What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-02-28 compared with 2021-03-01 · 88 added, 347 removed, 231 unchanged (65% of the section changed)

16 unchanged sentences

-1.00% (2.5) (8.8) (4.5) (10.1)

The Company had a positive gap position based on contractual and prepayment assumptions for the next 12 months, with a positive cumulative interest rate sensitivity gap as a percentage of total earning assets of 26.3% as of December 31, 2020.

This result includes assumptions for core deposit re-pricing validated for the Company by an independent third party consulting group.

The computations of interest rate risk do not necessarily include certain actions management may undertake to manage this risk in response to changes in interest rates.

Derivative financial instruments, such as interest rate swaps, options, caps, floors, futures and forward contracts may be utilized as components of the Company’s risk management profile.

The Company's calculation of interest rate sensitivity for the year ended December 31, 2021 is presented below.

The balances of interest rate sensitive assets and liabilities are presented in the periods in which they reprice to market rates or mature.

The amounts are aggregated to reflect the interest rate sensitivity gap.

This analysis includes assumptions for prepayments of loans and securities and assumptions for core deposit re-pricing.

The Company utilizes interest rate floors for certain variable rate loans to offset the potential impact of declining interest rates.

The computations of interest rate sensitivity are based on the static balance sheet and do not necessarily include certain actions management may undertake to manage this risk in response to changes in interest rates in the future.

This may include the use of derivative financial instruments, such as interest rate swaps, options, caps, floors, futures and forward contracts as components of the Company’s risk management profile.

Interest Rate Sensitivity Analysis 1

December 31, 2021

(In thousands) 0-3

5 Years Total

Federal funds sold and interest bearing deposits $ 498,979 $ — $ — $ — $ 498,979

Debt securities 2

451,661 258,684 1,150,754 421,860 2,282,959

1,902,428 866,539 2,457,841 730,012 5,956,820

Other assets 5,720 — — 39,314 45,034

Earning assets $ 2,858,788 $ 1,125,223 $ 3,608,595 $ 1,191,186 $ 8,783,792

Non-maturity deposits 139,252 305,931 1,318,864 2,673,065 4,437,112

Time deposits 194,331 305,286 54,719 607 554,943

Borrowings 193,211 — — — 193,211

Interest bearing liabilities $ 526,794 $ 611,217 $ 1,373,583 $ 2,673,672 $ 5,185,266

Interest rate swaps 300,000 — — — 300,000

Interest sensitivity gap $ 2,031,994 $ 514,006 $ 2,235,012 $ (1,482,486) $ 3,298,526

Cumulative gap $ 2,031,994 $ 2,546,000 $ 4,781,012 $ 3,298,526

Cumulative gap to total earning assets 23 % 29 % 54 % 38 %

Earning assets to interest bearing liabilities 543 % 184 % 263 % 45 %

1 The repricing dates may differ from contractual maturity dates for certain assets due to prepayment assumptions.

2 Securities are stated at carrying value.

3 Includes loans available-for-sale.

Market risk refers to potential losses arising from changes in interest rates, and other relevant market rates or prices.

27 unchanged sentences

Effects of Inflation and Changing Prices

The condensed consolidated financial statements and related financial data presented herein have been prepared in accordance with U.S.

The consolidated financial statements and related financial data presented herein have been prepared in accordance with U.S.

GAAP, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money, over time, due to inflation.

3 unchanged sentences

Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings, and shareholders’ equity.

originations and re-financings tend to slow as interest rates increase, and higher interest rates likely will reduce the Company’s earnings from such activities and the income from the sale of residential mortgage loans in the secondary market.

Table 1 - Components of Return on Average Assets 1

For the Year Ended December 31,

(In thousands) 2020 2019 2018

Net interest income 3.35% 3.57% 3.50%

Provision for credit losses on loans 0.49 0.16 0.19

Noninterest income

Securities gains (losses), net 0.02 0.02 (0.01)

Other 0.77 0.81 0.83

Noninterest expense 2.36 2.35 2.68

Income before income taxes 1.29 1.89 1.45

Provision for income taxes including tax equivalent adjustment 0.30 0.44 0.34

Net income 0.99% 1.45% 1.11%

1 On a fully taxable equivalent basis.

Balances presented as a percentage of average assets.

