SBCF filing — read by section

Item 8. Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 

 
 
 
 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
 Shareholders and the Board of Directors of Seacoast Banking Corporation of Florida 
 Stuart, Florida 
 Opinions on the Financial Statements and Internal Control over Financial Reporting 
 We have audited the accompanying consolidated balance sheets of Seacoast Banking Corporation of Florida (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. 
 Basis for Opinions 
 The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. 
 Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. 
 Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 
 Definition and Limitations of Internal Control Over Financial Reporting 
 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the 
 
 
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 company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
 Critical Audit Matter 
 The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 
 Allowance and Provision for Credit Losses on Loans 
 The allowance for credit losses (the “ACL”) is an accounting estimate of expected credit losses over the contractual term of loans carried at amortized cost as described in Notes 1 and 5 of the consolidated financial statements. The Company's loan portfolio, which is measured at amortized cost, is required to be presented at the net amount expected to be collected. Estimates of expected credit losses for loans are based on information from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. 
 The Company estimates expected credit losses for loans at the individual loan level using a discounted cash flow methodology for its commercial loans and using a loss rate methodology for its consumer loans. Expected losses are estimated using a blend of forecast scenarios. Specifically, the forecast scenarios selected were the “U.S. Macroeconomic Outlook Baseline” and “Alternative Scenario 3 - Downside - 90th Percentile” scenarios. The forecasted credit losses also incorporate macroeconomic variables such as changes in expectations indicated by the commercial real estate price index, changes in the housing price index, and changes in the unemployment rate. 
 The forecasts of future economic conditions are over a period that the Company has deemed reasonable and supportable, and in segments where it can no longer develop reasonable and supportable forecasts, the Company reverts to longer-term historical loss experience to estimate losses over the remaining life of the loans. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments . 
 The Company may incorporate qualitative adjustments to modeled reserves based on an assessment of internal and external influences on credit quality not fully reflected in the quantitative components of the allowance model. These influences may include elements such as changes in concentration, macroeconomic conditions, recent observable asset quality trends, staff turnover, regional market conditions, employment levels, model risk, and loan growth. 
 A significant amount of judgment was required when assessing the conceptual design and statistical methodology of the employed model and whether the model was relevant to the Company’s loan portfolio and suitable for use in the Company’s estimation process, which in turn involved especially complex and subjective judgment. The Company’s discounted cash flow methodology includes probability of default (“PD”) and loss given default (“LGD”) assumptions that required assessing the conceptual soundness and reasonableness of those assumptions. We utilized Crowe LLP employed valuation specialists (“Crowe VS”) to evaluate the soundness of the model’s methodology, conceptual design, and applicability to the Company. Crowe VS also performed procedures to assess the relationships between the Company’s PD and LGD rates and model rates. 
 The principal considerations resulting in our determination included the following: 
 • Significant auditor judgment in evaluating the selection and application of the reasonable and supportable forecasts of economic variables and reasonableness of other model assumptions. 
 • Significant auditor effort in evaluating probability-weighted forecast scenarios with PD and LGD assumptions that involved the use of management judgment and a high degree of auditor judgment, including the need to involve Crowe VS. 
 • Significant audit effort related to testing the completeness and accuracy of internal data used and evaluating the relevance and reliability of proxy loan information. 
 
 
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 The primary procedures performed to address the critical audit matter included: 
 • Testing the effectiveness of controls over the completeness and accuracy of internal data inputs, including loan segmentation data used in the development of PD and LGD assumptions, and the relevance and reliability of third-party data used in the computation. 
 • Testing the effectiveness of management’s internal controls over the Company’s significant model methods, assumptions and judgments, including qualitative adjustments, and information systems. 
 • Testing the effectiveness of controls over the Company’s preparation and review of the allowance for credit losses calculation, including the reasonableness of management's judgments over the forecasted period and economic scenarios selected. 
 • With the assistance of Crowe VS, evaluating the reasonableness of assumptions and judgments related to management’s methodology. 
 • Substantively testing the completeness and accuracy of internal loan level data used, loan segmentation, the relevance and reliability of third party data, and management’s judgments and assumptions for reasonableness. 
 • Substantive univariate directionality testing with the assistance of Crowe VS and other substantive analytical procedures to test significant assumptions made by management, and testing the process of management’s assessment for the incorporation of qualitative adjustments. 
 • Evaluating management’s judgments in the selection and application of reasonable and supportable forecasts, and the reasonableness of forecasted economic scenarios provided by a third-party, assisted by Crowe VS. 
 
 
 /s/ Crowe LLP 
 
 
 We have served as the Company's auditor since 2014. 
 
 
 Fort Lauderdale, Florida 
 February 27, 2024 
 
 
 
 
 
 
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 SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF INCOME 
 
 
 For the Year Ended December 31, 
 (In thousands, except per share data) 2023 2022 2021 
 Interest Income 
 Interest and dividends on securities 
 Taxable $ 82,926 $ 56,611 $ 29,206 
 Nontaxable 354 546 577 
 Interest and fees on loans 581,105 315,717 251,471 
 Interest on interest bearing deposits and other investments 24,590 7,620 2,990 
 Total Interest Income 688,975 380,494 284,244 
 
 Interest Expense 
 Interest on deposits 126,535 7,318 3,605 
 Interest on time certificates 52,254 2,642 2,788 
 Interest on securities sold under agreement to repurchase 8,323 986 141 
 Interest on Federal Home Loan Bank borrowings 
 6,378 330 — 
 Interest on long-term debt 7,245 3,056 1,685 
 Total Interest Expense 200,735 14,332 8,219 
 Net Interest Income 488,240 366,162 276,025 
 
 Provision for credit losses 37,518 26,183 ( 9,421 ) 
 Net Interest Income After Provision for Credit Losses 450,722 339,979 285,446 
 
 Noninterest Income: 
 
 Service charges on deposit accounts 18,278 13,709 9,777 
 Interchange income 13,877 17,171 16,231 
 Wealth management income 12,780 11,051 9,628 
 Mortgage banking fees 1,790 3,478 11,782 
 Insurance agency income 4,510 805 — 
 SBA gains 2,105 842 1,531 
 BOLI income 8,401 5,572 4,154 
 Other 20,304 14,559 18,202 
 82,045 67,187 71,305 
 Securities losses, net (includes net losses of $ 2.9 million for 2023, $ 0 for 2022 and net gains of $ 2.2 million for 2021 in other comprehensive income reclassifications) 
 ( 2,893 ) ( 1,096 ) ( 578 ) 
 Total Noninterest Income 79,152 66,091 70,727 
 
 Noninterest Expense: 
 
 Salaries and wages 177,637 130,100 97,283 
 Employee benefits 29,918 19,026 17,873 
 Outsourced data processing costs 52,098 27,510 19,919 
 Telephone / data lines 5,204 3,799 3,223 
 Occupancy 26,668 18,539 14,140 
 Furniture and equipment 8,692 6,420 5,390 
 Marketing 9,156 6,286 4,583 
 Legal and professional fees 17,514 20,703 11,376 

 
 
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 FDIC assessments 8,630 3,137 2,405 
 Amortization of intangibles 28,726 9,101 5,033 
 Other real estate owned expense and net loss (gain) on sale 
 985 ( 1,534 ) ( 264 ) 
 Provision for credit losses on unfunded commitments 1,239 1,157 133 
 Other 29,155 23,690 16,341 
 Total Noninterest Expense 395,622 267,934 197,435 
 
 Income Before Income Taxes 134,252 138,136 158,738 
 Income taxes 30,219 31,629 34,335 
 Net Income $ 104,033 $ 106,507 $ 124,403 
 
 Per share data 
 Net income per share of common stock 
 Diluted $ 1.23 $ 1.66 $ 2.18 
 Basic 1.24 1.67 2.20 
 Average common shares outstanding 
 
 Diluted 84,329 64,264 57,088 
 Basic 83,800 63,707 56,586 

 See notes to consolidated financial statements. 
 
 
 
 
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 SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Net Income $ 104,033 $ 106,507 $ 124,403 
 
 Other comprehensive income (loss): 
 
 Available-for-sale securities: 
 Unrealized gains (losses) on available-for-sale securities, net of tax expense of $ 7.7 million in 2023, tax benefit of $ 57.1 million in 2022, and tax benefit of $ 8.2 million in 2021 
 $ 23,645 $ ( 181,096 ) $ ( 27,377 ) 
 Amortization of unrealized (gains) losses on securities transferred to held-to-maturity, net of tax benefit of $ 13 thousand in 2023, tax benefit of $ 7 thousand in 2022, and tax expense of $ 21 thousand in 2021 
 ( 42 ) ( 20 ) 86 
 Reclassification adjustment for losses included in net income, net of tax benefit of $ 0.7 million in 2023 and tax benefit of $ 85 thousand in 2021 
 2,191 — 278 
 Unrealized gains on derivatives designated as fair value hedges, net of reclassifications to income, net of tax expense of $ 0.7 million in 2023 
 1,971 — — 
 Unrealized gains (losses) on derivatives designated as cash flow hedges, net of reclassifications to income, net of tax expense of $ 0.1 million in 2023, tax benefit of $ 26 thousand in 2022, and tax expense of $ 0.1 million in 2021 
 390 77 ( 351 ) 
 Total other comprehensive income (loss) $ 28,155 $ ( 181,039 ) $ ( 27,364 ) 
 
 Comprehensive Income (Loss) $ 132,188 $ ( 74,532 ) $ 97,039 

 See notes to consolidated financial statements. 
 
 
 
 
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 SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS 
 
 December 31, 
 (In thousands, except share data) 2023 2022 
 Assets 
 Cash and due from banks $ 167,511 $ 120,748 
 Interest bearing deposits with other banks 279,671 81,192 
 Total cash and cash equivalents 447,182 201,940 
 
 Time deposits with other banks 5,857 3,236 
 
 Debt securities: 
 Securities available-for-sale (at fair value) 1,836,020 1,871,742 
 Securities held-to-maturity (fair value $ 558.4 million in 2023 and $ 617.7 million in 2022) 
 680,313 747,408 
 Total debt securities 2,516,333 2,619,150 
 
 Loans held for sale (at fair value) 4,391 3,151 
 
 Loans 10,062,940 8,144,724 
 Less: Allowance for credit losses ( 148,931 ) ( 113,895 ) 
 Loans, net of allowance for credit losses 9,914,009 8,030,829 
 
 Bank premises and equipment, net 113,304 116,892 
 Other real estate owned 7,560 2,301 
 Goodwill 732,417 480,319 
 Other intangible assets, net 95,645 75,451 
 Bank owned life insurance 298,974 237,824 
 Net deferred tax assets 113,232 94,457 
 Other assets 331,345 280,212 
 Total Assets $ 14,580,249 $ 12,145,762 
 
 Liabilities 
 Deposits 
 Noninterest demand $ 3,544,981 $ 4,070,973 
 Interest-bearing demand 2,790,210 2,337,590 
 Savings 651,454 1,064,392 
 Money market 3,314,288 1,985,974 
 Other time deposits 803,393 369,389 
 Brokered time certificates 122,347 3,798 
 Time certificates of more than $250,000 550,262 149,479 
 Total Deposits $ 11,776,935 $ 9,981,595 
 
 Securities sold under agreements to repurchase, maturing within 30 days 374,573 172,029 
 FHLB borrowings 
 50,000 150,000 
 Long-term debt, net 106,302 84,533 
 Other liabilities 164,353 149,830 
 Total Liabilities $ 12,472,163 $ 10,537,987 

 
 
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 December 31, 
 (In thousands, except share data) 2023 2022 
 
 Commitments and Contingencies (See “Note 9 - Borrowings” and “Note 15 - Contingent Liabilities and Commitments with Off-Balance Sheet Risk”) 
 
 
 Shareholders' Equity 
 Common stock, par value $ 0.10 per share authorized 120,000,000 shares, issued 85,480,183 and outstanding 84,861,498 shares in 2023 and authorized 120,000,000 shares, issued 72,099,136 and outstanding 71,617,852 shares in 2022 
 8,486 7,162 
 Additional paid-in capital 1,808,883 1,377,802 
 Retained earnings 467,305 423,863 
 Less: Treasury stock ( 618,685 shares in 2023 and 481,284 shares in 2022), at cost 
 ( 16,710 ) ( 13,019 ) 
 2,267,964 1,795,808 
 Accumulated other comprehensive loss, net ( 159,878 ) ( 188,033 ) 
 Total Shareholders' Equity $ 2,108,086 $ 1,607,775 
 Total Liabilities & Shareholders' Equity $ 14,580,249 $ 12,145,762 

 See notes to consolidated financial statements. 
 
 
 
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 SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES 
 CONSOLIDATED STATEMENT OF CASH FLOWS 
 
 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Cash Flows From Operating Activities 
 Net Income $ 104,033 $ 106,507 $ 124,403 
 
 Adjustments to reconcile net income to net cash provided by operating activities: 
 Depreciation 8,245 6,115 5,482 
 (Accretion of discounts) and amortization of premiums on securities, net ( 949 ) 576 6,220 
 Amortization of operating lease right-of-use assets 8,053 6,485 4,576 
 Other amortization and accretion, net ( 15,875 ) ( 1,967 ) ( 13,908 ) 
 Stock based compensation 13,440 11,155 8,685 
 Origination of loans designated for sale ( 113,151 ) ( 186,504 ) ( 490,426 ) 
 Sale of loans designated for sale 116,563 221,199 543,410 
 Provision for credit losses 37,518 26,183 ( 9,421 ) 
 Deferred income taxes 9,442 ( 10,398 ) 3,836 
 Losses on sale of securities 2,935 — 363 
 Gains on sale of loans ( 4,211 ) ( 5,687 ) ( 15,276 ) 
 Losses (gains) on sale and write-downs of other real estate owned 450 ( 1,749 ) ( 635 ) 
 Losses on disposition of fixed assets and write-downs upon transfer of bank premises to other real estate owned 1,842 1,394 817 
 Changes in operating assets and liabilities, net of effects from acquired companies: 
 Net (increase) decrease in other assets ( 8,967 ) 508 ( 42,437 ) 
 Net (decrease) increase in other liabilities ( 8,755 ) 22,042 28,883 
 Net Cash Provided by Operating Activities 150,613 195,859 154,572 
 
 Cash Flows From Investing Activities 
 Maturities and repayments of available-for-sale debt securities 220,114 270,785 546,339 
 Maturities and repayments of held-to-maturity debt securities 69,471 96,925 132,916 
 Proceeds from sale of available-for-sale debt securities 113,400 515,183 84,972 
 Purchases of available-for-sale debt securities ( 100,873 ) ( 693,625 ) ( 1,145,193 ) 
 Purchases of held-to-maturity debt securities — ( 206,065 ) ( 377,159 ) 
 Maturities of time deposits with other banks 1,984 3,237 750 
 Purchases of time deposits with other banks ( 4,605 ) — — 
 Net new loans and principal repayments 110,665 ( 513,343 ) 566,348 
 Purchases of loans held for investment — ( 111,292 ) ( 259,267 ) 
 Proceeds from sale of other real estate owned 577 15,951 5,598 
 Additions to other real estate owned — ( 591 ) ( 2,513 ) 
 Proceeds from sale of FHLB and Federal Reserve Bank stock 73,473 — 3,945 
 Purchase of FHLB and Federal Reserve Bank stock ( 88,141 ) ( 11,924 ) ( 3,020 ) 
 Redemption of bank owned life insurance — 25,782 — 
 Purchase of bank owned life insurance — ( 25,000 ) ( 60,000 ) 
 Net cash from bank acquisitions 141,674 281,747 98,100 
 Additions to bank premises and equipment ( 10,293 ) ( 12,645 ) ( 4,327 ) 
 Net Cash Provided by (Used in) Investing Activities 
 527,446 ( 364,875 ) ( 412,511 ) 

 
 
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 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Cash Flows From Financing Activities 
 Net (decrease) increase in deposits ( 324,002 ) ( 384,403 ) 640,108 
 Net increase in repurchase agreements 202,544 50,464 1,956 
 Net decrease in FHLB borrowings with original maturities of three months or less ( 280,000 ) ( 62,500 ) — 
 Repayments of FHLB borrowings with original maturities of more than three months ( 75,000 ) ( 7,500 ) ( 33,000 ) 
 Proceeds from FHLB borrowings with original maturities of more than three months 110,000 75,000 — 
 Stock based employee benefit plans 5,100 3,408 5,022 
 Repurchase of common stock ( 10,868 ) — — 
 Dividends paid ( 60,591 ) ( 41,242 ) ( 22,506 ) 
 Net Cash (Used in) Provided by Financing Activities ( 432,817 ) ( 366,773 ) 591,580 
 Net increase (decrease) in cash and cash equivalents 
 245,242 ( 535,789 ) 333,641 
 Cash and Cash Equivalents at Beginning of Year 201,940 737,729 404,088 
 Cash and Cash Equivalents at End of Year $ 447,182 $ 201,940 $ 737,729 
 
 Supplemental disclosure of cash flow information: 
 Cash paid during the period for interest $ 191,225 $ 13,743 $ 9,977 
 Net (refund received) cash paid during the period for taxes ( 5,921 ) 29,591 30,887 
 Recognition of operating lease right-of-use assets, other than through bank acquisition, net of terminations 2,068 3,370 12,459 
 Recognition of operating lease liabilities, other than through bank acquisition, net of terminations 2,080 3,370 12,459 
 
 Supplemental disclosure of non-cash investing activities: 1 
 
 Transfer of debt securities from available-for-sale to held-to-maturity $ — $ — $ 210,805 
 
 Unsettled sales of debt securities available-for-sale — — 17,147 
 
 Transfer from bank premises to other real estate owned 6,286 1,674 3,318 
 1 See "Note 17 - Business Combinations" for non cash transactions related to business combinations. 
 

 
 See notes to consolidated financial statements. 
 
 
 
 
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 SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 
 
 
 Accumulated
Other 
 Common Stock Paid-in Retained Treasury Comprehensive 
 (Dollars and shares in thousands) Shares Amount Capital Earnings Stock Income (Loss) Total 
 Balance at December 31, 2020 55,243 $ 5,524 $ 856,092 $ 256,701 $ ( 8,285 ) $ 20,370 $ 1,130,402 
 Comprehensive income (loss) — — — 124,403 — ( 27,364 ) 97,039 
 Stock based compensation expense 23 — 8,685 — — — 8,685 
 Common stock issued for stock based employee benefit plans 167 19 ( 49 ) — ( 2,284 ) — ( 2,314 ) 
 Common stock issued for stock options 384 38 7,298 — — — 7,336 
 Issuance of common stock, pursuant to acquisitions 2,687 269 86,218 — — — 86,487 
 Conversion of options, pursuant to acquisition — — 5,607 — — — 5,607 
 Dividends on common stock ($ 0.39 per share) 
 — — — ( 22,506 ) — — ( 22,506 ) 
 Balance at December 31, 2021 58,504 $ 5,850 $ 963,851 $ 358,598 $ ( 10,569 ) $ ( 6,994 ) $ 1,310,736 
 Comprehensive income (loss) — — — 106,507 — ( 181,039 ) ( 74,532 ) 
 Stock based compensation expense 21 — 11,155 — — — 11,155 
 Common stock issued for stock based employee benefit plans 367 40 ( 97 ) — ( 2,450 ) — ( 2,507 ) 
 Common stock issued for stock options 522 52 5,864 — — — 5,916 
 Issuance of common stock, pursuant to acquisition 12,204 1,220 396,016 — — — 397,236 
 Conversion of options, pursuant to acquisition — — 1,013 — — — 1,013 
 Dividends on common stock ($ 0.64 per share) 
 — — — ( 41,242 ) — — ( 41,242 ) 
 
 Balance at December 31, 2022 71,618 $ 7,162 $ 1,377,802 $ 423,863 $ ( 13,019 ) $ ( 188,033 ) $ 1,607,775 
 Comprehensive income — — — 104,033 — 28,155 132,188 
 Stock based compensation expense 30 — 13,440 — — — 13,440 
 Common stock issued for stock based employee benefit plans 970 100 8,691 — ( 3,691 ) — 5,100 
 
 Issuance of common stock, pursuant to acquisition 12,792 1,279 409,459 — — — 410,738 
 Conversion of options, pursuant to acquisition — — 10,304 — — — 10,304 
 Repurchase of common stock ( 549 ) ( 55 ) ( 10,813 ) — — — ( 10,868 ) 
 Dividends on common stock ($ 0.71 per share) 
 — — — ( 60,591 ) — — ( 60,591 ) 
 
 Balance at December 31, 2023 84,861 $ 8,486 $ 1,808,883 $ 467,305 $ ( 16,710 ) $ ( 159,878 ) $ 2,108,086 

 
 See notes to consolidated financial statements. 
 
 
 
 
 
 
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 N OTES TO C ONSOLIDATED F INANCIAL S TATEMENTS 
 
 
 
 Seacoast Banking Corporation of Florida and Subsidiaries 
 Note 1 - Significant Accounting Policies 
 General: Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) is a single segment financial holding company with one operating subsidiary bank, Seacoast National Bank (“Seacoast Bank”). The Company provides integrated financial services including commercial and consumer banking, wealth management, and mortgage and insurance services to customers at 77 full-service branches across Florida, and through advanced mobile and online banking solutions. 
 The consolidated financial statements include the accounts of Seacoast and all its majority-owned subsidiaries but exclude trusts created for the issuance of trust preferred securities. In consolidation, all significant intercompany accounts and transactions are eliminated. 
 The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America, and they conform to general practices within the applicable industries. Certain prior period amounts have been reclassified to conform to the current period presentation. 
 Use of Estimates: The preparation of consolidated financial statements requires management to make judgments in the application of certain accounting policies that involve significant estimates and assumptions. The Company has established policies and control procedures that are intended to ensure valuation methods are well controlled and applied consistently from period to period. These estimates and assumptions, which may materially affect the reported amounts of certain assets, liabilities, revenues and expenses, are based on information available as of the date of the financial statements, and changes in this information over time and the use of revised estimates and assumptions could materially affect amounts reported in subsequent financial statements. Specific areas, among others, requiring the application of management’s estimates include the determination of the allowance for credit losses, acquisition accounting and purchased loans, intangible assets and impairment testing, and other fair value measurements . 
 Cash and Cash Equivalents: Cash and cash equivalents include cash and due from banks and interest-bearing bank balances. Cash equivalents have original maturities of three months or less, and accordingly, the carrying amount of these instruments is deemed to be a reasonable estimate of fair value. 
 Time Deposits with Other Banks: Time deposits with other banks consist of certificates of deposit with original maturities greater than three months and are carried at cost. 
 Securities Purchased and Sold Agreements: Securities purchased under resale agreements and securities sold under repurchase agreements are generally accounted for as collateralized financing transactions and are recorded at the amount at which the securities were acquired or sold plus accrued interest. It is the Company’s policy to take possession of securities purchased under resale agreements, which are primarily U.S. government and government agency securities. The fair value of securities purchased and sold is monitored and collateral is obtained from or returned to the counterparty when appropriate. 
 Securities: Debt securities are classified as available-for-sale or held-to-maturity. Debt securities available-for-sale may be sold as part of the Company's asset/liability management or in response to, or in anticipation of, changes in interest rates and resulting prepayment risk, or for other factors, and are stated at fair value. Unrealized gains or losses are reflected as a component of shareholders' equity net of tax or included in noninterest income as appropriate. Debt securities held-to-maturity that the Company has the ability and intent to hold to maturity are carried at amortized cost. Equity securities with readily determinable fair values are considered marketable and measured at fair value with unrealized gains or losses included in noninterest income as securities gains or losses. Equity investments that do not have readily determinable fair values are considered non-marketable and are accounted for at cost under the measurement alternative to fair value, with adjustments for impairment and observable price changes if applicable. 
 The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flow analyses, using observable market data where available. 
 Realized gains and losses are included in noninterest income as investment securities gains (losses). Interest and dividends on securities, including amortization of premiums and accretion of discounts on debt securities, is recognized in interest income on an accrual basis using the interest method. The Company anticipates prepayments of principal in the calculation of the effective yield for collateralized mortgage obligations and mortgage backed securities by obtaining estimates of prepayments from 
 
 
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 independent third parties. The adjusted cost of each specific security sold is used to compute realized gains or losses on the sale of securities on a trade date basis. 
 Credit losses on securities: For securities classified as held-to-maturity, management estimates expected credit losses over the remaining expected life and recognizes this estimate as an allowance for credit losses. Debt securities that are available-for-sale are considered impaired if the fair value is less than amortized cost. Impairments are analyzed at an individual security level on a quarterly basis and both quantitative and qualitative assessments are utilized to determine if a security has a credit loss. Qualitative assessments consider a range of factors including: percent decline in fair value, rating downgrades, subordination, duration, amortized loan-to-value, and the ability of the issuers to pay all amounts due in accordance with the contractual terms. Quantitative assessments are based on a discounted cash flow analysis, which includes evaluating the timing and amount of the expected cash flows. If any portion of the decline in fair value is related to credit, then the credit loss is recognized as an allowance for credit loss and the noncredit portion is recognized in other comprehensive income. 
 
 
 For securities classified as available-for-sale, both quantitative and qualitative assessments are utilized to determine if a security has a credit loss. Quantitative assessments are based on a discounted cash flow method. Qualitative assessments consider a range of factors including: percent decline in fair value, rating downgrades, subordination, duration, amortized loan-to-value, and the ability of the issuers to pay all amounts due in accordance with the contractual terms. 
 Loans Held for Sale: The Company has elected to account for residential mortgage loans originated as held for sale at fair value. Changes in fair value are measured and recorded in Mortgage Banking Fees in noninterest income each period. The Company designates other loans as held for sale when it has the intent to sell them. These loans are recorded at the lower of cost or estimated fair value on an individual basis. When such loans are transferred to held for sale, any previously recorded allowance for credit losses is reversed into earnings and the loan is recorded at its amortized cost basis. Prior to the transfer, write-downs on the loans are recorded as charge-offs, establishing a new cost basis upon transfer. 
 Loans Held for Investment: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are considered held for investment. Loans originated by Seacoast and held for investment are recognized at the principal amount outstanding, net of unearned income and amounts charged off. Unearned income includes discounts, premiums and deferred loan origination fees reduced by loan origination costs. Unearned income on loans is amortized to interest income over the life of the related loan using the effective interest rate method. Interest income is recognized on an accrual basis. 
 Loans acquired through business acquisitions are recorded at fair value on the acquisition date. Loans that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination are classified as purchased credit deteriorated (“PCD”). Acquired loans that do not meet the definition of PCD are classified by the Company as acquired Non-PCD. Expected credit losses on loans not considered PCD are recognized through the provision for credit losses when the initial allowance is recorded. 
 A loan for which the terms have been modified with principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay or a term extension and for which the borrower is experiencing financial difficulty, is considered to be a troubled borrower modification ("TBM"). 
 Allowance for credit losses on loans: The allowance for credit losses represents management's best estimate of expected credit losses related to the loan portfolio at the balance sheet date. The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount to be collected on loans. Loan balances deemed uncollectible are charged off against the allowance for credit losses and recoveries are credited to the allowance. In order to adjust the allowance to the current estimate of expected credit losses, charges or credits to the provision for credit losses are reflected in the Consolidated Statements of Income. The Company excludes accrued interest on loans from its determination of allowance. 
 Portfolio segments represent the level at which the Company develops and documents its methodology for determining its allowance for credit losses. See Note 4 - Loans, for a description of each of the segments, which are disaggregated by similar risk characteristics such as customer and/or collateral type. 
 The allowance for credit losses is measured on a collective basis when similar risk characteristics exist. Management establishes the allowance using relevant available information from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Economic forecast data is sourced from Moody’s Analytics (“Moody’s”), a firm recognized for its research, analysis, and economic forecasts. The forecasts of future economic conditions are over a period that has been deemed reasonable and supportable, and in segments where it can no longer develop reasonable and supportable forecasts, the Company reverts to longer-term historical loss experience to estimate losses over the remaining life of the loans. The forecast may utilize one scenario or a composite of scenarios based on management's judgment and 
 
 
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 expectations around the current and future macroeconomic outlook. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. 
 In the implementation of CECL at January 1, 2020 and through June 30, 2022, the Company utilized a top-down allowance model based on an analysis of the probability of default (“PD”) and loss given default (“LGD”) to determine an expected loss by loan segment. During the third quarter of 2022, the Company transitioned to a tool that calculates the quantitative portion of expected credit losses at the individual loan level using a discounted cash flow methodology for its commercial loans and using a loss rate methodology for its consumer loans. The Moody's tool being utilized produces more granular results, incorporates more extensive historical loss data, and allows for a more efficient process. This change did not result in a material impact to the Company’s financial statements. 
 Adjustments may be made to baseline reserves based on an assessment of internal and external influences on credit quality not fully reflected in the quantitative components of the allowance model. These influences may include elements such as changes in concentration, macroeconomic conditions, recent observable asset quality trends, staff turnover, regional market conditions, employment levels, model risk, and loan growth. Based upon management's assessments of these factors, the Company may apply qualitative adjustments to the allowance. 
 Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. For loans that are individually evaluated, the allowance is determined through review of data specific to the borrower and the related collateral, if any. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. 
 The allowance for PCD loans is determined at the time of acquisition as the estimated expected credit loss of the outstanding balance or par value, based on the methodologies described previously for loans. The allowance recognized at acquisition is added to the acquisition date purchase price to determine the asset’s amortized cost basis. 
 It is the Company's practice to ensure that the charge-off policy aligns with regulatory requirements. Losses on unsecured consumer loans are recognized at 90 days past due. In compliance with Federal Financial Institution Examination Council guidelines, secured consumer loans, including residential real estate, are typically charged off or charged down between 120 and 180 days past due, depending on the collateral type. Commercial loans and real estate loans are typically placed on nonaccrual status when principal or interest is past due for 90 days or more, unless the loan is both secured by collateral having realizable value sufficient to discharge the debt in-full and the loan is in process of collection. Secured loans may be charged down to the estimated value of the collateral with previously accrued unpaid interest reversed against interest income. Subsequent charge-offs may be required as a result of changes in the market value of collateral or other repayment prospects. Initial charge-off amounts are based on valuation estimates derived from appraisals or other market information. Generally, new appraisals are not received until the foreclosure process is completed; however, collateral values are evaluated periodically based on market information and incremental charge-offs are recorded if it is determined that collateral values have declined from their initial estimates. 
 Derivative Instruments and Hedging Activities : The Company enters into derivative contracts, including swaps and floors, to meet the needs of customers who request such services and to manage the Company's exposure to interest rate fluctuations. Derivative contracts are carried at fair value and recorded in the consolidated balance sheet within Other Assets or Other Liabilities. The gain or loss resulting from changes in the fair value of interest rate swaps designated and qualifying as cash flow hedging instruments is initially reported as a component of other comprehensive income and subsequently reclassified into earnings through interest income in the same period in which the hedged transaction affects earnings. The gain or loss resulting from changes in the fair value of interest rate swaps designed as fair value hedges is classified in the statement of income or comprehensive income in the line item associated with the instrument being hedged. 
 The Company discontinues hedge accounting prospectively when it is determined that the derivative contract is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative expires or is terminated, management determines that the designation of the derivative as a hedging instrument is no longer appropriate or, for a cash flow hedge, the occurrence of the forecasted transaction is no longer probable. When hedge accounting on a cash flow hedge is discontinued, any subsequent changes in fair value of the derivative are recognized in earnings. The cumulative unrealized gain or loss related to a discontinuing cash flow hedge continues to be reported in Accumulated Other Comprehensive Income (“AOCI”) and is subsequently reclassified into earnings in the same period in which the hedged transactions affects earnings, unless it is probable that the forecasted transaction will not occur by the end of the originally specified time period, in which case the cumulative unrealized gain or loss in AOCI is reclassified into earnings immediately. 
 Cash flows resulting from derivative financial instruments that are accounted for as hedges are classified in the cash flow statement in the same category as the cash flows from the hedged items. 
 