Table 2 – Three Year Summary

Average Balances, Interest Income and Expenses, Yields and Rates 1

For the Year Ended December 31,

2020 2019 2018

(In thousands, except percentages) Average

Balance Interest Yield/

Earning Assets:

Taxable $ 1,277,441 $ 29,718 2.33 % $ 1,176,842 $ 35,354 3.00 % $ 1,299,089 $ 37,860 2.91 %

Nontaxable 22,164 570 2.57 23,122 695 3.01 31,331 1,115 3.56

Total Securities 1,299,605 30,288 2.33 1,199,964 36,049 3.00 1,330,420 38,975 2.93

Federal funds sold and other investments 239,494 2,497 1.04 88,045 3,379 3.84 61,048 2,670 4.37

Loan excluding PPP loans 5,259,653 242,736 4.62 4,933,518 250,730 5.08 4,112,009 200,194 4.87

PPP loans 419,154 11,974 2.86 — — — — — —

Total Loans 5,678,807 254,710 4.49 4,933,518 250,730 5.08 4,112,009 200,194 4.87

Total Earning Assets 7,217,906 287,495 3.98 6,221,527 290,158 4.66 5,503,477 241,839 4.39

Provision for credit losses on loans (81,858) (33,465) (29,972)

Cash and due from banks 142,314 94,643 114,936

Bank premises and equipment, net 71,846 69,142 67,332

Intangible assets 231,267 228,042 178,287

Bank owned life insurance 128,569 124,803 124,452

Other assets 149,956 126,588 98,823

Total Assets $ 7,860,000 $ 6,831,280 $ 6,057,335

Liabilities and Shareholders' Equity

Interest-Bearing Liabilities:

Interest-bearing demand $ 1,324,433 1,710 0.13 % $ 1,114,334 4,025 0.36 % $ 978,030 1,883 0.19 %

Savings deposits 610,015 849 0.14 516,526 2,015 0.39 457,542 811 0.18

Money market 1,294,629 4,361 0.34 1,164,938 10,581 0.91 1,049,900 6,069 0.58

Time deposits 1,101,321 13,365 1.21 1,092,516 21,776 1.99 811,741 11,684 1.44

Securities sold under agreements to repurchase 84,514 283 0.33 106,142 1,431 1.35 200,839 1,804 0.90

Federal Home Loan Bank borrowings 139,439 1,540 1.10 131,921 3,010 2.28 224,982 4,468 1.99

Other borrowings 71,220 2,184 3.07 70,939 3,367 4.75 70,658 3,164 4.48

Total Interest-Bearing Liabilities 4,625,571 24,292 0.53 4,197,316 46,205 1.10 3,793,692 29,883 0.79

Noninterest demand 2,107,931 1,641,766 1,492,451

Other liabilities 81,279 63,405 30,621

Total Liabilities 6,814,781 5,902,487 5,316,764

Shareholders' equity 1,045,219 928,793 740,571

Total Liabilities & Shareholders' Equity $ 7,860,000 $ 6,831,280 $ 6,057,335

Cost of deposits 0.32 % 0.69 % 0.43 %

Interest expense as % of earning assets 0.34 % 0.74 % 0.54 %

Net interest income/yield on earning assets $ 263,203 3.65 % $ 243,953 3.92 % $ 211,956 3.85 %

1 On a fully taxable equivalent basis.

All yields and rates have been computed using amortized costs.

Fees on loans have been included in interest on loans.

Nonaccrual loans are included in loan balances.

Table 3 - Rate/Volume Analysis 1

Due to Change in:

(In thousands) Volume Rate Total Volume Rate Total

Amount of increase (decrease)

Earning Assets:

Taxable $ 2,681 $ (8,317) $ (5,636) $ (3,618) $ 1,112 $ (2,506)

Nontaxable (27) (98) (125) (269) (151) (420)

Total Securities 2,654 (8,415) (5,761) (3,887) 961 (2,926)

Federal funds sold and other investments 3,696 (4,578) (882) 1,108 (399) 709

Loans, net 35,653 (31,673) 3,980 40,873 9,663 50,536

Total Earning Assets 42,003 (44,666) (2,663) 38,094 10,225 48,319

Interest-Bearing Liabilities:

Interest-bearing demand 515 (2,830) (2,315) 377 1,765 2,142

Savings deposits 247 (1,413) (1,166) 167 1,037 1,204

Money market accounts 807 (7,027) (6,220) 855 3,657 4,512

Time deposits 141 (8,552) (8,411) 4,819 5,273 10,092

Total Deposits 1,710 (19,822) (18,112) 6,218 11,732 17,950

Securities sold under agreements to repurchase (182) (966) (1,148) (1,064) 691 (373)

Federal Home Loan Bank borrowings 127 (1,597) (1,470) (1,986) 528 (1,458)

Other borrowings 11 (1,194) (1,183) 13 190 203

Total Interest Bearing Liabilities 1,666 (23,579) (21,913) 3,181 13,141 16,322

Net Interest Income $ 40,337 $ (21,087) $ 19,250 $ 34,913 $ (2,916) $ 31,997

1 On a fully taxable equivalent basis.

All yields and rates have been computed using amortized costs.

Fees on loans have been included in interest on loans.

Nonaccrual loans are included in loan balances.

Changes attributable to rate/volume (mix) are allocated to rate and volume on an equal basis.

Table 4 – Noninterest Income

For the Year Ended December 31, % Change

(In thousands, except percentages) 2020 2019 2018 20/19

Service charges on deposit accounts $ 9,429 $ 11,529 $ 11,198 (18%) 3%

Interchange income 13,711 13,399 12,335 2 9

Wealth management income 7,507 6,352 5,915 18 7

Mortgage banking fees 14,696 6,490 4,682 126 39

Marine finance fees 690 1,054 1,398 (35) (25)

SBA gains 685 2,472 2,474 (72) —

BOLI income 3,561 3,674 4,291 (3) (14)

Other income 10,056 10,545 8,352 (5) 26

60,335 55,515 50,645 9 10

Securities gains (losses), net 1,235 1,217 (623) 1 (295)

Total Noninterest Income $ 61,570 $ 56,732 $ 50,022 9% 13%

Table 5 - Noninterest Expense

For the Year Ended December 31, % Change

(In thousands, except percentages) 2020 2019 2018 20/19

Salaries and wages $ 88,539 $ 73,829 $ 71,111 20% 4%

Employee benefits 15,544 13,697 12,945 13 6

Outsourced data processing costs 19,053 15,077 16,374 26 (8)

Telephone and data lines 2,984 2,958 2,481 1 19

Occupancy 14,150 14,284 13,394 (1) 7

Furniture and equipment 5,874 6,245 6,744 (6) (7)

Marketing 4,833 4,161 5,085 16 (18)

Legal and professional fees 9,167 8,553 9,961 7 (14)

FDIC assessments 1,268 881 2,195 44 (60)

Amortization of intangibles 5,857 5,826 4,300 1 35

Foreclosed property expense and net loss on sale 2,263 51 461 4,337 (89)

Provision for credit losses on unfunded commitments 185 — — n/m n/m

Other 15,835 15,177 17,222 4 (12)

Total Noninterest Expense $ 185,552 $ 160,739 $ 162,273 15% (1%)

n/m = not meaningful

Mortgage originations and re-financings tend to slow as interest rates increase, and higher interest rates likely will reduce the Company’s earnings from such activities and the income from the sale of residential mortgage loans in the secondary market.

Table 1 - Capital Resources

19 unchanged sentences

Regulatory minimum 2

4.50 4.50 4.50

Tier 1 capital ratio 17.40 17.46

Regulatory minimum 2

6.00 6.00 6.00

Total capital ratio 18.21 18.51

Regulatory minimum 2

8.00 8.00 8.00

Tier 1 capital to adjusted total assets 11.68 11.92

3 unchanged sentences

Tangible shareholders' equity to tangible assets 11.09 11.01

1 In 2020, the Company elected, in accordance with interagency guidance, to delay the estimated impact on regulatory capital resulting from the implementation of CECL.

1 Upon adoption of the CECL accounting standard in 2020, the Company elected, in accordance with interagency guidance, to delay the estimated impact on regulatory capital resulting from the implementation of CECL.

The guidance provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option).

The adjustment to Tier 1 Capital was $24.7 million and the adjustment to Tier 2 Capital was $30.2 million.

2 Excludes the Basel III capital conservation buffer of 2.5% for 2020 and 2019, and 1.875% for 2018, which if not exceeded may constrain dividends, equity repurchases and compensation.

As of December 31, 2021 and 2020, the adjustment to Tier 1 Capital was $23.0 million and $24.7 million, respectively, and the adjustment to Tier 2 Capital was $28.5 million and $30.2 million, respectively.

2 Excludes the Basel III capital conservation buffer of 2.5% which, if not exceeded, may constrain dividends, equity repurchases and compensation.

Table 2 - Loans Outstanding

(In thousands) 2021 2020

Amount % to Total Loans Amount % to Total Loans

Construction and land development $ 230,824 4 % $ 245,108 4 %

Residential $ 64,385 $ 94,641 $ 123,326 $ 97,725 $ 29,693

Commercial 93,033 86,658 128,175 91,043 57,856

157,418 181,299 251,501 188,768 87,549

Individuals 87,690 143,814 192,067 154,357 72,567

245,108 325,113 443,568 343,125 160,116

Commercial real estate

Owner-occupied 1,141,310 1,034,963 970,181 791,400 623,800

Non owner-occupied 1,395,854 1,344,008 1,161,885 848,592 733,792

2,537,164 2,378,971 2,132,066 1,639,992 1,357,592

Commercial real estate - owner occupied 1,197,774 20 % 1,141,310 20 %

Commercial real estate - non-owner occupied 1,736,439 29 % 1,395,854 25 %

Residential real estate 1,425,354 24 % 1,342,628 23 %

Adjustable 436,262 556,453 618,123 487,231 418,276

Fixed rate 499,050 589,960 370,224 246,884 210,365

Home equity mortgages 65,717 69,394 74,127 71,367 44,484

Home equity lines 341,599 292,056 261,903 233,328 163,662

1,342,628 1,507,863 1,324,377 1,038,810 836,787

Commercial and financial 1,069,356 18 % 854,753 15 %

PPP Loans 566,961 — — — —

Installment loans to individuals

Automobiles and trucks 17,697 22,939 20,482 19,006 19,234

Marine loans 97,404 91,025 83,606 78,855 78,993

Other 72,364 93,274 97,606 90,851 55,718

187,465 207,238 201,694 188,712 153,945

Other loans 1,270 967 1,187 724 507

Consumer 174,175 3 % 188,735 3 %

Paycheck Protection Program 91,107 2 % 566,961 10 %

Total Loans $ 5,925,029 100 % $ 5,735,349 100 %

Table 3 - Loan Maturity Distribution

The following table presents loans by maturity, separately presenting fixed rate loans from those with floating or adjustable rates.

December 31, 2021

(In thousands) Commercial and

Financial Construction

Development Total

In one year or less $ 263,932 $ 116,718 $ 380,650

After one year but within five years:

Interest rates are floating or adjustable 88,833 51,313 140,146

Interest rates are fixed 241,401 8,690 250,091

In five years or more:

Interest rates are floating or adjustable 85,664 16,226 101,890

Interest rates are fixed 174,923 52,161 227,084

Total $ 854,753 $ 245,108 $ 1,099,861

Table 9 - Maturity of Certificates of Deposit of $100,000 or More

Maturity of Certificates of Deposit of $100,000 through $250,000

December 31, % of December 31, % of

(In thousands, except percentages) 2020 Total 2019 Total

Maturity Group:

Under 3 Months $ 96,635 42% $ 110,724 41%

3 to 6 Months 61,486 26 78,190 29

6 to 12 Months 50,999 22 53,702 20

Over 12 Months 22,930 10 25,832 10

Total Time Deposits $ 232,050 100% $ 268,448 100%

Maturity of Certificates of Deposit of more than $250,000

December 31, % of December 31, % of

(In thousands, except percentages) 2020 Total 2019 Total

Maturity Group:

Under 3 Months $ 65,627 38% $ 95,351 46%

3 to 6 Months 50,430 29 58,930 28

6 to 12 Months 35,580 21 34,925 17

Over 12 Months 19,826 12 18,113 9

Total Time Deposits $ 171,463 100% $ 207,319 100%

Table 10 - Summary of Allowance for Credit Losses on Loans 1

For the Year Ended December 31,

(In thousands, except percentages) 2020 2019 2018 2017 2016

Beginning balance $ 35,154 $ 32,423 $ 27,122 $ 23,400 $ 19,128

Impact of adoption of ASC 326 21,226 n/a n/a n/a n/a

Initial allowance for PCD loans acquired 6,279 n/a n/a n/a n/a

Provision for credit losses on loans 37,779 10,999 11,730 5,648 2,411

After five year but within fifteen years:

After fifteen years:

(In thousands) In one year or less Floating or adjustable Fixed Floating or adjustable Fixed Floating or adjustable Fixed Total

Construction and Land Development $ 61,924 $ 35,914 $ 14,354 $ 62,928 $ 15,905 $ 20,554 $ 19,245 $ 230,824

Commercial real estate - owner occupied 310 n/a n/a n/a n/a

Commercial real estate - non-owner occupied 177 n/a n/a n/a n/a

Commercial real estate n/a 248 3,139 407 256

Commercial Real Estate - Owner Occupied 56,708 43,584 261,332 104,358 703,830 24,419 3,543 1,197,774

Commercial Real Estate - Non-owner Occupied 152,824 70,651 716,994 85,868 693,667 14,328 2,107 1,736,439

Residential Real Estate 34,627 33,405 67,374 286,247 76,368 276,070 651,263 1,425,354

1 unchanged sentence

Consumer 18,320 11,431 37,147 10,480 52,719 26,610 17,468 174,175

Total Charge-Offs 9,842 10,559 8,026 4,102 1,144

Paycheck Protection Program 4,089 — 87,018 — — — — 91,107

Total $ 541,220 $ 267,258 $ 1,517,387 $ 632,221 $ 1,686,498 $ 511,633 $ 768,812 $ 5,925,029

Table 4 - Select Credit Ratios 1

For the Year Ended December 31,

(In thousands, except percentages) 2021 2020 2019

Daily average loans outstanding 2

$ 5,751,064 $ 5,678,807 $ 4,933,518

Ratio of allowance for credit losses on loans to loans outstanding at end of year 1.41 % 1.62 % 0.68 %

Ratio of net charge-offs (recoveries) to average loans outstanding

Construction and land development — % — % — %

Commercial real estate - owner occupied 18 n/a n/a n/a n/a

Commercial real estate - non-owner occupied 37 n/a n/a n/a n/a

Commercial real estate n/a 744 292 747 306

Commercial real estate - owner occupied — % — % n/a

Commercial real estate - non-owner occupied 0.02 % — % n/a

Commercial real estate n/a n/a (0.01) %

Residential real estate (0.02) % — % — %

1 unchanged sentence

Consumer — % 0.03 % 0.04 %

Total Recoveries 2,251 2,420 1,789 2,495 3,236

Net loan charge-offs (recoveries) 7,591 8,139 6,237 1,607 (2,092)

TDR valuation adjustments 114 129 192 319 231

Total Allowance for Credit Losses on Loans $ 92,733 $ 35,154 $ 32,423 $ 27,122 $ 23,400

Loans outstanding at end of year 2

$ 5,735,349 $ 5,198,404 $ 4,825,214 $ 3,817,377 $ 2,879,536

Ratio of allowance for credit losses on loans to loans outstanding at end of year 1.62 % 0.68 % 0.67 % 0.71 % 0.81 %

Daily average loans outstanding 2

$ 5,678,807 $ 4,933,518 $ 4,112,009 $ 3,323,403 $ 2,584,389

Ratio of net charge-offs (recoveries) to average loans outstanding 0.13 % 0.16 % 0.15 % 0.05 % (0.08 %)

Paycheck Protection Program — % — % — %

Total ratio of net charge-offs to average loans outstanding 0.05 % 0.13 % 0.16 %

1 With the adoption of ASC Topic 326 -Financial Instruments - Credit Losses on January 1, 2020, the Company re-evaluated the aggregation of loans into segments, and separated Commercial Real Estate - Owner Occupied from Commercial Real Estate - Non Owner Occupied.