 
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 See additional disclosures related to derivative instruments and hedging activities in “Note 6 – Derivatives”. 
 Loan Commitments and Letters of Credit: Loan commitments and letters of credit are an off-balance sheet item and represent commitments to make loans or lines of credit available to borrowers. The face amount of these commitments represents an exposure to loss, before considering customer collateral or ability to repay. Such commitments are recognized as loans when funded. The Company estimates a reserve for potential losses on unfunded commitments, which is reported separately from the allowance for credit losses within Other Liabilities. Changes to the allowance for credit losses on unfunded commitments are recorded in noninterest expense on the income statement. The reserve is based upon the same quantitative and qualitative factors applied to the collectively evaluated loan portfolio. Fees on commitments are typically deferred and amortized to interest income over the life of the related loan, beginning with the initial borrowing. 
 Fair Value Measurements: The Company measures or monitors the fair value of many of its assets and liabilities. Certain assets are measured on a recurring basis, including available-for-sale securities, equity securities and derivatives. These assets are carried at fair value on the Company’s balance sheets. Additionally, fair value is measured on a non-recurring basis to evaluate assets or liabilities for impairment. Examples include collateral-dependent loans, other real estate owned, loan servicing rights, and long-lived assets. 
 Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value. 
 The Company applies the following fair value hierarchy: 
 Level 1 – Assets or liabilities for which the identical item is traded on an active exchange, such as publicly-traded instruments. 
 Level 2 – Assets and liabilities valued based on observable market data for similar instruments. 
 Level 3 – Assets and liabilities for which significant valuation assumptions are not readily observable in the market; instruments valued based on the best available data, some of which is internally-developed, and considers risk premiums that a market participant would require. 
 When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to market observable data for similar assets and liabilities. Certain assets and liabilities are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement. 
 Bank Premises and Equipment: Bank premises and equipment are stated at cost, less accumulated depreciation and amortization. Premises and equipment include certain costs associated with the acquisition of leasehold improvements. Depreciation and amortization are recognized principally by the straight-line method, over the estimated useful lives as follows: buildings - 25 - 40 years, leasehold improvements - 5 - 25 years, furniture and equipment - 3 - 12 years. Leasehold improvements amortize over the shorter of the lease term or estimated useful life. Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable. If impaired, the assets are written down to fair value with a corresponding increase to noninterest expense. 
 Other Real Estate Owned: Other real estate owned (“OREO”) consists of real estate taken in foreclosure of defaulted loan balances. These assets are carried at an amount equal to the loan balance prior to foreclosure plus costs incurred for improvements to the property, but no more than the estimated fair value of the property less estimated selling costs. Any valuation adjustments required at the date of transfer are charged to the allowance for credit losses. Subsequently, unrealized losses and realized gains and losses are included in other noninterest expense. Operating results from OREO are recorded in other noninterest expense. 
 OREO may also include bank premises no longer utilized in the course of the Company's business (closed branches) that are initially recorded at the lower of carrying value or fair value, less costs to sell. If the fair value of the premises is less than carrying value, a write down is recorded through noninterest expense. Costs to maintain the property are expensed. 
 Intangible Assets. The Company’s intangible assets consist of goodwill, core deposit intangibles (CDIs), customer relationship intangibles and loan servicing rights. Goodwill results from business combinations and represents the difference between the purchase price and the fair value of net assets acquired. Goodwill may be adjusted for up to one year from the acquisition date in the event new information is obtained which, if known at the date of the acquisition, would have impacted the fair value of 
 
 
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 the acquired assets and liabilities. Goodwill is considered to have an indefinite useful life and is not amortized, but rather tested for impairment annually in the fourth quarter, or more often if circumstances arise that may indicate risk of impairment. If impaired, goodwill is written down with a corresponding impact to noninterest expense. 
 The Company recognizes CDI that results from either whole bank acquisitions or branch acquisitions. CDI is initially measured at fair value and then amortized over periods ranging from six to eight years generally on an accelerated basis. Customer relationship intangibles are measured at fair value and amortized on a straight-line basis over ten years . The Company evaluates other identifiable intangibles for impairment annually, or more often if circumstances arise that may indicate risk of impairment. If impaired, the intangible asset is written down with a corresponding increase to noninterest expense. 
 Bank Owned Life Insurance (BOLI): The Company, through its subsidiary bank, has purchased or acquired through bank acquisitions, life insurance policies on certain key executives and members of management. BOLI is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. 
 Other Investments: Included in Other Assets are investments in funds generating affordable housing tax credits, and investments in Small Business Investment Companies (“SBICs”), which are privately owned and operated companies licensed by the U.S. Small Business Administration (“SBA”) to invest in small businesses. Investments generating tax credits are accounted for using the proportional amortization method. Under this method, the investor amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits allocated to the investor. The amortization is recorded in income tax expense within the income statement, which is the location the related tax credits are recorded. SBIC investments are held at cost less impairment, if any. Income from SBIC investments is recognized in noninterest income. Seacoast Bank is a member of the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) systems. Members are required to own a certain amount of FHLB and FRB stock based on the level of borrowings and other factors, and may invest in additional amounts. The FHLB and FRB stock are accounted for at cost less impairment, if any. Both cash and stock dividends are recognized in earnings. 
 Leases: Arrangements are analyzed at inception to determine the existence of a lease. Right-of-use assets (ROUAs) represent the right to use the underlying asset and lease liabilities represent the obligation to make lease payments for the lease term. Operating lease ROUAs and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the appropriate term and information available at commencement date in determining the present value of lease payments. The lease term may include options to extend the lease when it is reasonably certain that the option will be exercised. ROUAs and operating lease liabilities are reported in Other Assets and Other Liabilities, respectively, in the Consolidated Balance Sheet. Lease expense for lease payments is recognized on a straight-line basis over the lease term and is classified as Occupancy or Furniture and Equipment expense based on the subject asset. 
 Revenue Recognition: The Company recognizes two types of revenue in its Consolidated Statements of Income, interest income and noninterest income. The Company's principal source of revenue is interest income from loans and securities which is recognized on an accrual basis using the effective interest method. 
 Noninterest income includes revenue from various types of transactions and services provided to customers. The Company recognizes revenue from contracts with customers as performance obligations are satisfied. Performance obligations are typically satisfied in one year or less. Relevant activity includes: 
 • Service Charges on Deposits: Seacoast Bank offers a variety of deposit-related services to its customers through several delivery channels including branch offices, ATMs, telephone, mobile, and internet banking. Transaction-based fees are recognized when services, each of which represents a performance obligation, are satisfied. Service fees may be assessed monthly, quarterly, or annually; however, the account agreements to which these fees relate can be canceled at any time by Seacoast and/or the customer. Therefore, the contract term is considered a single day (a day-to-day contract). 
 • Wealth Management Income: The Company earns trust fees from fiduciary services provided to trust customers, which include custody of assets, recordkeeping, collection and distribution of funds. Fees are earned over time and accrued monthly as the Company provides services, and are generally assessed based on the market value of the trust assets under management at a particular date or over a particular period. The Company also earns commissions and fees from investment brokerage services provided to its customers through an arrangement with a third-party service provider. Commissions received from the third-party service provider are recorded monthly and are based upon customer activity. Fees are earned over time and accrued monthly as services are provided. The Company acts as an agent in this arrangement and therefore presents the brokerage commissions and fees net of related costs. 
 
 
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 • Interchange Income: Fees earned on card transactions depend upon the volume of activity, as well as the fees permitted by the payment network. Such fees are recognized by the Company upon fulfilling its performance obligation to approve the card transaction. 
 • Insurance Agency Income: Insurance commissions are earned upon the sale of insurance products as agent and are paid by the insurance companies upon the completion of application requirements and receipt of client payment to the insurance company. The commissions are recognized upon the placement date of the insurance policies, representing the Company’s related performance obligations. Commission payment is normally received within the policy period. 
 Treasury Stock and Share Repurchases: The Company's repurchases of shares of its common stock are recorded at cost as additional paid-in capital and result in a reduction of shareholders' equity. Shares repurchased in 2023 pursuant to the Company's share repurchase program were immediately retired, and therefore were not included in treasury stock. Activity in treasury stock represents shares traded to offset employee payroll taxes on vested shares. Shares held in treasury are also used for employee share purchases through the Company's employee stock purchase plan. 
 Stock-Based Compensation: The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with market assumptions. The fair value is amortized on a straight-line basis over the vesting period, generally five years . For restricted stock awards, which generally vest based on continued service with the Company, the deferred compensation is measured as the fair value of the shares on the date of grant, and the deferred compensation is amortized as salaries and wages expense in accordance with the applicable vesting schedule, generally straight-line over three years . Some award shares vest based upon the Company achieving certain performance goals and the amortization expense recorded within salaries and wages is based on an estimate of the most likely results on a straight line basis. The Company accounts for forfeitures as they occur. 
 Income Taxes : Deferred tax assets and liabilities are determined based on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and their related tax bases and are measured using the enacted tax rates and laws that are in effect. A valuation allowance is recognized for a deferred tax asset if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The effect on deferred tax assets and liabilities of a change in rates is recognized as income or expense in the period in which the change occurs. 
 Recently Adopted Accounting Standards 
 On January 1, 2023, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2022-02, “Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings (“TDRs”) in ASC 310-40, Receivables – Troubled Debt Restructurings by Creditors , and introduces new disclosures related to modifications with borrowers that are experiencing financial difficulties. ASU 2022-02 also requires the disclosure of current-period gross write-offs by year of origination for financing receivables held at amortized cost. Upon adoption, the Company eliminated the separate credit loss estimation process for loans classified as TDRs. The adoption did not have a material impact to the consolidated financial statements. For additional information on the loans modified for borrowers in financial difficulty and for the disclosure of current-period gross write-offs by year of origination, see “Note 4 – Loans.” 
 On January 1, 2023, the Company adopted FASB ASU 2022-01, “Fair Value Hedging - Portfolio Layer Method.” ASU 2022-01 permits the designation of multiple hedging relationships on a single closed portfolio. The guidance also expands the scope of the portfolio layer method to include non-prepayable assets, specifies eligible hedging instruments in a single-layer hedge, and provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method. The adoption did not have a material impact to the consolidated financial statements. For additional information on fair value hedges, see “Note 6 – Derivatives.” 
 Issued Accounting Standards 
 In November 2023, the FASB issued ASU 2023-07, "Improvements to Reportable Segment Disclosures." ASU 2023-07 requires disclosure of significant segment expenses and other segment items on an interim and annual basis. The standard is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. The Company is evaluating the impact of the changes to its existing disclosures. 
 In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures." ASU 2023-09 requires disclosure of specific categories in the income tax rate reconciliation and requires additional information for reconciling items that meet a quantitative threshold. The standard requires an annual disclosure of income taxes paid, net of refunds received, 
 
 
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 disaggregated by federal, state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. The standard is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted. The Company does not expect the adoption of the standard to have a material impact to its disclosures. 
 
 
 
 Note 2 - Earnings Per Share 
 Basic earnings per share are computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are based on the weighted-average number of common shares outstanding during each period, plus common share equivalents, calculated for share-based awards outstanding using the treasury stock method. 
 In 2023 and 2022, options to purchase 344,230 and 1,505 shares of the Company's common stock, respectively, were antidilutive and accordingly were excluded in determining diluted earnings per share. In 2021, no options were antidilutive. 
 
 For the Year Ended December 31, 
 (In thousands, except per share data) 2023 2022 2021 
 Basic earnings per share 
 Net Income $ 104,033 $ 106,507 $ 124,403 
 Total weighted average common stock outstanding 83,800 63,707 56,586 
 Net income per share $ 1.24 $ 1.67 $ 2.20 
 
 Diluted earnings per share 
 Net Income $ 104,033 $ 106,507 $ 124,403 
 
 Total weighted average common stock outstanding 83,800 63,707 56,586 
 Add: Dilutive effect of share-based awards outstanding 
 529 557 502 
 Total weighted average diluted stock outstanding 84,329 64,264 57,088 
 Net income per share $ 1.23 $ 1.66 $ 2.18 
 Net income has not been allocated to unvested restricted stock awards that are participating securities because the amounts that would be allocated are not material to net income per share of common stock. Unvested restricted stock awards that are participating securities represent less than one percent of all of the outstanding shares of common stock for each of the periods presented. 
 

 
 
 
 Note 3 - Securities 
 The amortized cost, gross unrealized gains and losses and fair value of AFS and HTM securities at December 31, 2023 and December 31, 2022 are summarized as follows: 
 
 
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 December 31, 2023 
 (In thousands) Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value 
 Available-for-Sale Debt Securities 
 U.S. Treasury securities and obligations of U.S. government agencies $ 37,718 $ 205 $ ( 478 ) $ 37,445 
 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 1,152,753 780 ( 184,152 ) 969,381 
 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 385,013 2,824 ( 19,565 ) 368,272 
 Private mortgage-backed securities and collateralized mortgage obligations 135,878 36 ( 10,911 ) 125,003 
 Collateralized loan obligations 300,855 11 ( 1,411 ) 299,455 
 Obligations of state and political subdivisions 10,486 — ( 1,096 ) 9,390 
 Other debt securities 26,599 576 ( 101 ) 27,074 
 Totals $ 2,049,302 $ 4,432 $ ( 217,714 ) $ 1,836,020 
 
 Held-to-Maturity Debt Securities 
 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities $ 590,676 $ — $ ( 111,746 ) $ 478,930 
 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 89,637 — ( 10,208 ) 79,429 
 Totals $ 680,313 $ — $ ( 121,954 ) $ 558,359 

 
 
 
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 December 31, 2022 
 (In thousands) Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value 
 Available-for-Sale Debt Securities 
 U.S. Treasury securities and obligations of U.S. government agencies $ 13,813 $ 173 $ ( 339 ) $ 13,647 
 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 1,170,062 539 ( 196,272 ) 974,329 
 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 391,135 — ( 26,811 ) 364,324 
 Private mortgage-backed securities and collateralized mortgage obligations 179,148 70 ( 12,831 ) 166,387 
 Collateralized loan obligations 313,155 — ( 10,251 ) 302,904 
 Obligations of state and political subdivisions 29,350 122 ( 1,731 ) 27,741 
 Other debt securities 22,640 197 ( 427 ) 22,410 
 Totals $ 2,119,303 $ 1,101 $ ( 248,662 ) $ 1,871,742 
 
 Held-to-Maturity Debt Securities 
 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities $ 634,300 $ 64 $ ( 116,711 ) $ 517,653 
 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 113,108 — ( 13,020 ) 100,088 
 Totals $ 747,408 $ 64 $ ( 129,731 ) $ 617,741 

 During the year ended December 31, 2023, debt securities with a fair value of $ 113.4 million were sold, with gross gains of $ 25 thousand and gross losses of $ 3.0 million. During 2022, debt securities with a fair value of $ 515.2 million obtained in bank acquisitions were sold. No gain or loss was recognized on these sales, and there were no other sales of securities in 2022. Debt securities with a fair value of $ 102.1 million were sold during 2021, with gross gains of $ 0.3 million and gross losses of $ 0.6 million. Also included in “Securities losses, net” is an increase of $ 42 thousand in 2023, and decreases of $ 1.1 million and $ 0.2 million in 2022 and 2021, respectively, in the value of investments in mutual funds that invest in CRA-qualified debt securities. 
 At December 31, 2023, debt securities with a fair value of $ 1.7 billion were pledged primarily as collateral for public deposits and secured borrowings. 
 The amortized cost and fair value of securities at December 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because prepayments of the underlying collateral for these securities may occur, due to the right to call or repay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. 
 
 
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 Held-to-Maturity Available-for-Sale 
 (In thousands) Amortized
Cost Fair
Value Amortized
Cost Fair
Value 
 Due in less than one year $ — $ — $ 4,537 $ 4,504 
 Due after one year through five years — — 6,066 6,069 
 Due after five years through ten years — — 9,465 9,362 
 Due after ten years — — 28,136 26,900 
 $ — $ — $ 48,204 $ 46,835 
 
 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities $ 590,676 $ 478,930 $ 1,152,753 $ 969,381 
 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 89,637 79,429 385,013 368,272 
 Private mortgage-backed securities and collateralized mortgage obligations — — 135,878 125,003 
 Collateralized loan obligations — — 300,855 299,455 
 Other debt securities — — 26,599 27,074 
 Totals $ 680,313 $ 558,359 $ 2,049,302 $ 1,836,020 

 The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flows analyses, or using observable market data. The tables below indicate the fair value of available-for-sale debt securities with unrealized losses for which no allowance for credit losses has been recorded. 
 