3 unchanged sentences

(In thousands, except percentages) 2021 2020 2019

Allocation by Loan Type

Allocation by Loan Type Amount % of Total Allowance Amount % of Total Allowance Amount % of Total Allowance

Construction and land development $ 2,751 3 % $ 4,920 5 % $ 1,842 5 %

Commercial real estate - owner occupied 9,868 n/a n/a n/a n/a

Commercial real estate - non-owner occupied 38,266 n/a n/a n/a n/a

Commercial real estate n/a 13,224 11,112 9,285 9,273

Commercial real estate - owner occupied 8,579 10 % 9,868 11 % n/a n/a

Commercial real estate - non-owner occupied 36,617 44 % 38,266 41 % n/a n/a

Commercial real estate n/a n/a n/a n/a 13,224 38 %

Residential real estate 12,811 16 % 17,500 19 % 7,667 22 %

1 unchanged sentence

Consumer 2,813 3 % 3,489 4 % 2,705 8 %

Paycheck Protection Program $ — — % $ — — % n/a n/a

Total Allowance for Credit Losses on Loans $ 83,315 100 % $ 92,733 100 % $ 35,154 100%

Year End Loan Types as a Percent of Total Loans

Construction and land development 4 % 6 % 9 % 9 % 6 %

Commercial real estate - owner occupied 20 20 20 21 22

Commercial real estate - non-owner occupied 25 26 24 22 25

Residential real estate 23 29 28 27 29

Commercial and financial 15 15 15 16 13

Consumer 3 4 4 5 5

Paycheck Protection Program 10 — — — —

Total 100 % 100 % 100 % 100 % 100 %

4 unchanged sentences

Construction and land development $ 259 $ 167 $ 4,937

Commercial real estate loans - owner occupied 8,181 n/a n/a n/a n/a

Commercial real estate loans - non-owner occupied 8,084 n/a n/a n/a n/a

Commercial real estate n/a 6,520 9,220 2,833 7,341

Commercial real estate loans - owner occupied 3,966 8,181 n/a

Commercial real estate loans - non-owner occupied 5,905 8,084 n/a

Commercial real estate n/a n/a 6,520

Residential real estate loans 13,045 12,492 9,479

4 unchanged sentences

Construction and land development $ 8,828 $ 6,715 $ 197

Commercial real estate loans - owner occupied — n/a n/a n/a n/a

Commercial real estate loans - non-owner occupied 5,963 n/a n/a n/a n/a

Commercial real estate n/a 5,111 1,566 2,550 3,041

Commercial real estate loans - owner occupied — — n/a

Commercial real estate loans - non-owner occupied 3,395 5,963 n/a

Commercial real estate n/a n/a 5,111

Residential real estate loans — 72 241

5 unchanged sentences

Ratio of total nonperforming assets to loans outstanding and other real estate owned at end of period 0.74 % 0.85 % 0.76 %

Ratio of total nonaccrual loans to loans outstanding at end of period 0.52 % 0.63 % 0.52 %

Ratio of allowance for credit losses on loans to total nonaccrual loans 272 % 257 % 130 %

Accruing loans past due 90 days or more $ 121 $ 63 $ 108

3 unchanged sentences

In prior years, all Commercial Real Estate loans were considered a single segment.

2 Interest income that could have been recorded during 2020, 2019, 2018, 2017, and 2016 related to nonaccrual loans was $1.1 million, $0.4 million, $1.0 million, $0.7 million, and $0.7 million, respectively, none of which was included in interest income or net income.

2 Interest income that could have been recorded during 2021, 2020, and 2019 related to nonaccrual loans was $0.9 million, $1.1 million, and $0.4 million, respectively, none of which was included in interest income or net income.

3 Net of unearned income.

4 Interest income that would have been recorded based on original contractual terms was $0.2 million, $0.4 million, $0.5 million, $0.7 million, and $1.1 million respectively, for 2020, 2019, 2018, 2017, and 2016.

The amount included in interest income under the modified terms for 2020, 2019, 2018, 2017, and 2016 was $0.3 million, $0.6 million, $0.7 million, $0.7 million, and $0.8 million, respectively.

Table 13 - Available-For-Sale Debt Securities

(In thousands) Gross

Treasury securities and obligations of U.S.

government agencies

2020 $ 8,250 $ 8,777 $ 528 $ (1)

2019 9,914 10,114 204 (4)

2018 7,200 7,300 106 (6)

Mortgage-backed securities and collateralized mortgage obligations of U.S.

government-sponsored entities

2020 1,038,437 1,060,654 23,457 (1,240)

2019 604,934 609,207 5,784 (1,511)

2018 567,753 554,006 300 (14,047)

Private mortgage-backed securities and collateralized mortgage obligations

2020 89,284 91,205 2,131 (210)

2019 56,005 57,561 1,561 (5)

2018 55,569 55,728 560 (401)

Collateralized loan obligations

2020 202,563 202,195 279 (647)

2019 239,364 238,218 7 (1,153)

2018 212,807 209,366 1 (3,442)

Obligations of state and political subdivisions

2020 33,005 35,326 2,321 —

2019 30,548 31,755 1,208 (1)

2018 39,543 39,431 339 (451)

Total Available-For-Sale Debt Securities

2020 $ 1,371,539 $ 1,398,157 $ 28,716 $ (2,098)

2019 940,765 946,855 8,764 (2,674)

2018 882,872 865,831 1,306 (18,347)

Table 14 - Held-to-Maturity Debt Securities

(In thousands) Gross

Mortgage-backed securities of U.S.

government-sponsored entities

2020 $ 184,484 $ 192,179 $ 7,818 $ (123)

2019 261,369 262,213 2,717 (1,873)

2018 304,423 297,099 — (7,324)

Private mortgage-backed securities and collateralized mortgage obligations

2018 21,526 21,673 277 (130)

Collateralized loan obligations

2018 32,000 31,123 — (877)

Total Held-to-Maturity Debt Securities

2020 $ 184,484 $ 192,179 $ 7,818 $ (123)

2019 261,369 262,213 2,717 (1,873)

2018 357,949 349,895 277 (8,331)

4 Interest income that would have been recorded based on original contractual terms was $0.2 million, $0.2 million, and $0.4 million, respectively, for 2021, 2020, and 2019.

The amount included in interest income under the modified terms for 2021, 2020, and 2019 was $0.2 million, $0.3 million, and $0.6 million respectively.

Table 7 - Maturity Distribution of Available-For-Sale Debt Securities

December 31, 2021

(In thousands) 1 Year

(In thousands) Less than 1 Year After 1-5

Years After 5-10

Years After 10

Amortized Cost

27 unchanged sentences

December 31, 2021

(In thousands) 1 Year

(In thousands) Less than 1 year After 1-5

Years After 5-10

Years After 10

Amortized Cost

Mortgage-backed securities of U.S.

Mortgage-backed securities and collateralized mortgage obligations of U.S.

government-sponsored entities $ 18,634 $ 8,906 $ 53,680 $ 557,420 $ 638,640

Total Held-to-Maturity Debt Securities $ 18,634 $ 8,906 $ 53,680 $ 557,420 $ 638,640

Mortgage-backed securities of U.S.

Mortgage-backed securities and collateralized mortgage obligations of U.S.

government-sponsored entities $ 18,808 $ 9,083 $ 55,335 $ 544,172 $ 627,398

1 unchanged sentence

Weighted Average Yield 1

Mortgage-backed securities of U.S.

Mortgage-backed securities and collateralized mortgage obligations of U.S.

government-sponsored entities 2.36 % 2.96 % 2.62 % 1.58 % 1.71 %

1 unchanged sentence

1 All yields and rates have been computed using amortized costs.

Table 17 - Interest Rate Sensitivity Analysis 1

December 31, 2020

(In thousands) 0-3

5 Years Total

Federal funds sold and interest bearing deposits $ 318,207 $ — $ — $ — $ 318,207

Debt securities 2

412,560 206,534 541,121 422,426 1,582,641

2,058,050 1,061,253 2,131,649 553,287 5,804,239

Other assets 4

13,406 27,959 — — 41,365

Earning assets $ 2,802,223 $ 1,295,746 $ 2,672,770 $ 975,713 $ 7,746,452

Savings deposits 239,651 121,945 1,076,649 2,373,373 3,811,618

Time deposits 369,745 390,395 70,363 653 831,156

Borrowings 190,974 — — — 190,974

Interest bearing liabilities $ 800,370 $ 512,340 $ 1,147,012 $ 2,374,026 $ 4,833,748

Interest sensitivity gap $ 2,001,853 $ 783,406 $ 1,525,758 $ (1,398,313) $ 2,912,704

Cumulative gap $ 2,001,853 $ 2,785,259 $ 4,311,017 $ 2,912,704

Cumulative gap to total earning assets 26 % 36 % 56 % (18 %)

Earning assets to interest bearing liabilities 350 253 233 41

1 The repricing dates may differ from contractual maturity dates for certain assets due to prepayment assumptions.

2 Securities are stated at carrying value.

3 Includes loans available-for-sale.

4 “0-3 Months” includes FHLB stock for which interest resets quarterly and a mutual fund that invests in CRA qualified debt securities which reprices daily and “4-12 Months” includes Federal Reserve Bank stock for which interest resets semiannually.