 December 31, 2023 
 Less than 12 months 12 months or longer Total 1 
 
 (In thousands) Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses 
 U.S. Treasury securities and obligations of U.S. government agencies $ 24,933 $ ( 143 ) $ 3,594 $ ( 335 ) $ 28,527 $ ( 478 ) 
 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 91,867 ( 9,320 ) 826,324 ( 174,832 ) 918,191 ( 184,152 ) 
 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 24,251 ( 1,270 ) 262,666 ( 18,295 ) 286,917 ( 19,565 ) 
 Private mortgage-backed securities and collateralized mortgage obligations 3,945 ( 69 ) 119,475 ( 10,842 ) 123,420 ( 10,911 ) 
 Collateralized loan obligations 60,087 ( 223 ) 232,545 ( 1,188 ) 292,632 ( 1,411 ) 
 Obligations of state and political subdivisions 326 ( 2 ) 9,064 ( 1,094 ) 9,390 ( 1,096 ) 
 Other debt securities 10,579 ( 101 ) — — 10,579 ( 101 ) 
 Totals $ 215,988 $ ( 11,128 ) $ 1,453,668 $ ( 206,586 ) $ 1,669,656 $ ( 217,714 ) 
 1 Comprised of 504 individual securities 
 

 
 
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 December 31, 2022 
 Less than 12 months 12 months or longer Total 1 
 
 (In thousands) Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses 
 U.S. Treasury securities and obligations of U.S. government agencies $ 3,788 $ ( 328 ) $ 249 $ ( 11 ) $ 4,037 $ ( 339 ) 
 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 304,732 ( 33,401 ) 645,115 ( 162,870 ) 949,847 ( 196,271 ) 
 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 341,920 ( 21,555 ) 22,404 ( 5,257 ) 364,324 ( 26,812 ) 
 Private mortgage-backed securities and collateralized mortgage obligations 130,488 ( 8,255 ) 25,234 ( 4,576 ) 155,722 ( 12,831 ) 
 Collateralized loan obligations 242,370 ( 8,343 ) 60,534 ( 1,908 ) 302,904 ( 10,251 ) 
 Obligations of state and political subdivisions 23,804 ( 1,656 ) 425 ( 75 ) 24,229 ( 1,731 ) 
 Other debt securities 11,459 ( 427 ) — — 11,459 ( 427 ) 
 Totals $ 1,058,561 $ ( 73,965 ) $ 753,961 $ ( 174,697 ) $ 1,812,522 $ ( 248,662 ) 
 1 Comprised of 420 individual securities 
 

 At December 31, 2023, the Company had unrealized losses of $ 203.7 million on commercial and residential mortgage-backed securities and collateralized mortgage obligations issued by government-sponsored entities having a fair value of $ 1.2 billion. These securities are either explicitly or implicitly guaranteed by the U.S. government and have a long history of no credit losses. The implied government guarantee of principal and interest payments and the high credit rating of the portfolio provide sufficient basis for the current expectation that there is no risk of loss if default were to occur. Based on the assessment, the Company believes that the unrealized loss positions on these debt securities are a function of changes in investment spreads and interest rate movements and not changes in credit quality, and expects to recover the entire amortized cost basis of these securities. Therefore, at December 31, 2023, no allowance for credit losses has been recorded. 
 At December 31, 2023, the Company had $ 10.9 million of unrealized losses on private label residential and commercial mortgage-backed securities and collateralized mortgage obligations having a fair value of $ 123.4 million. The securities have average credit support of 23 %. Based on the evaluation of available information relevant to collectibility, the Company believes that the unrealized loss positions on these debt securities are a function of changes in investment spreads and interest rate movements and not changes in credit quality and expects to recover the entire amortized cost basis of these securities. Therefore, at December 31, 2023, no allowance for credit losses has been recorded. 
 At December 31, 2023, the Company had $ 1.4 million of unrealized losses in floating rate collateralized loan obligations (“CLOs”) having a fair value of $ 292.6 million. CLOs are special purpose vehicles and those in which the Company has invested are nearly all first-lien, broadly syndicated corporate loans across a diversified band of industries while providing support to senior tranche investors. As of December 31, 2023, all positions held by the Company are in AAA and AA tranches, with average credit support of 35 % and 26 % respectively. The Company evaluates the securities for potential credit losses by modeling expected loan-level defaults, recoveries, and prepayments for each CLO security. Based on the evaluation of available information relevant to collectibility, the Company believes that the unrealized loss positions on these debt securities are a function of changes in investment spreads and interest rate movement and not changes in credit quality, and expects to recover the entire amortized cost basis of these securities. Therefore, at December 31, 2023, no allowance for credit losses has been recorded. 
 At December 31, 2023, the Company had $ 1.1 million of unrealized losses on municipal securities having a fair value of $ 9.4 million. These securities are highly rated issuances of state or local municipalities, all of which are continuing to make timely contractual payments. Based on the evaluation of available information relevant to collectibility, the Company believes that the unrealized loss positions on these debt securities are a function of changes in investment spreads and interest rate movements and not changes in credit quality, and expects to recover the entire amortized cost basis of these securities. As a result, as of December 31, 2023, no allowance for credit losses has been recorded. 
 All HTM debt securities are issued by government-sponsored entities, which are either explicitly or implicitly guaranteed by the U.S. government and have a long history of no credit losses. While the potential for default on these securities may be 
 
 
 86 

 
 

 something greater than zero, the long history with no credit losses, the implied government guarantee of principal and interest payments and the high credit rating of the HTM portfolio provide sufficient basis for the current expectation that there is no risk of loss if default were to occur. As a result, as of December 31, 2023, no allowance for credit losses has been recorded. The Company has the intent and ability to hold these securities until maturity. 
 Included in Other Assets at December 31, 2023, is $ 67.7 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. The Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of these cost method investment securities. Accrued interest receivable on AFS and HTM debt securities of $ 7.9 million and $ 1.1 million, respectively, at December 31, 2023, and $ 7.0 million and $ 1.3 million, respectively, at December 31, 2022, is included in Other Assets . Also included in Other Assets are investments in CRA-qualified mutual funds carried at fair value of $ 13.6 million and $ 8.2 million at December 31, 2023 and December 31, 2022, respectively. 
 At December 31, 2023, the Company held 11,330 shares of Visa Class B stock. The ownership of Visa stock was related to prior ownership in Visa's network while Visa operated as a cooperative, and was recorded on the Company's financial records at a zero basis. In January of 2024, the Company sold all of its Visa Class B stock, receiving net proceeds of $ 4.1 million. 
 
 
 
 Note 4 - Loans 
 Loans held for investment are categorized into the following segments: 
 • Construction and land development: Loans are extended to both commercial and consumer customers which are collateralized by and for the purpose of funding land development and construction projects, including 1-4 family residential construction, multi-family property and non-farm residential property where the primary source of repayment is from proceeds of the sale, refinancing or permanent financing of the property. 
 • Commercial real estate - owner-occupied: Loans are extended to commercial customers for the purpose of acquiring real estate to be occupied by the borrower's business. These loans are collateralized by the subject property and the repayment of these loans is largely dependent on the performance of the company occupying the property. 
 • Commercial real estate - non owner-occupied: Loans are extended to commercial customers for the purpose of acquiring commercial property where occupancy by the borrower is not their primary intent. These loans are viewed primarily as cash flow loans, collateralized by the subject property, and the repayment of these loans is largely dependent on rental income from the successful operation of the property. 
 • Residential real estate: Loans are extended to consumer customers and collateralized primarily by 1-4 family residential properties and include fixed and variable rate mortgages, home equity mortgages, and home equity lines of credit. Loans are primarily written based on conventional loan agency guidelines, including loans that exceed agency value limitations. Sources of repayment are largely dependent on the occupant of the residential property. 
 • Commercial and financial: Loans are extended to commercial customers. The purpose of the loans can be working capital, physical asset expansion, asset acquisition or other business purposes. Loans may be collateralized by assets owned by the borrower or the borrower's business. Commercial loans are based primarily on the historical and projected cash flow of the borrower's business and secondarily on the capacity of credit enhancements, guarantees and underlying collateral provided by the borrower. 
 • Consumer: Loans are extended to consumer customers. The segment includes both installment loans and lines of credit which may be collateralized or non-collateralized. 
 
 
 87 

 
 

 The following tables present net loan balances by segment as of: 
 
 December 31, 2023 
 (In thousands) Portfolio Loans Acquired Non-PCD Loans PCD Loans Total 
 
 Construction and land development $ 519,426 $ 247,654 $ 542 $ 767,622 
 Commercial real estate - owner occupied 1,079,633 552,627 38,021 1,670,281 
 Commercial real estate - non-owner occupied 1,844,588 1,323,222 152,080 3,319,890 
 Residential real estate 1,714,748 710,129 20,815 2,445,692 
 Commercial and financial 1,237,090 318,683 52,115 1,607,888 
 Consumer 175,969 74,854 744 251,567 
 Totals $ 6,571,454 $ 3,227,169 $ 264,317 $ 10,062,940 

 
 December 31, 2022 
 (In thousands) Portfolio Loans Acquired Non-PCD Loans PCD Loans Total 
 
 Construction and land development $ 364,900 $ 201,333 $ 21,100 $ 587,332 
 Commercial real estate - owner occupied 995,154 451,202 31,946 1,478,302 
 Commercial real estate - non-owner occupied 1,695,411 767,138 127,225 2,589,774 
 Residential real estate 1,558,643 271,378 19,482 1,849,503 
 Commercial and financial 1,152,747 185,240 15,238 1,353,225 
 Consumer 177,338 89,458 19,791 286,587 
 Totals $ 5,944,193 $ 1,965,749 $ 234,782 $ 8,144,724 

 The amortized cost basis of loans at December 31, 2023 and 2022 included net deferred costs of $ 43.1 million and $ 35.1 million, respectively. At December 31, 2023, the remaining fair value adjustments on acquired loans were $ 174.0 million, or 4.8 % of the outstanding acquired loan balances, compared to $ 97.7 million, or 4.3 % of the acquired loan balances at December 31, 2022. The discount is accreted into interest income over the remaining lives of the related loans on a level yield basis. 
 Accrued interest receivable is included within Other Assets and was $ 39.4 million and $ 28.2 million at December 31, 2023 and 2022, respectively. 
 Loans to directors and executive officers totaled $ 0.3 million and $ 0.4 million at December 31, 2023 and 2022, respectively. No new loans were originated to officers or directors in 2023. 
 
 
 
 
 
 
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 The following table presents the status of net loan balances as of December 31, 2023 and December 31, 2022. 
 
 December 31, 2023 
 (In thousands) Current Accruing
30-59 Days Past Due Accruing
60-89 Days Past Due Accruing
Greater
Than 90 Days Nonaccrual Total 
 Portfolio Loans 
 Construction and land development $ 519,383 $ 19 $ — $ — $ 24 $ 519,426 
 Commercial real estate - owner occupied 1,078,732 — — — 901 1,079,633 
 Commercial real estate - non-owner occupied 1,840,485 $ 685 — — 3,418 1,844,588 
 Residential real estate 1,701,862 4,373 1,515 169 6,829 1,714,748 
 Commercial and financial 1,221,941 1,372 145 50 13,582 1,237,090 
 Consumer 174,798 763 290 — 118 175,969 
 Total Portfolio Loans $ 6,537,201 $ 7,212 $ 1,950 $ 219 $ 24,872 $ 6,571,454 
 
 Acquired Non-PCD Loans 
 Construction and land development $ 245,674 $ 891 $ 289 $ — $ 800 $ 247,654 
 Commercial real estate - owner occupied 545,374 1,691 133 — 5,429 552,627 
 Commercial real estate - non-owner occupied 1,310,100 11,577 — — 1,545 1,323,222 
 Residential real estate 704,417 2,586 888 153 2,085 710,129 
 Commercial and financial 315,229 50 36 35 3,333 318,683 
 Consumer 71,986 568 618 618 1,064 74,854 
 Total Acquired Non-PCD Loans $ 3,192,780 $ 17,363 $ 1,964 $ 806 $ 14,256 $ 3,227,169 
 
 PCD Loans 
 Construction and land development $ 442 $ 100 $ — $ — $ — $ 542 
 Commercial real estate - owner occupied 34,667 — — — 3,354 38,021 
 Commercial real estate - non-owner occupied 148,308 — — — 3,772 152,080 
 Residential real estate 18,923 497 169 154 1,072 20,815 
 Commercial and financial 34,337 — — — 17,778 52,115 
 Consumer 651 85 8 — — 744 
 Total PCD Loans $ 237,328 $ 682 $ 177 $ 154 $ 25,976 $ 264,317 
 
 Total Loans $ 9,967,309 $ 25,257 $ 4,091 $ 1,179 $ 65,104 $ 10,062,940 
 

 
 
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 December 31, 2022 
 (In thousands) Current Accruing
30-59 Days Past Due Accruing
60-89 Days Past Due Accruing
Greater
Than 90 Days Nonaccrual Total 
 Portfolio Loans 
 Construction and land development $ 364,841 $ — $ — $ — $ 59 $ 364,900 
 Commercial real estate - owner occupied 993,690 — 67 440 957 995,154 
 Commercial real estate - non-owner occupied 1,695,381 — — — 30 1,695,411 
 Residential real estate 1,550,040 1,172 147 — 7,284 1,558,643 
 Commercial and financial 1,143,635 1,065 476 342 7,229 1,152,747 
 Consumer 176,444 550 252 1 91 177,338 
 Total Portfolio Loans $ 5,924,031 $ 2,787 $ 942 $ 783 $ 15,650 $ 5,944,193 
 
 Acquired Non-PCD Loans 
 Construction and land development $ 201,263 $ — $ — $ — $ 70 $ 201,333 
 Commercial real estate - owner occupied 450,109 796 297 — — 451,202 
 Commercial real estate - non-owner occupied 765,633 162 — — 1,343 767,138 
 Residential real estate 270,215 577 — — 586 271,378 
 Commercial and financial 183,953 790 87 — 410 185,240 
 Consumer 87,317 779 616 525 221 89,458 
 Total Acquired Non-PCD Loans $ 1,958,490 $ 3,104 $ 1,000 $ 525 $ 2,630 $ 1,965,749 
 
 PCD Loans 
 Construction and land development $ 20,680 $ — $ — $ — $ 420 $ 21,100 
 Commercial real estate - owner occupied 30,517 23 23 — 1,383 31,946 
 Commercial real estate - non-owner occupied 124,115 — — — 3,110 127,225 
 Residential real estate 17,885 10 — — 1,587 19,482 
 Commercial and financial 11,201 4 — — 4,033 15,238 
 Consumer 17,884 1,001 336 540 30 19,791 
 Total PCD Loans $ 222,282 $ 1,038 $ 359 $ 540 $ 10,563 $ 234,782 
 
 Total Loans $ 8,104,803 $ 6,929 $ 2,301 $ 1,848 $ 28,843 $ 8,144,724 
 

 
 
 
 
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 All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest subsequently received on such loans is accounted for under the cost-recovery method, whereby interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, and future payments are reasonably assured. The Company recognized $ 0.5 million, $ 1.6 million, and $ 1.2 million in interest income on nonaccrual loans during the years ended December 31, 2023, 2022, and 2021, respectively. 
 The following tables present net balances of loans on nonaccrual status and the related allowance for credit losses, if any, as of: 
 
 December 31, 2023 
 (In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans 
 
 Construction and land development $ — $ 824 $ 824 
 Commercial real estate - owner-occupied 4,859 4,825 9,684 
 Commercial real estate - non-owner occupied 3,938 4,797 8,735 
 Residential real estate 1,792 8,194 9,986 
 Commercial and financial 4,868 29,825 34,693 
 Consumer — 1,182 1,182 
 
 Totals $ 15,457 $ 49,647 $ 65,104 

 
 December 31, 2022 
 (In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans 
 Construction and land development $ 615 $ — $ 615 
 Commercial real estate - owner-occupied 957 1,641 2,597 
 Commercial real estate - non-owner occupied 3,347 837 4,184 
 Residential real estate 8,072 1,036 9,109 
 Commercial and financial 4,724 6,891 11,615 
 Consumer 40 683 723 
 Totals $ 17,755 $ 11,088 $ 28,843 

 
 
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 Credit Quality Evaluation 
 The Company utilizes an internal asset classification system as a means of identifying problem and potential problem loans. The following classifications are used to categorize loans under the internal classification system: 
 • Pass: Loans that are not problem loans or potential problem loans are considered to be pass-rated. 
 • Special Mention: Loans that do not currently expose the Company to sufficient risk to warrant classification in the Substandard or Doubtful categories, but possess weaknesses that deserve management’s close attention are deemed to be Special Mention. 
 • Substandard: Loans with the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. 
 • Substandard Impaired: Loans typically placed on nonaccrual and considered to be collateral-dependent. 
 • Doubtful: Loans that have all the weaknesses inherent in those classified Substandard with the added characteristic that the weakness present makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful is likely to be charged off. 
 
 
 
 
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 The following tables present the risk rating of loans and gross charge-offs by year of origination as of: 
 
 December 31, 2023 
 (In thousands) 2023 2022 2021 2020 2019 Prior Revolving Total 
 Construction and Land Development 
 Risk Ratings: 
 Pass $ 80,750 $ 295,043 $ 107,158 $ 20,199 $ 21,942 $ 28,902 $ 210,716 $ 764,710 
 Special Mention — 1,407 — — — 393 289 2,089 
 Substandard — — — — — 499 324 823 
 Substandard Impaired — — — — — — — — 
 Doubtful — — — — — — — — 
 Total $ 80,750 $ 296,450 $ 107,158 $ 20,199 $ 21,942 $ 29,794 $ 211,329 $ 767,622 
 Gross Charge-Offs 
 $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial real estate - owner occupied 
 Risk Ratings: 
 Pass $ 145,642 $ 272,384 $ 281,870 $ 165,475 $ 171,897 $ 551,177 $ 36,952 $ 1,625,397 
 Special Mention — 159 1,335 — 524 9,122 1 11,141 
 Substandard — 5,176 1,041 6,342 7,113 4,387 — 24,059 
 Substandard Impaired — 848 16 649 3 8,104 64 9,684 
 Doubtful — — — — — — — — 
 Total $ 145,642 $ 278,567 $ 284,262 $ 172,466 $ 179,537 $ 572,790 $ 37,017 $ 1,670,281 
 Gross Charge-Offs 
 $ — $ — $ — $ — $ — $ — $ — $ — 
 Commercial real estate - non-owner occupied 
 Risk Ratings: 
 Pass $ 234,226 $ 784,525 $ 657,499 $ 288,747 $ 397,031 $ 841,062 $ 25,954 $ 3,229,044 
 Special Mention — 29,381 2,092 2,964 — 12,120 — 46,557 
 Substandard — 685 8,723 8,332 8,578 8,985 250 35,553 
 Substandard Impaired — — — 1,066 1,849 5,821 — 8,736 
 Doubtful — — — — — — — — 
 Total $ 234,226 $ 814,591 $ 668,314 $ 301,109 $ 407,458 $ 867,988 $ 26,204 $ 3,319,890 
 Gross Charge-Offs 
 $ — $ — $ 11 $ — $ — $ — $ 109 $ 120 
 Residential real estate 
 Risk Ratings: 
 Pass 177,000 450,366 649,086 160,889 95,288 413,719 479,047 2,425,395 
 Special Mention 208 — — — 58 482 4,004 4,752 
 Substandard — — — — — — 1,824 1,824 
 Substandard Impaired 95 — 919 123 314 8,960 3,310 13,721 
 Doubtful — — — — — — — — 
 Total $ 177,303 $ 450,366 $ 650,005 $ 161,012 $ 95,660 $ 423,161 $ 488,185 $ 2,445,692 
 Gross Charge-Offs 
 $ — $ — $ — $ 44 $ — $ 159 $ 153 $ 356 
 

 
 
 93 

 
 

 
 December 31, 2023 
 (In thousands) 2023 2022 2021 2020 2019 Prior Revolving Total 
 Commercial and financial 
 Risk Ratings: 
 Pass $ 315,560 $ 336,071 $ 333,113 $ 127,069 $ 66,165 $ 89,002 $ 269,108 $ 1,536,088 
 Special Mention 136 2,167 1,064 1,005 503 1,103 2,191 8,169 
 Substandard — 9,136 10,810 804 1,002 3,340 3,847 28,939 
 Substandard Impaired — 9,422 10,833 576 4,887 8,502 114 34,334 
 Doubtful — — — — — 358 — 358 
 Total $ 315,696 $ 356,796 $ 355,820 $ 129,454 $ 72,557 $ 102,305 $ 275,260 $ 1,607,888 
 Gross Charge-Offs 
 $ 1,198 $ 117 $ 659 $ 3,007 $ 582 $ 12,584 $ 418 $ 18,565 
 Consumer 
 Risk Ratings: 
 Pass 20,557 66,699 45,534 19,747 20,300 19,080 56,473 248,390 
 Special Mention 5 334 279 77 5 194 65 959 
 Substandard — — — — — — — — 
 Substandard Impaired 66 930 891 103 51 177 — 2,218 
 Doubtful — — — — — — — — 
 Total $ 20,628 $ 67,963 $ 46,704 $ 19,927 $ 20,356 $ 19,451 $ 56,538 $ 251,567 
 Gross Charge-Offs 
 $ 74 $ 1,910 $ 2,218 $ 362 $ 263 $ 666 $ 261 $ 5,754 
 Consolidated 
 
 
 
 
 
 
 Total $ 974,245 $ 2,264,733 $ 2,112,263 $ 804,167 $ 797,510 $ 2,015,489 $ 1,094,533 $ 10,062,940 
 Gross Charge-Offs 
 $ 1,272 $ 2,027 $ 2,888 $ 3,413 $ 845 $ 13,409 $ 941 $ 24,795 

 
 
 
 December 31, 2022 
 (In thousands) 2022 2021 2020 2019 2018 Prior Revolving Total 
 Construction and Land Development 
 Risk Ratings: 
 Pass $ 223,204 $ 209,738 $ 18,239 $ 24,600 $ 12,783 $ 19,022 $ 50,960 $ 558,546 
 Special Mention 14,523 452 — 3,153 — — 15 18,143 
 Substandard — 9,227 — — 959 — — 10,186 
 Substandard Impaired — 52 — — — 405 — 457 
 Doubtful — — — — — — — — 
 Total $ 237,727 $ 219,469 $ 18,239 $ 27,753 $ 13,742 $ 19,427 $ 50,975 $ 587,332 
 Commercial real estate - owner occupied 
 Risk Ratings: 
 Pass $ 215,453 $ 251,638 $ 180,081 $ 185,286 $ 121,568 $ 467,963 $ 32,253 $ 1,454,242 
 Special Mention 694 — 2,363 4,403 2,548 2,869 — 12,877 
 Substandard — — 667 2,625 573 4,444 — 8,309 
 Substandard Impaired — — — 311 294 2,269 — 2,874 
 Doubtful — — — — — — — — 
 Total $ 216,147 $ 251,638 $ 183,111 $ 192,625 $ 124,983 $ 477,545 $ 32,253 $ 1,478,302 
 Commercial real estate - non-owner occupied 
 Risk Ratings: 
 Pass $ 593,364 $ 530,462 $ 231,693 $ 331,173 $ 228,077 $ 575,656 $ 35,326 $ 2,525,751 

 
 
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 Special Mention — 16,257 735 5,438 — 4,975 — 27,405 
 Substandard — 192 19,315 — 5,515 7,412 — 32,434 
 Substandard Impaired — — 1,044 1,849 30 1,261 — 4,184 
 Doubtful — — — — — — — — 
 Total $ 593,364 $ 546,911 $ 252,787 $ 338,460 $ 233,622 $ 589,304 $ 35,326 $ 2,589,774 
 Residential real estate 
 Risk Ratings: 
 Pass $ 270,054 $ 552,950 $ 121,879 $ 77,100 $ 97,900 $ 292,867 $ 423,764 $ 1,836,514 
 Special Mention — — 50 — 25 269 884 1,228 
 Substandard — — — — — 343 85 428 
 Substandard Impaired — — 133 32 83 9,515 1,570 11,333 
 Doubtful — — — — — — — — 
 Total $ 270,054 $ 552,950 $ 122,062 $ 77,132 $ 98,008 $ 302,994 $ 426,303 $ 1,849,503 
 Commercial and financial 
 Risk Ratings: 
 Pass $ 359,833 $ 323,014 $ 142,332 $ 77,562 $ 57,924 $ 58,648 $ 292,818 $ 1,312,131 
 Special Mention 1,244 423 106 474 195 259 2,998 5,699 
 Substandard — 67 942 6,304 1,603 1,683 13,114 23,713 
 Substandard Impaired 5 58 5,109 147 3,642 2,545 176 11,682 
 Doubtful — — — — — — — — 
 Total $ 361,082 $ 323,562 $ 148,489 $ 84,487 $ 63,364 $ 63,135 $ 309,106 $ 1,353,225 
 Consumer 
 Risk Ratings: 
 Pass $ 93,012 $ 77,889 $ 27,982 $ 28,772 $ 11,690 $ 16,480 $ 29,725 $ 285,550 
 Special Mention — — — 250 2 134 30 416 
 Substandard — — 11 — — 191 — 202 
 Substandard Impaired — — 18 55 36 103 207 419 
 Doubtful — — — — — — — — 
 Total $ 93,012 $ 77,889 $ 28,011 $ 29,077 $ 11,728 $ 16,908 $ 29,962 $ 286,587 
 Consolidated 
 
 
 
 
 
 
 Total $ 1,771,386 $ 1,972,420 $ 752,699 $ 749,534 $ 545,447 $ 1,469,313 $ 883,925 $ 8,144,724 

 
 
 
 
 
 
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 Troubled Borrower Modifications 
 The following table presents the amortized cost of troubled borrower modification (TBM) loans that were modified during the year ended December 31, 2023. 
 
 December 31, 2023 
 (In thousands) Term Extension and/or Payment Delay 1 
 % of Total Class of Loans 
 Residential real estate 818 0.03 % 
 Commercial and financial 12,711 0.79 % 
 Consumer 3,988 1.59 % 
 Totals $ 17,517 0.17 % 
 1 At December 31, 2023, there were no unfunded lending related commitments associated with TBMs. 
 

 
 
 
 December 31, 2023 
 (In thousands) Current Accruing
30-59 Days Past Due Accruing
60-89 Days Past Due Accruing
Greater
Than 90 Days Nonaccrual Total 
 Residential real estate 596 — — — 222 818 
 Commercial and financial 244 — — — 12,467 12,711 
 Consumer 3,166 211 156 143 312 3,988 
 Totals $ 4,006 $ 211 $ 156 $ 143 $ 13,001 $ 17,517 

 During the year ending December 31, 2023, there were no subsequent defaults of TBMs. 
 
 
 
 
 96 

 
 
 

 Note 5 - Allowance for Credit Losses 
 Activity in the allowance for credit losses is summarized as follows: 
 
 For the Year Ended December 31, 2023 
 
 (In thousands) Beginning
Balance Initial Allowance on PCD Loans Acquired During the Period Provision
for Credit
Losses Charge-
Offs Recoveries Ending
Balance 
 Construction and land development $ 6,464 $ 5 $ 2,160 $ — $ 8 $ 8,637 
 Commercial real estate - owner occupied 6,051 139 ( 663 ) — 2 5,529 
 Commercial real estate - non-owner occupied 43,258 647 4,315 ( 120 ) 188 48,288 
 Residential real estate 29,605 400 8,858 ( 356 ) 509 39,016 
 Commercial and financial 15,648 17,527 17,644 ( 18,565 ) 2,089 34,343 
 Consumer 12,869 161 5,204 ( 5,754 ) 638 13,118 
 Total $ 113,895 $ 18,879 $ 37,518 $ ( 24,795 ) $ 3,434 $ 148,931 

 
 For the Year Ended December 31, 2022 
 
 (In thousands) Beginning
Balance Initial Allowance on PCD Loans Acquired During the Period Provision
for Credit
Losses Charge-
Offs Recoveries TDR
Allowance
Adjustments Ending
Balance 
 Construction and land development $ 2,751 $ 518 $ 3,127 $ — $ 68 $ — $ 6,464 
 Commercial real estate - owner occupied 8,579 38 ( 2,566 ) — — — 6,051 
 Commercial real estate - non-owner occupied 36,617 880 5,871 ( 179 ) 69 — 43,258 
 Residential real estate 12,811 229 16,284 ( 84 ) 393 ( 28 ) 29,605 
 Commercial and financial 19,744 1,699 ( 5,367 ) ( 1,233 ) 807 ( 2 ) 15,648 
 Consumer 2,813 1,911 8,834 ( 1,415 ) 733 ( 7 ) 12,869 
 
 Total $ 83,315 $ 5,275 $ 26,183 $ ( 2,911 ) $ 2,070 $ ( 37 ) $ 113,895 

 
 For the Year Ended December 31, 2021 
 
 (In thousands) Beginning
Balance Initial Allowance on PCD Loans Acquired During the Period Provision
for Credit
Losses Charge-
Offs Recoveries TDR
Allowance
Adjustments Ending
Balance 
 Construction and land development $ 4,920 $ — $ ( 2,300 ) $ — $ 133 $ ( 2 ) $ 2,751 
 Commercial real estate - owner occupied 9,868 — ( 1,289 ) — — — 8,579 
 Commercial real estate - non-owner occupied 38,266 1,327 ( 1,664 ) ( 1,327 ) 15 — 36,617 
 Residential real estate 17,500 — ( 5,822 ) ( 57 ) 1,196 ( 6 ) 12,811 
 Commercial and financial 18,690 1,719 2,292 ( 3,987 ) 1,030 — 19,744 
 Consumer 3,489 — ( 638 ) ( 727 ) 697 ( 8 ) 2,813 
 Total $ 92,733 $ 3,046 $ ( 9,421 ) $ ( 6,098 ) $ 3,071 $ ( 16 ) $ 83,315 

 
 
 As of December 31, 2023 and 2022, the Company utilized a blend of Moody’s most recent “U.S. Macroeconomic Outlook Baseline” and “Alternative Scenario 3 - Downside - 90th Percentile” scenarios and considered the uncertainty associated with the assumptions in both scenarios, including for the 2023 analysis, the actions taken by the FRB with regard to monetary policy 
 
 
 97 

 
 

 and interest rates and the potential impact of those actions, the conflicts in the Middle East and Russia-Ukraine and the magnitude of the resulting market disruption, and the potential impact of persistent high inflation on economic growth. Outcomes in any or all of these factors could differ from the scenarios identified above, and the Company incorporated qualitative considerations reflecting the risk of uncertain economic conditions, and for additional dimensions of risk that may not be captured in the quantitative model. 
 The following section discusses changes in the level of the allowance for credit losses for the year ended December 31, 2023. 
 In the Construction and Land Development segment, the increase in the allowance is primarily due to an increase in loan balances. In this segment, the primary source of repayment is typically from proceeds of the sale, refinancing, or permanent financing of the underlying property; therefore, industry and collateral type and estimated collateral values are among the relevant factors in assessing expected losses. 
 In the Commercial Real Estate - Owner-Occupied segment, the allowance decreased from the prior year due to changes in loan mix and slight improvements in the forecast for macroeconomic factors. Risk characteristics include but are not limited to, collateral type, note structure, and loan seasoning. 
 In the Commercial Real Estate - Non Owner-Occupied segment, the increase in the allowance reflects higher loan balances and an increase in reserves for individually evaluated loans, partially offset by a decrease in expected losses due to improvements in the forecast for macroeconomic factors. Repayment is often dependent upon rental income from the operation of the underlying property. Loan performance may be adversely affected by general economic conditions or conditions specific to the real estate market, including property types. Collateral type, note structure, and loan seasoning are among the risk characteristics analyzed for this segment. 
 
 
 The Residential Real Estate segment includes first mortgages secured by residential property, and home equity lines of credit. The increase in the allowance reflects higher loan balances. Risk characteristics considered for this segment include, but are not limited to, borrower FICO score, lien position, loan to value ratios, and loan seasoning. 
 In the Commercial and Financial segment, borrowers are primarily small to medium sized professional firms and other businesses, and loans are generally supported by projected cash flows of the business, collateralized by business assets, and/or guaranteed by the business owners. The increase in reserves is due to an increase in loan balances, both through acquisition and organic loan growth, combined with an increase in expected losses on commercial and industrial unsecured loans. Charge-offs for this segment include the charge-off of an $ 11.3 million acquired PCD loan that was fully reserved. Industry, collateral type, estimated collateral values and loan seasoning are among the relevant factors in assessing expected losses. 
 Consumer loans include installment and revolving lines, loans for automobiles, boats, and other personal or family purposes. Risk characteristics considered for this segment include, but are not limited to, collateral type, loan to value ratios, loan seasoning and FICO score. The increase in the reserve during the year reflects higher expected losses due to changes in loan mix, partly offset by a decrease in loan balances. 
 
 
 
 Note 6 – Derivatives 
 
 
 Back-to-Back Swaps 
 The Company offers interest rate swaps when requested by customers to allow them to hedge the risk of rising interest rates on their variable rate loans. Upon entering into these swaps, the Company enters into offsetting positions with counterparties in order to minimize the interest rate risk. These back-to-back swaps are freestanding financial derivatives with the fair values reported in Other Assets and Other Liabilities. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under the arrangements for financial statement presentation purposes. Gains and losses on these back-to-back swaps, which offset, are recorded through noninterest income. 
 Interest Rate Floors Designated as Cash Flow Hedges 
 The Company entered into interest rate floor contracts to mitigate exposure to the variability of future cash flows due to changes in interest rates on certain segments of its variable-rate loans, which matured in the fourth quarter of 2023. The Company considered these derivatives to be highly effective at achieving offsetting changes in cash flows attributable to changes in interest rates and had designated them as cash flow hedges. Therefore, changes in the fair value of these derivative instruments were recognized in other comprehensive income. Amortization of the premium paid on cash flow hedges is recognized in earnings over the term of the hedge in the same caption as the hedged item. For the year ended December 31, 
 
 
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 2023, the Company recognized a nominal amount through other comprehensive income and reclassified $ 0.5 million out of accumulated other comprehensive income into interest income. For the year ended December 31, 2022, the Company recognized $ 0.3 million through other comprehensive income and reclassified $ 0.4 million, respectively, out of accumulated other comprehensive income into interest income. 
 Interest Rate Swaps Designated as Fair Value Hedges 
 The Company entered into interest rate swap contracts to hedge the risk of changes in fair value of the AFS portfolio due to changes in the Secured Overnight Financing Rate ("SOFR"). The Company considers these derivatives to be highly effective at offsetting changes in interest rates and will assess the effectiveness on a quarterly basis. The changes in interest rates affecting the fair value of these derivative contracts are recognized in other comprehensive income. These derivative instruments are primarily for risk management purposes. For the year ended December 31, 2023, the Company recognized gains through other comprehensive income of $ 2.6 million and reclassified gains of $ 35 thousand, out of accumulated other comprehensive income into interest income. 
 The Company entered into interest rate swap contracts to hedge the risk of changes in the fair value of a pool of residential mortgages due to changes in SOFR. These fair values hedges utilize the portfolio layer method. The Company considers these derivatives to be highly effective at offsetting changes in interest rates and will assess the effectiveness on a quarterly basis. The changes in interest rates affecting the fair value of these derivative contracts are recognized in interest income. These derivative instruments are primarily for risk management purposes. For the year ended December 31, 2023, the Company recognized gains through interest income of $ 16 thousand. 
 
 (In thousands) Notional Amount Fair Value Balance Sheet Category 
 December 31, 2023 
 Back-to-back swaps 1 
 $ 605,735 $ 28,804 Other Assets and Other Liabilities 
 
 Securities fair value hedges 400,000 2,677 Other Assets 
 Residential mortgage fair value hedges 200,000 75 Other Liabilities 
 
 December 31, 2022 
 Back-to-back swaps 1 
 $ 312,808 $ 23,140 Other Assets and Other Liabilities 
 Interest rate floors 300,000 2 Other Assets 
 1 Back-to-back swaps include risk participation agreements with notional amounts of $ 9.4 million and nominal fair value. 
 
 

 The following table presents amounts recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges. 
 
 Carrying amount of the hedged items at December 31, 
 Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items at December 31, 
 
 
 (In thousands) 2023 2022 2023 2022 
 Securities available-for-sale 1 
 $ 584,108 $ — $ 2,643 $ — 
 Loans, net 2 
 633,693 — 44 — 
 1 At December 31, 2023, and December 31, 2022, the amortized cost basis and unallocated basis adjustments used in hedging relationships was $ 680.6 million and $ 0 , respectively. Refer to Note 3 for a reconciliation of the amortized cost and fair value of available-for-sale securities. 
 
 2 These amounts represent the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios a nticipated to be outstanding for the designated hedge period. At December 31, 2023, and December 31, 2022, the portfolio layer method was $ 200 million an d $ 0 , respectively, of which $ 200 million and $ 0 , respectively, was designated as hedged.. 
 

 
 
 
 
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 Note 7 - Bank Premises and Equipment 
 Bank premises and equipment consisted of the following: 
 
 (In thousands) Cost Accumulated
Depreciation &
Amortization Net
Carrying
Value 
 December 31, 2023 
 Premises (including land of $ 35,588 ) 
 $ 138,773 $ ( 36,500 ) $ 102,273 
 Furniture and equipment 42,507 ( 31,476 ) 11,031 
 Total $ 181,280 $ ( 67,976 ) $ 113,304 
 
 December 31, 2022 
 Premises (including land of $ 37,516 ) 
 $ 138,447 $ ( 33,037 ) $ 105,410 
 Furniture and equipment 40,354 ( 28,872 ) 11,482 
 Total $ 178,801 $ ( 61,909 ) $ 116,892 

 
 
 
 Note 8 - Goodwill and Acquired Intangible Assets 
 The following table presents changes in the carrying amount of goodwill: 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Beginning of year $ 480,319 $ 252,154 $ 221,176 
 Changes from business combinations 252,098 228,165 30,978 
 Total $ 732,417 $ 480,319 $ 252,154 

 
 
 The Company performs an analysis for goodwill impairment annually in the fourth quarter or more frequently as considered necessary. The Company performed a qualitative goodwill assessment in the fourth quarter of 2023, and concluded that a quantitative goodwill impairment test was not necessary as it was not more likely-than-not that the fair value of the Company’s reporting unit was below the carrying amount. Based on the analyses performed, the Company concluded that goodwill was not impaired during the periods presented. 
 
 
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 Acquired intangible assets primarily consist of core deposit intangibles (“CDI”), which are intangible assets arising from the purchase of deposits separately or from bank acquisitions. The change in balance for CDI is as follows: 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Beginning of year $ 71,285 $ 12,998 $ 14,577 
 Acquired CDI, including measurement period adjustments 49,143 67,388 3,454 
 Amortization expense ( 28,726 ) ( 9,101 ) ( 5,033 ) 
 End of year $ 91,702 $ 71,285 $ 12,998 
 
 
 

 The gross carrying amount and accumulated amortization of the Company's CDI subject to amortization as of: 
 
 December 31, 2023 December 31, 2022 
 (In thousands) Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization 
 Core deposit intangible $ 135,212 $ ( 43,511 ) $ 97,778 $ ( 26,493 ) 

 The annual amortization expense for the Company's CDI for each of the five years subsequent to December 31, 2023 is $ 23.6 million, $ 19.9 million, $ 16.4 million, $ 13.0 million and $ 9.3 million, respectively. 
 Certain customer relationships were acquired in 2022 through the acquisition of Drummond and its insurance agency subsidiary. The gross carrying amount assigned to these relationships as of December 31, 2023 is $ 2.6 million and the accumulated amortization is $ 0.3 million. The intangible asset is being amortized on a straight line basis over 10 years. 
 The carrying value of servicing rights retained from the sale of the guaranteed portion of Small Business Administration (“SBA”) loans totaled $ 1.7 million at December 31, 2023 and 2022. 
 
 
 
 Note 9 - Borrowings 
 A significant portion of the Company's short-term borrowings were comprised of securities sold under agreements to repurchase with overnight maturities: 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 
 Maximum amount outstanding at any month end $ 374,573 $ 172,029 
 Weighted average interest rate at end of year 3.48 % 1.89 % 
 Average amount outstanding $ 270,999 $ 121,318 
 Weighted average interest rate during the year 3.07 % 0.81 % 

 Securities sold under agreements to repurchase are accounted for as secured borrowings. For securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of collateral pledged. Company securities pledged were as follows by collateral type and maturity as of: 
 
 December 31, 
 (In thousands) 2023 2022 
 Fair value of pledged securities - overnight and continuous: 
 Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities $ 396,378 $ 184,967 

 At December 31, 2023, the Company had available secured lines of credit totaling $ 4.5 billion, inclusive of lendable collateral of $ 2.8 billion and $ 1.7 billion at the Federal Reserve and the Federal Home Loan Bank ("FHLB"), respectively. 
 Of the $ 1.7 billion at the FHLB, $ 50.0 million was outstanding at December 31, 2023. During 2023, the average interest rate on FHLB borrowings was 3.64 % and the weighted average interest rate on balances outstanding at December 31, 2023 was 3.23 %. 
 
 
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 The following table summarizes the Company's junior subordinated trust preferred debentures and related common equity securities as of December 31, 2023: 
 
 (In thousands) 
 Description Issuance Date Acquisition Date 1 
 Maturity Date Junior Subordinated Debt Trust Preferred Securities Common Equity Securities Contractual Interest Rate Interest Rate at December 31, 2023 
 SBCF Capital Trust I 3/31/2005 n/a 3/31/2035 $ 20,619 $ 20,000 $ 619 3 month SOFR + 533 bps 
 7.34 % 
 SBCF Statutory Trust II 12/16/2005 n/a 12/16/2035 20,619 20,000 619 3 month SOFR + 538 bps 
 6.98 % 
 SBCF Statutory Trust III 6/29/2007 n/a 6/15/2037 12,372 12,000 372 3 month SOFR + 538 bps 
 7.00 % 
 The BANKshares, Inc. Statutory Trust I 12/19/2002 10/1/2014 12/26/2032 5,155 5,000 155 3 month SOFR + 325 bps 
 8.87 % 
 The BANKshares, Inc. Statutory Trust II 3/17/2004 10/1/2014 3/17/2034 4,124 4,000 124 3 month SOFR + 279 bps 
 8.43 % 
 The BANKshares, Inc. Capital Trust I 12/15/2005 10/1/2014 12/15/2035 5,155 5,000 155 3 month SOFR + 538 bps 
 7.03 % 
 Grand Bank Capital Trust I 10/29/2004 7/17/2015 10/29/2034 7,217 7,000 217 3 month SOFR + 198 bps 
 7.57 % 
 $ 75,261 $ 73,000 $ 2,261 
 1 Acquired junior subordinated debentures were recorded at their acquisition date fair values, which collectively was $ 5.6 million lower than face value; this amount is being amortized into interest expense over the remaining term to maturity. 
 

 Interest on the trust preferred securities is calculated on the basis of 3-month SOFR plus spread and is re-set quarterly. The trust preferred securities may be redeemed without penalty, upon approval of the FRB or upon occurrence of certain events affecting their tax or regulatory capital treatment. The proceeds of the offering of trust preferred securities and common equity securities were used by SBCF Capital Trust I and SBCF Statutory Trust II to purchase the $ 41.2 million junior subordinated deferrable interest notes issued by the Company, and by SBCF Statutory Trust III to purchase the $ 12.4 million junior subordinated deferrable interest notes issued by the Company, all of which have terms substantially similar to the trust preferred securities. 
 The Company has the right to defer payments of interest on the notes at any time or from time to time at the Company's election. Interest can be deferred for a period not longer than five years. If the Company elects to defer interest, it may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock or purchase or acquire any of its capital stock. As of December 31, 2023, 2022 and 2021, all interest payments on trust preferred securities were current. 
 Distributions on the trust preferred securities are payable quarterly. The Company has entered into agreements to guarantee the payments of distributions on the trust preferred securities and payments of redemption of the trust preferred securities. Under these agreements, the Company also agrees, on a subordinated basis, to pay expenses and liabilities of the Trusts other than those arising under the trust preferred securities. The obligations of the Company under the junior subordinated notes, the trust agreement establishing the Trusts, the guarantees and agreements as to expenses and liabilities, in aggregate, constitute a full and conditional guarantee by the Company of the Trusts' obligations under the trust preferred securities. 
 In 2022, the Company obtained $ 12.3 million in senior notes through the acquisition of Apollo. Contractual interest is paid on a semiannual basis at a fixed rate of 5.50 % until April 30, 2025, at which point the rate converts to a floating rate of 3-month SOFR plus 533 basis points. The debt was recorded at fair value, resulting in a $ 0.4 million premium that is being amortized into interest expense over the remaining term to maturity. 
 In 2023, the Company acquired $ 25.0 million in subordinated debt through the acquisition of Professional. Contractual interest is paid on a semiannual basis at a fixed interest rate of 3.375 % until January 30, 2027, at which point the rate converts to a 3-month SOFR rate plus 203 basis points paid quarterly. The debt was recorded at fair value, resulting in a $ 3.9 million discount that is being accreted into interest expense over the remaining term to maturity. 
 
 
 
 
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 Note 10 - Employee Benefits and Stock Compensation 
 The Company’s defined contribution plan covers substantially all employees after one year of service and includes a matching benefit for employees who can elect to defer a portion of their compensation. In addition, amounts of compensation contributed by employees are matched on a percentage basis under the plan. The Company's contributions to this plan charged to expense were $ 4.8 million in 2023, $ 3.5 million in 2022, and $ 3.1 million in 2021. 
 The Company, through its Compensation and Governance Committee of the board of directors (the “Compensation Committee”), offers equity compensation to employees and non-employee directors of Seacoast and Seacoast Bank in the form of various share-based awards, including stock options, restricted stock awards (“RSAs”), or restricted stock units (“RSUs”). The awards may vest over time, have certain performance based criteria, or both. 
 Stock options are granted with an exercise price at least equal to the market price of the Company’s stock at the date of grant. The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model. Compensation cost is amortized on a straight-line basis over the vesting period. Vesting is determined by the Compensation Committee at the time of grant, generally over five years . The options have a maximum term of ten years . 
 The fair value of RSAs and RSUs are estimated based on the price of the Company’s common stock on the date of grant. Compensation cost is measured straight-line for RSAs and ratably for RSUs over the vesting period of the awards and reversed for awards that are forfeited due to unfulfilled service or performance criteria. To the extent the Company has treasury shares available, stock options exercised or stock grants awarded may be issued from treasury shares. If treasury shares are insufficient, the Company can issue new shares. 
 Vesting of share-based awards is immediately accelerated on death or disability of the recipient. The Compensation Committee may, at its discretion, accelerate vesting upon retirement or upon the event of a change-in-control. 
 Awards are currently granted under the Seacoast 2021 Incentive Plan (“2021 Plan”), with 3,750,000 authorized shares for issuance, plus shares of underlying awards outstanding under the 2013 Incentive Plan (the “Prior Plan”) that thereafter terminate or expire unexercised or are cancelled, forfeited or lapse for any reason under the Prior Plan. 
 In 2021, as part of the Legacy Bank acquisition, 356,497 options were granted to replace outstanding Legacy Bank options. These options had a weighted average exercise price of $ 16.70 and were fully vested upon acquisition. The value of the replacement awards associated with pre-combination service, $ 4.7 million, was considered purchase consideration, and the value of the replacement awards associated with post-combination service, $ 0.9 million, was recognized as compensation expense in 2021. 
 In 2022, as part of the acquisitions of BBFC, Sabal Palm and Apollo, 52,432 , 188,253 and 274,373 options, respectively, were granted to replace outstanding options. These options had weighted average exercise prices of $ 26.63 , $ 17.84 and $ 9.94 , respectively, and were fully vested upon acquisition. Additionally, as part of the acquisition of Apollo, 37,240 warrants were granted to replace outstanding Apollo warrants. These warrants had a weighted average exercise price of $ 9.94 and were fully vested upon acquisition. The full value of the options and warrants issued through acquisitions in 2022, $ 10.4 million, was considered purchase consideration. 
 In 2023, as part of the acquisition of Professional, 501,561 options were granted to replace outstanding options. These options had a weighted average exercise price of $ 12.63 and were fully vested upon acquisition. The full value of the options issued through the Professional acquisition was $ 10.3 million and was considered purchase consideration. 
 The impact of share-based compensation on the Company’s financial results is presented below: 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Share-based compensation expense 1 
 $ 13,440 $ 11,155 $ 8,685 
 Income tax benefit ( 3,406 ) ( 2,827 ) ( 2,067 ) 
 1 Excludes $ 10.3 million in 2023, $ 10.4 million in 2022 and $ 4.7 million in 2021 associated with replacement awards granted in bank acquisitions. 
 

 The total unrecognized compensation cost and the weighted-average period over which unrecognized compensation cost is expected to be recognized related to non-vested share-based compensation arrangements at December 31, 2023 is presented below: 
 
 
 103 

 
 

 
 (In thousands) Unrecognized
Compensation
Cost Weighted-Average Period Remaining (Years) 
 Restricted stock awards $ 14,392 1.94 
 Restricted stock units 5,636 2.30 
 
 Total $ 20,028 2.04 

 Restricted Stock Awards 
 RSAs are granted to various employees and vest over time, generally three years . Compensation cost of RSAs is based on the market value of the Company’s common stock at the date of grant and is recognized over the required service period on a straight-line basis. The Company’s accounting policy is to recognize forfeitures as they occur. 
 A summary of the status of the Company’s non-vested RSAs as of December 31, 2023, and changes during the year then ended, is presented below: 
 
 Restricted
Award
Shares Weighted-Average Grant-Date Fair Value 
 Non-vested at January 1, 2023 533,275 $ 31.26 
 Granted 631,409 24.57 
 Forfeited/Canceled ( 112,456 ) 27.35 
 Vested ( 289,016 ) 28.22 
 Non-vested at December 31, 2023 763,212 $ 27.45 

 Information regarding restricted stock awards during each of the following years is presented below: 
 
 For the Year Ended December 31, 
 2023 2022 2021 
 
 Weighted-average grant date fair value $ 24.57 $ 33.08 $ 35.08 
 Fair value of awards vested 1 
 $ 8,156 $ 6,923 $ 4,731 
 1 Based on grant date fair value, in thousands. 
 

 Restricted Stock Units 
 RSUs allow the grantee to earn 0 %- 225 % of the target award based on the Company's achievement of performance goals relating to average annual earnings per share growth and average annual return on average tangible equity relative to a group of peer companies, each measured over a three year period beginning with the year of grant. 
 A summary of the status of the Company’s non-vested RSUs as of December 31, 2023, and changes during the year then ended, is presented below: 
 
 Restricted
Award
Shares Weighted-Average Grant-Date Fair Value 
 Non-vested at January 1, 2023 310,034 $ 28.69 
 Granted 233,175 22.84 
 Forfeited/Canceled ( 47,416 ) 20.58 
 Vested ( 112,092 ) 17.82 
 Non-vested at December 31, 2023 383,701 $ 29.31 

 
 
 104 

 
 

 Information regarding restricted stock units during each of the following years is presented below: 
 
 For the Year Ended December 31, 
 2023 2022 2021 
 
 Weighted-average grant date fair value $ 22.84 $ 34.11 $ 35.24 
 Fair value of awards vested 1 
 $ 1,997 $ 2,305 $ 1,936 
 1 Based on grant date fair value, in thousands. 
 

 Stock Options 
 The fair value of options and warrants granted is estimated on the date of grant using the Black-Scholes options-pricing model. In 2023, 2022, and 2021, options to purchase shares of Seacoast stock were granted to option holders of acquired entities in accordance with the terms of the merger agreements. 
 
 For the Year Ended December 31, 
 2023 2022 2021 
 Risk-free interest rates 4.25 % 2.21 % 0.12 % 
 Expected dividend yield 2.45 % 1.95 % 1.65 % 
 Expected volatility 64.32 % 32.09 % 36.87 % 
 Expected lives (years) 1.8 1.0 1.0 

 A summary of the Company’s stock options as of December 31, 2023, and changes during the year then ended, is presented below: 
 
 Options Weighted-Average Exercise Price 
 Outstanding at January 1, 2023 837,622 $ 21.72 
 Granted in Acquisition 
 501,561 12.63 
 Exercised ( 507,133 ) 14.76 
 Forfeited ( 8,087 ) 20.77 
 Outstanding and Exercisable at December 31, 2023 
 823,963 $ 20.48 
 Weighted-Average Remaining Contractual Term (Years) 3.29 
 Aggregate Intrinsic Value (000s) 
 $ 7,053 
 

 The following table presents information related to stock options during each of the following years: 
 
 For the Year Ended December 31, 
 2023 2022 2021 
 
 Weighted-average grant date fair value $ 12.63 $ 14.28 $ 16.70 
 Intrinsic value of stock options exercised, in thousands 5,969 8,860 5,808 

 
 
 Supplemental Executive Retirement Plan 
 The Company sponsors a Supplemental Executive Retirement Plan (“SERP”), which is a non-qualified deferred compensation arrangement that provides the Company's Chief Executive Officer with supplemental retirement benefits. The present value of the accumulated benefit, which is recorded as an accrued liability, was $ 0.4 million and $ 0.2 million as of December 31, 2023 and 2022, respectively. 
 Employee Stock Purchase Plan 
 The Employee Stock Purchase Plan (“ESPP”) authorizes the Company to issue up to 800,000 common shares of the Company’s common stock to eligible employees of the Company. These shares may be purchased by employees at a price equal to 95 % of the fair market value of the shares on the purchase date. Employee contributions to the ESPP are made through payroll deductions. 
 
 
 105 

 
 

 
 2023 2022 2021 
 ESPP shares purchased 35,630 20,972 14,834 
 Weighted-average employee purchase price $ 22.56 $ 30.76 $ 32.43 

 
 
 
 Note 11 - Lease Commitments 
 The Company is the lessee in various noncancellable operating leases for land, buildings, and equipment. Certain leases contain provisions for variable lease payments that are linked to the consumer price index. Lease cost consists of: 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Operating lease cost $ 10,667 $ 8,111 $ 5,872 
 Variable lease cost 2,827 1,599 996 
 Short-term lease cost 919 427 564 
 Sublease income ( 639 ) ( 704 ) ( 601 ) 
 Total lease cost $ 13,774 $ 9,433 $ 6,831 

 The following table provides supplemental information related to leases: 
 
 As of and For the Year Ended December 31, 
 (In thousands, except for weighted average data) 2023 2022 
 Operating lease right-of-use assets $ 46,772 $ 47,500 
 Operating lease liabilities 50,545 50,770 
 Cash paid during the year for amounts included in the measurement of operating lease liabilities 10,005 16,508 
 
 Right-of-use assets recorded during the year in exchange for new or renewed operating lease obligations 4,139 5,305 
 Right-of-use assets obtained during the year through bank acquisition 3,909 14,597 
 Weighted average remaining lease term for operating leases 7.0 years 8.0 years 
 Weighted average discount rate for operating leases 4.94 % 4.64 % 

 The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If, at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company includes the extended term in the calculation of the lease liability. Maturities of lease liabilities as of December 31, 2023 are as follows: 
 
 
 (In thousands) 
 2024 $ 10,465 
 2025 9,833 
 2026 8,499 
 2027 7,437 
 2028 6,388 
 Thereafter 16,181 
 Total undiscounted cash flows 58,803 
 Less: Net present value adjustment ( 8,258 ) 
 Total $ 50,545 

 
 
 
 
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 Note 12 - Income Taxes 
 The provision for income taxes is as follows: 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Current 
 Federal $ 14,716 $ 2,770 $ 23,661 
 State 6,061 ( 1,266 ) 3,882 
 
 Deferred 
 Federal 9,524 23,710 6,800 
 State ( 82 ) 6,415 ( 8 ) 
 $ 30,219 $ 31,629 $ 34,335 

 The difference between the total expected tax expense (computed by applying the U.S. Federal tax rate of 21% to pretax income) and the reported income tax provision relating to income before income taxes is as follows: 
 
 For the Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Tax rate applied to income before income taxes $ 28,193 $ 29,009 $ 33,335 
 Increase (decrease) resulting from the effects of: 
 
 Nondeductible acquisition costs 300 924 419 
 Tax exempt interest on loans and securities ( 639 ) ( 406 ) ( 414 ) 
 Income from bank owned life insurance ( 2,217 ) ( 935 ) ( 862 ) 
 State income taxes ( 1,256 ) ( 1,081 ) ( 813 ) 
 Tax credit investments ( 402 ) ( 406 ) ( 213 ) 
 Stock compensation ( 446 ) ( 992 ) ( 1,239 ) 
 Executive compensation disallowance 638 402 253 
 Other 69 ( 36 ) ( 5 ) 
 Federal tax provision 24,240 26,479 30,461 
 State tax provision 5,979 5,150 3,874 
 Total income tax provision $ 30,219 $ 31,629 $ 34,335 

 
 
 107 

 
 

 
 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of: 
 
 December 31, 
 (In thousands) 2023 2022 
 Allowance for credit losses $ 40,710 $ 31,097 
 
 Other real estate owned 91 591 
 Accrued stock compensation 4,556 2,931 
 Federal tax loss carryforward 2,660 3,150 
 State tax loss carryforward 1,084 1,117 
 Lease liabilities 12,811 12,868 
 Net unrealized securities losses 50,817 59,392 
 Deferred compensation 2,828 2,766 
 Accrued interest and fee income 34,665 16,035 
 Other 7,027 1,755 
 Gross deferred tax assets 157,249 131,702 
 Less: Valuation allowance — — 
 Deferred tax assets net of valuation allowance 157,249 131,702 
 
 Core deposit intangible ( 24,301 ) ( 18,767 ) 
 
 Net unrealized derivatives gains ( 670 ) — 
 Premises and equipment ( 1,771 ) ( 2,214 ) 
 Right of use assets ( 11,854 ) ( 12,039 ) 
 Other ( 5,421 ) ( 4,225 ) 
 Gross deferred tax liabilities ( 44,017 ) ( 37,245 ) 
 Net deferred tax assets $ 113,232 $ 94,457 

 Included in the table above is the effect of temporary differences associated with the Company's investments in debt securities accounted for under ASC Topic 320, Investments - Debt Securities, for which no deferred tax expense or benefit was recognized. These items are recorded as Accumulated Other Comprehensive Income in the shareholders' equity section of the consolidated balance sheet. In 2023, unrealized losses on debt securities of $ 212.7 million resulted in a deferred tax asset of $ 50.8 million. In 2022, unrealized losses of $ 247.4 million resulted in a deferred tax asset of $ 59.4 million. 
 At December 31, 2023, the Company's net deferred tax assets ("DTAs") of $ 113.2 million consisted of $ 91.0 million of net U.S. federal DTAs and $ 22.2 million of net state DTAs. At December 31, 2022, the Company's net DTAs of $ 94.5 million consisted of $ 76.8 million of U.S. federal DTAs and $ 17.7 million of net state DTAs. 
 Management assesses the necessity of a valuation allowance recorded against DTAs at each reporting period. The determination of whether a valuation allowance for net DTAs is appropriate is subject to considerable judgment and requires an evaluation of positive and negative evidence. Based on an assessment of relevant evidence, including favorable trending in asset quality and certainty regarding the amount of future taxable income that the Company forecasts, management concluded that it was more likely than not that its net DTAs will be realized based upon future taxable income. Management's determination in the realization of projected future taxable income is based upon analysis of the Company's risk profile and its trending financial performance, including credit quality. The Company believes it can reasonably predict future results of operations that result in taxable income at sufficient levels over the future period of time that the Company has available to realize its net DTA. 
 Management expects to realize the $ 113.2 million in net DTAs well in advance of the statutory carryforward period. At December 31, 2023, approximately $ 2.7 million of DTAs related to federal net operating losses which will expire in annual installments beginning in 2029 through 2032. Additionally, $ 1.1 million of the DTAs related to state net operating losses which will expire in annual installments beginning in 2029 through 2034. Remaining DTAs are not related to net operating losses or credits and therefore, have no expiration date. 
 
 
 108 

 
 

 The Company recognizes interest and penalties, as appropriate, as part of the provisioning for income taxes. No interest or penalties were accrued at December 31, 2023. 
 In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company recognized $ 0.5 million, $ 1.1 million and $ 0.9 million in 2023, 2022, and 2021, respectively, of discrete tax benefits related to share-based compensation. 
 In accordance with ASC Topic 323, Investments-Equity Method and Joint Ventures, amortization of the Company's low-income housing credit investments of $ 2.8 million, $ 2.5 million and $ 1.6 million was reflected as income tax expense for the years ended December 31, 2023, 2022, and 2021, respectively. The amounts of affordable housing tax credits, amortization and tax benefits recorded as income tax expense for the year ended December 31, 2023 were $ 2.7 million, $ 2.8 million, and $ 1.5 million, respectively. The amounts of affordable housing tax credits, amortization and tax benefits recorded as income tax expense for the year ended December 31, 2022 were $ 2.0 million, $ 2.5 million and $ 1.0 million, respectively, and for the year ended December 31, 2021 were $ 1.2 million, $ 1.6 million and $ 0.7 million, respectively. The carrying value of the affordable housing credit investments was $ 39.5 million and $ 27.3 million at December 31, 2023 and 2022, respectively, of which $ 26.3 million and $ 17.6 million, respectively, was unfunded. 
 The Company has no unrecognized income tax benefits or provisions due to uncertain income tax positions. No federal or state income tax return examinations are currently in process. The Company does not expect to record or realize any material unrecognized tax benefits during 2023. The following are the major tax jurisdictions in which the Company operates and the earliest tax year, exclusive of the impact of the net operating loss carryforwards, subject to examination: 
 
 Jurisdiction Tax Year 
 United States of America 2020 
 Florida 2020 

 
 
 109 

 
 
 

 Note 13 - Regulatory Capital 
 Required Regulatory Capital 
 The Company is subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet the minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by the regulators, which could have a direct material impact on the financial statements. These requirements involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated pursuant to regulatory guidance. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. 
 Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total, Tier 1 capital and common equity Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets, all as defined in the regulations. 
 At December 31, 2023 and 2022, the Company and Seacoast Bank, its wholly-owned banking subsidiary, were both considered “well capitalized” based on the applicable U.S. regulatory capital ratio requirements as reflected in the table below: 
 
 Minimum to meet 
 “Well Capitalized” Requirements Minimum for Capital Adequacy 
 Purpose 1 
 
 (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio 
 Seacoast Banking Corporation of Florida 
 (Consolidated) 
 
 At December 31, 2023: 
 Total Risk-Based Capital Ratio $ 1,713,797 15.92 % n/a n/a $ 861,355 ≥ 8.00 % 
 Tier 1 Capital Ratio 1,565,710 14.54 n/a n/a 646,017 ≥ 6.00 
 Common Equity Tier 1 Capital Ratio 1,493,499 13.87 n/a n/a 484,512 ≥ 4.50 
 Leverage Ratio 1,565,710 11.00 n/a n/a 569,317 ≥ 4.00 
 At December 31, 2022: 
 Total Risk-Based Capital Ratio $ 1,454,168 15.79 % n/a n/a $ 736,709 ≥ 8.00 % 
 Tier 1 Capital Ratio 1,361,832 14.79 n/a n/a 552,532 ≥ 6.00 
 Common Equity Tier 1 Capital Ratio 1,277,295 13.87 n/a n/a 414,399 ≥ 4.50 
 Leverage Ratio 1,361,832 11.46 n/a n/a 475,134 ≥ 4.00 
 
 Seacoast National Bank 
 (A Wholly Owned Bank Subsidiary) 
 At December 31, 2023: 
 Total Risk-Based Capital Ratio $ 1,593,431 14.82 % $ 1,075,494 ≥ 10.00 % $ 860,395 ≥ 8.00 % 
 Tier 1 Capital Ratio 1,466,878 13.64 860,395 ≥ 8.00 645,296 ≥ 6.00 
 Common Equity Tier 1 Capital Ratio 1,466,874 13.64 699,071 ≥ 6.50 483,972 ≥ 4.50 
 Leverage Ratio 1,466,878 10.32 711,039 ≥ 5.00 568,831 ≥ 4.00 
 At December 31, 2022: 
 Total Risk-Based Capital Ratio $ 1,330,836 14.47 % $ 919,904 ≥ 10.00 % $ 735,923 ≥ 8.00 % 
 Tier 1 Capital Ratio 1,238,500 13.46 735,923 ≥ 8.00 551,942 ≥ 6.00 
 Common Equity Tier 1 Capital Ratio 1,238,496 13.46 597,938 ≥ 6.50 413,957 ≥ 4.50 
 Leverage Ratio 1,238,500 10.44 620,398 ≥ 5.00 496,318 ≥ 4.00 
 1 Excludes the Basel III capital conservation buffer of 2.5 %, which if not exceeded may constrain dividends, equity repurchases and compensation. 
 
 n/a - not applicable. 

 
 
 
 
 
 
 
 
 
 
 
 
 110 

 
 
 

 Note 14 - Seacoast Banking Corporation of Florida (Parent Company Only) Financial Information 
 Balance Sheets 
 
 December 31, 
 (In thousands) 2023 2022 
 Assets 
 Cash $ 466 $ 58 
 Securities purchased under agreement to resell with subsidiary bank, maturing within 30 days 101,191 111,698 
 Investment in subsidiaries 2,109,341 1,578,786 
 Other assets 
 4,837 2,335 
 $ 2,215,835 $ 1,692,877 
 
 Liabilities and Shareholders' Equity 
 Long-term debt $ 106,302 $ 84,533 
 Other liabilities 1,551 673 
 Shareholders' equity 2,107,982 1,607,671 
 $ 2,215,835 $ 1,692,877 

 Statements of Income 
 
 Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Income 
 Interest/other $ 3,573 $ 897 $ 167 
 Dividends from subsidiary Bank 40,655 48,424 47,684 
 
 Total income 44,228 49,321 47,851 
 
 Interest expense 7,408 3,090 1,683 
 Other expenses 996 1,023 765 
 Total expenses 8,404 4,113 2,448 
 
 Income before income taxes and equity in undistributed income of subsidiaries 35,824 45,208 45,403 
 Income tax benefit ( 1,015 ) ( 675 ) ( 481 ) 
 
 Income before equity in undistributed income of subsidiaries 36,839 45,883 45,884 
 Equity in undistributed income of subsidiaries 67,194 60,624 78,519 
 Net income $ 104,033 $ 106,507 $ 124,403 

 
 
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 Statements of Cash Flows 
 
 Year Ended December 31, 
 (In thousands) 2023 2022 2021 
 Cash flows from operating activities 
 Adjustments to reconcile net income to net cash provided
by operating activities: 
 Net Income $ 104,033 $ 106,507 $ 124,403 
 Equity in undistributed income of subsidiaries ( 67,194 ) ( 60,624 ) ( 78,519 ) 
 Net increase in other assets 
 ( 3,029 ) ( 13,823 ) ( 489 ) 
 Net increase in other liabilities 22,646 499 400 
 Net cash provided by operating activities 56,456 32,559 45,795 
 
 Cash flows from investing activities 
 Net cash from bank acquisitions 10,237 17,610 — 
 Net advances with subsidiary 270 ( 13,300 ) ( 28,324 ) 
 
 
 
 Net cash provided by (used in) investment activities 10,507 4,310 ( 28,324 ) 
 
 Cash flows from financing activities 
 
 Dividends paid ( 60,591 ) ( 41,242 ) ( 22,506 ) 
 Stock based employment benefit plans 4,904 4,374 5,022 
 Repurchase of common stock ( 10,868 ) — — 
 Net cash used in financing activities ( 66,555 ) ( 36,868 ) ( 17,484 ) 
 
 Net change in cash 408 1 ( 13 ) 
 Cash at beginning of year 58 57 70 
 Cash at end of year $ 466 $ 58 $ 57 
 
 Supplemental disclosure of cash flow information: 
 Cash paid during the period for interest $ 5,315 $ 2,890 $ 1,441 

 
 
 
 Note 15 - Contingent Liabilities and Commitments with Off-Balance Sheet Risk 
 The Company and its subsidiaries, because of the nature of their business, are at all times subject to numerous legal actions, threatened or filed. Management presently believes that none of the legal proceedings to which it is a party are likely to have a materially adverse effect on the Company’s consolidated financial condition, operating results or cash flows. 
 The Company's subsidiary bank is party to financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and limited partner equity commitments. 
 The subsidiary bank’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contract or notional amount of those instruments. The subsidiary bank uses the same credit policies in making commitments and standby letters of credit as they do for on balance sheet instruments. 
 
 
 112 

 
 

 Unfunded commitments for the Company as of: 
 
 December 31, 
 (In thousands) 2023 2022 
 Contract or Notional Amount 
 Financial instruments whose contract amounts represent credit risk: 
 
 Commitments to extend credit $ 2,651,206 $ 2,814,924 
 
 Standby letters of credit and financial guarantees written: 
 Secured 35,669 19,744 
 Unsecured 2,830 3,191 
 
 Unfunded limited partner equity commitment 20,004 26,761 

 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Commitments include home equity lines, commercial and consumer lines of credit and construction loans. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The subsidiary bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the bank upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, equipment, and commercial and residential real estate. 
 Standby letters of credit are conditional commitments issued by the subsidiary bank to guarantee the performance of a customer to a third party. These instruments have fixed termination dates and most end without being drawn; therefore, they do not represent a significant liquidity risk. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The subsidiary bank holds collateral supporting these commitments for which collateral is deemed necessary. Collateral held for secured standby letters of credit at December 31, 2023 totaled $ 35.8 million. 
 Unfunded limited partner equity commitments at December 31, 2023 totaled $ 20.0 million that the Company has committed to small business investment companies under the SBIC Act to be used to provide capital to small businesses and entities that provide low income housing tax credits. 
 
 
 
 
 113 

 
 
 

 Note 16 - Fair Value 
 Under ASC Topic 820, fair value measurements for items measured at fair value on a recurring and nonrecurring basis at December 31, 2023 and December 31, 2022 included: 
 
 Fair Value Quoted Prices in
Active Markets for
Identical Assets Significant Other
Observable
Inputs Significant Other
Unobservable
Inputs 
 (In thousands) Measurements Level 1 Level 2 Level 3 
 At December 31, 2023 
 Financial Assets 
 Debt securities available-for-sale 1 
 $ 1,836,020 $ 192 $ 1,835,828 $ — 
 Derivative financial instruments 2 
 31,481 — 31,481 — 
 Loans held for sale 2 
 4,391 — 4,391 — 
 Loans 3 
 15,242 — — 15,242 
 Other real estate owned 4 
 7,560 — — 7,560 
 Equity securities 5 
 13,623 13,623 — — 
 Financial Liabilities 
 Derivative financial instruments 2 
 $ 28,879 $ — $ 28,879 $ — 
 
 At December 31, 2022 
 Financial Assets 
 Debt securities available-for-sale 1 
 $ 1,871,742 $ 186 $ 1,871,556 $ — 
 Derivative financial instruments 2 
 23,142 — 23,142 — 
 Loans held for sale 2 
 3,151 — 3,151 — 
 Loans 3 
 8,513 — 1,183 7,330 
 Other real estate owned 4 
 2,301 — 2,301 — 
 Equity securities 5 
 8,220 8,220 — — 
 Financial Liabilities 
 Derivative financial instruments 2 
 $ 23,142 $ — $ 23,142 $ — 
 1 See “Note 3 - Securities” for further detail of fair value of individual investment categories. 
 
 2 Recurring fair value basis determined using observable market data. 
 
 3 See “Note 4 - Loans”. Nonrecurring fair value adjustments to collateral-dependent loans reflect full or partial write-downs that are based on current appraised values of the collateral. 
 
 4 Fair value is measured on a nonrecurring basis in accordance with ASC Topic 360, Property, Plant, and Equipment. 
 
 5 Investment in shares of mutual funds that invest primarily in CRA-qualified debt securities, reported at fair value in Other Assets. Recurring fair value basis is determined using market quotations. 
 

 Debt securities available-for-sale: Level 1 securities consist of U.S. Treasury securities. Other securities are reported at fair value utilizing Level 2 inputs. The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flow analyses, using observable market data where available. 
 Derivative financial instruments : The fair value of these derivatives is based on a discounted cash flow approach. Due to the observable nature of the inputs used in deriving the fair value of these derivative contracts, the valuation of interest rate swaps is classified as Level 2. The fair values of these instruments are based upon the estimated amount the Company would receive or pay to terminate the instruments, taking into account current interest rates and, when appropriate, the current credit worthiness of the counterparties. 
 Loans held for sale : Fair values are based upon estimated values to be received from independent third party purchasers. These loans are intended for sale and the Company believes the fair value is the best indicator of the resolution of these loans. Fair market value changes occur due to changes in interest rates, the borrower’s credit, the secondary loan market and the market for a borrower’s debt. Interest income is recorded based on contractual terms of the loan in accordance with Company's policy on loans held for investment. 
 
 
 114 

 
 

 Loans : Fair value of collateral-dependent real estate loans is based on recent real estate appraisals less estimated costs of sale. For these loans, evaluations may use either a single valuation approach or a combination of approaches, such as comparative sales, cost and/or income approach. A significant unobservable input in the income approach is the estimated capitalization rate for a given piece of collateral. At December 31, 2023, capitalization rates utilized to determine fair value of the underlying collateral averaged approximately 7.1 %. Adjustments to comparable sales may be made by an appraiser to reflect local market conditions or other economic factors and may result in changes in the fair value of an asset over time. As such, the fair value of these loans is considered level 3 in the fair value hierarchy. Collateral-dependent loans measured at fair value totaled $ 17.8 million with a specific reserve of $ 2.6 million at December 31, 2023, compared to $ 10.2 million with a specific reserve of $ 2.9 million at December 31, 2022. 
 Other real estate owned : When appraisals are used to determine fair value and the appraisals are based on a market approach, the fair value of other real estate owned (“OREO”) is classified as level 2. When the fair value of OREO is based on appraisals which require significant adjustments to market-based valuation inputs or apply an income approach based on unobservable cash flows, the fair value of OREO is classified as Level 3. 
 Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company's monthly and/or quarterly valuation process. There were no such transfers during the twelve months ended December 31, 2023 and 2022. 
 The carrying amount and fair value of the Company's other significant financial instruments that were not disclosed previously in the balance sheet and for which carrying amount is not fair value as of December 31, 2023 and December 31, 2022 is as follows: 
 
 Carrying Quoted Prices in
Active Markets for
Identical Assets Significant Other
Observable
Inputs Significant Other
Unobservable
Inputs 
 (In thousands) Amount Level 1 Level 2 Level 3 
 At December 31, 2023 
 Financial Assets 
 Held-to-maturity debt securities 1 
 $ 680,313 $ — $ 558,359 $ — 
 Time deposits with other banks 5,857 — 5,756 — 
 Loans, net 9,898,767 — — 9,805,693 
 Financial Liabilities 
 Deposits 11,776,935 — — 11,775,613 
 FHLB borrowings 50,000 — 49,745 — 
 Long-term debt 109,458 — 100,851 — 
 
 At December 31, 2022 
 Financial Assets 
 Held-to-maturity debt securities 1 
 $ 747,408 $ — $ 617,741 $ — 
 Time deposits with other banks 3,236 — 2,989 — 
 Loans, net 8,022,316 — — 7,845,375 
 Financial Liabilities 
 Deposits 9,981,595 — — 9,976,125 
 FHLB borrowings 
 150,000 — — 149,450 
 Long-term debt 84,533 — 82,226 — 
 1 See “Note 3 - Securities” for further detail of recurring fair value basis of individual investment categories. 
 

 The short maturity of Seacoast’s assets and liabilities results in having a significant number of financial instruments whose fair value equals or closely approximates carrying value. Such financial instruments are reported in the following balance sheet captions: cash and due from banks, interest bearing deposits with other banks, short-term FHLB borrowings and securities sold under agreement to repurchase. 
 The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value at December 31, 2023 and December 31, 2022: 
 
 
 115 

 
 

 Loans : Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, mortgage, etc. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming categories. The fair value of loans is calculated by discounting scheduled cash flows through the estimated life including prepayment considerations, using estimated market discount rates that reflect the risks inherent in the loan. The fair value approach considers market-driven variables including credit related factors and reflects an “exit price” as defined in ASC Topic 820, Fair Value Measurement . 
 Deposit Liabilities : The fair value of demand deposits, savings accounts and money market deposits is the amount payable at the reporting date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for funding of similar remaining maturities. 
 
 
 
 Note 17 - Business Combinations 
 Acquisition of Professional Holding Corp. 
 On January 31, 2023, the Company completed its acquisition of Professional Holding Corp. (“Professional”). Simultaneously, upon completion of the merger of Professional and the Company, Professional Bank was merged with and into Seacoast Bank. Prior to the acquisition, Professional Bank operated nine branches across South Florida. The transaction further expanded the Company’s presence in the tri-county South Florida market, which includes Miami-Dade, Broward, and Palm Beach counties, Florida’s largest MSA and the 8 th largest in the nation. The Company acquired 100 % of the outstanding common stock of Professional. Under the terms of the merger agreement, Professional shareholders received 0.8909 shares of Seacoast common stock for each share of Professional common stock held immediately prior to the merger, and Professional option holders received options to purchase Seacoast common stock, with the number of shares underlying each such option and the applicable exercise price adjusted using the same 0.8909 exchange ratio. 
 
 
 
 (In thousands, except per share data) January 31, 2023 
 Number of Professional common shares outstanding 14,358 
 Per share exchange ratio 0.8909 
 Number of shares of SBCF common stock issued 12,792 
 Multiplied by common stock price per share at January 31, 2023 $ 32.11 
 Value of SBCF common stock issued $ 410,738 
 Cash paid for fractional shares 5 
 Fair value of Professional options converted 10,304 
 Total purchase price $ 421,047 

 
 
 The acquisition of Professional was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations . The Company recognized goodwill of $ 251.7 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. 
 As part of the acquisition of Professional, options were granted to replace outstanding Professional options. These options were fully vested upon acquisition. The full value of the replacement options, $ 10.3 million, was associated with pre-combination service and was therefore included in the calculation of the total purchase consideration. 
 
 
 116 

 
 

 
 Initially Measured Measurement As Adjusted 
 (In thousands) January 31, 2023 Period Adjustments January 31, 2023 
 Assets: 
 Cash and cash equivalents $ 141,680 $ — $ 141,680 
 Investment securities 167,059 — 167,059 
 Loans 1,991,713 ( 5,544 ) 1,986,169 
 Bank premises and equipment 2,478 — 2,478 
 Core deposit intangibles 48,885 — 48,885 
 Goodwill 248,091 3,583 251,674 
 BOLI 55,071 — 55,071 
 Other Assets 74,232 2,561 76,793 
 Total Assets $ 2,729,209 $ 600 $ 2,729,809 
 
 Liabilities: 
 Deposits $ 2,119,341 $ — $ 2,119,341 
 Subordinated debt 21,141 — 21,141 
 Other Liabilities 167,680 600 168,280 
 Total Liabilities $ 2,308,162 $ 600 $ 2,308,762 

 The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date. 
 
 January 31, 2023 
 (In thousands) Book Balance Fair Value 
 Loans: 
 Construction and land development $ 156,048 $ 151,012 
 Commercial real estate - owner occupied 293,473 274,068 
 Commercial real estate - non-owner occupied 752,393 692,746 
 
 Residential real estate 509,305 483,611 
 Commercial and financial 392,396 350,628 
 Consumer 33,656 32,153 
 PPP Loans 1,951 1,951 
 Total acquired loans $ 2,139,222 $ 1,986,169 

 The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination: 
 
 (In thousands) January 31, 2023 
 Book balance of loans at acquisition $ 155,031 
 Allowance for credit losses at acquisition ( 18,879 ) 
 Non-credit related discount ( 12,361 ) 
 Total PCD loans acquired $ 123,791 

 The acquisition of Professional resulted in the addition of $ 45.5 million in allowance for credit losses, including the $ 18.9 million identified in the table above for PCD loans, and $ 26.6 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition. Included within the $ 18.9 million initial PCD allowance is $ 5.5 million recorded as a measurement period adjustment during the three months ended June 30, 2023, reflecting information obtained by the Company relating to events or circumstances existing at the acquisition date. 
 
 
 117 

 
 

 The Company believes the deposits assumed in the acquisition have an intangible value. In determining the valuation amount, deposits were analyzed based on factors such as type of deposit, deposit retention, interest rates and age of deposit relationships. The core deposit intangible asset acquired from Professional is being amortized over eight years using an accelerated method of amortization. 
 Acquisition of Apollo Bancshares, Inc. 
 On October 7, 2022, the Company completed its acquisition of Apollo Bancshares, Inc. ("Apollo"). Simultaneously, upon completion of the merger of Apollo and the Company, Apollo Bank was merged with and into Seacoast Bank. Prior to the acquisition, Apollo Bank operated five branches in Miami-Dade County. 
 As a result of this acquisition, the Company expects to expand its customer base and leverage economies of scale to positively affect the Company’s operating results. 
 Under the terms of the merger agreement, Apollo shareholders received 1.006529 shares of Seacoast common stock for each share of Apollo common stock, and the minority interest holders in Apollo Bank received 1.195651 shares of Seacoast common stock for each share of Apollo Bank common stock. 
 
 
 
 (In thousands, except per share data) October 7, 2022 
 Number of Apollo common shares outstanding 3,766 
 Per share exchange ratio 1.0065 
 Number of shares of SBCF common stock issued 3,791 
 Number of Apollo Bank minority interest shares outstanding 609 
 Per share exchange ratio 1.1957 
 Number of shares of SBCF common stock issued 728 
 Total number of shares of SBCF common stock issued 4,519 
 Multiplied by common stock price per share at October 7, 2022 $ 30.83 
 Value of SBCF common stock issued $ 139,307 
 Cash paid for fractional shares 5 
 Fair value of Apollo options and warrants converted 6,530 
 Total purchase price $ 145,842 
 

 The acquisition of Apollo was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations . The Company recognized goodwill of $ 90.5 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. 
 As part of the acquisition of Apollo, options and warrants were granted to replace outstanding Apollo awards. These awards were fully vested upon acquisition. The full value of the replacement awards, $ 6.5 million, was associated with pre-combination service and was therefore included in the calculation of the total purchase consideration. 
 
 
 
 
 118 

 
 

 
 Initially Measured Measurement As Adjusted 
 (In thousands) October 7, 2022 Period Adjustments October 7, 2022 
 Assets: 
 Cash and cash equivalents $ 41,001 $ — $ 41,001 
 Investment securities 203,596 — 203,596 
 Loans 666,522 — 666,522 
 Bank premises and equipment 7,809 — 7,809 
 Core deposit intangibles 28,699 — 28,699 
 Goodwill 90,237 251 90,488 
 Other Assets 52,724 ( 251 ) 52,473 
 Total Assets $ 1,090,588 $ — $ 1,090,588 
 
 Liabilities: 
 Deposits $ 854,774 $ — $ 854,774 
 Other Liabilities 89,972 — 89,972 
 Total Liabilities $ 944,746 $ — $ 944,746 

 
 
 The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date. 
 
 October 7, 2022 
 (In thousands) Book Balance Fair Value 
 Loans: 
 Construction and land development $ 74,126 $ 70,654 
 Commercial real estate - owner-occupied 131,093 121,600 
 Commercial real estate - non owner-occupied 374,673 340,561 
 Residential real estate 76,254 75,957 
 Commercial and financial 50,125 46,695 
 Consumer 11,307 11,055 
 Total acquired loans $ 717,578 $ 666,522 

 The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination: 
 
 (In thousands) October 7, 2022 
 Book balance of loans at acquisition $ 107,744 
 Allowance for credit losses at acquisition ( 2,658 ) 
 Non-credit related discount ( 14,191 ) 
 Total PCD loans acquired $ 90,895 
 

 The acquisition of Apollo resulted in the addition of $ 7.8 million in allowance for credit losses, including the $ 2.7 million identified in the table above for PCD loans, and $ 5.1 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition. 
 The Company believes the deposits assumed in the acquisition have an intangible value. In determining the valuation amount, deposits were analyzed based on factors such as type of deposit, deposit retention, interest rates and age of deposit relationships. 
 
 
 119 

 
 

 Acquisition of Drummond Banking Company. 
 On October 7, 2022, the Company completed its acquisition of Drummond Banking Company (“Drummond”). Simultaneously, upon completion of the merger of Drummond and the Company, Drummond’s wholly owned subsidiary bank, Drummond Community Bank, was merged with and into Seacoast Bank. Prior to the acquisition, Drummond Community Bank operated 18 branches across North Florida. 
 As a result of this acquisition, the Company expects to expand its customer base and leverage economies of scale to positively affect the Company’s operating results. The Company acquired 100 % of the outstanding common stock of Drummond. Under the terms of the merger agreement, each share of Drummond common stock was converted into the right to receive 51.9561 shares of Seacoast common stock. 
 
 
 
 (In thousands, except per share data) October 7, 2022 
 Number of Drummond common shares outstanding 99 
 Per share exchange ratio 51.9561 
 Number of shares of SBCF common stock issued 5,136 
 Multiplied by common stock price per share at October 7, 2022 $ 30.83 
 Total purchase price $ 158,332 

 The acquisition of Drummond was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations . The Company recognized goodwill of $ 103.6 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. 
 
 Initially Measured Measurement As Adjusted 
 (In thousands) October 7, 2022 Period Adjustments October 7, 2022 
 Assets: 
 Cash and cash equivalents $ 31,805 $ — $ 31,805 
 Investment securities 327,852 — 327,852 
 Loans 544,694 — 544,694 
 Bank premises and equipment 29,370 — 29,370 
 Core deposit and other intangibles 32,983 — 32,983 
 Goodwill 103,476 173 103,649 
 Other Assets 49,812 ( 173 ) 49,639 
 Total Assets $ 1,119,992 $ — $ 1,119,992 
 
 Liabilities: 
 Deposits $ 881,281 $ — $ 881,281 
 Other Liabilities