Stock Performance Graph

The line graph below compares the cumulative total stockholder return on Seacoast common stock with the cumulative total return of the NASDAQ Composite Index and the SNL Southeast Bank Index for the same period.

The graph and table assume that $100 was invested on December 31, 2015 (the last day of trading for the year ended December 31, 2015) in each of Seacoast common stock, the NASDAQ Composite Index and the SNL Southeast Bank Index.

The line graph below compares the cumulative total stockholder return on Seacoast common stock with the cumulative total return of the NASDAQ Composite Index and the S&P U.S.

BMI Banks - Southeast Region Index for the same period.

The graph and table assume that $100 was invested on December 31, 2016 (the last day of trading for the year ended December 31, 2016) in each of Seacoast common stock, the NASDAQ Composite Index and the S&P U.S.

BMI Banks - Southeast Region Index.

The cumulative total return represents the change in stock price and the amount of dividends received over the period, assuming all dividends were reinvested.

Period ending

Index December 31, 2015

December 31, 2016

December 31, 2017

December 31, 2018

December 31, 2019

December 31, 2020

Index December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021

Seacoast Banking Corporation of Florida 100.00 114.28 117.95 138.58 133.50 162.32

NASDAQ Composite Index 100.00 129.64 125.96 172.18 249.51 304.85

SNL Southeast Bank Index 100.00 132.75 164.21 135.67 191.06 172.07

BMI Banks - Southeast Region Index 100.00 123.70 102.20 144.05 129.15 184.47

49 unchanged sentences

Bid price at end of period 35.39 33.81 34.15 36.24 29.45 18.03 20.40 18.31

FINANCIAL HIGHLIGHTS

For the Year Ended and at December 31,

(In thousands, except per share data) 2020 2019 2018 2017 2016

Net interest income $ 262,743 $ 243,618 $ 211,515 $ 176,296 $ 139,588

Provision for credit losses 38,179 10,999 11,730 5,648 2,411

Noninterest income:

Other 60,335 55,515 50,645 43,230 37,427

Securities gains (losses), net 1,235 1,217 (623) 86 368

Gain on sale of VISA stock — — — 15,153 —

Noninterest expenses 185,552 160,739 162,273 149,916 130,881

Income before income taxes 100,582 128,612 87,534 79,201 44,091

Income taxes 22,818 29,873 20,259 36,336 14,889

Net income $ 77,764 $ 98,739 $ 67,275 $ 42,865 $ 29,202

Per Share Data

Net income available to common shareholders:

Diluted $ 1.44 $ 1.90 $ 1.38 $ 0.99 $ 0.78

Basic 1.45 1.92 1.40 1.01 0.79

Cash dividends declared 0.00 0.00 0.00 0.00 0.00

Book value per share common 20.46 19.13 16.83 14.70 11.45

Tangible book value per share 16.16 14.76 12.33 11.15 9.37

Assets $ 8,342,392 $ 7,108,511 $ 6,747,659 $ 5,810,129 $ 4,680,932

Debt securities 1,582,641 1,208,224 1,223,780 1,372,667 1,323,001

Net loans 5,642,616 5,163,250 4,792,791 3,790,255 2,856,136

Deposits 6,932,561 5,584,753 5,177,240 4,592,720 3,523,245

FHLB borrowings — 315,000 380,000 211,000 415,000

Subordinated debt 71,365 71,085 70,804 70,521 70,241

Shareholders' equity 1,130,402 985,639 864,267 689,664 435,397

For the Year Ended and at December 31,

(In thousands, except per share data) 2020 2019 2018 2017 2016

Performance ratios:

Return on average assets 0.99 % 1.45 % 1.11 % 0.82 % 0.69 %

Return on average equity 7.44 10.63 9.08 7.51 7.06

Net interest margin 1

3.65 3.92 3.85 3.73 3.63

Average equity to average assets 13.30 13.60 12.23 10.96 9.85

Return on tangible assets 1.08 1.56 1.20 0.88 0.75

Return on tangible common equity 10.10 14.72 12.54 9.90 8.87

1 On a fully taxable equivalent basis, a non-GAAP measure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk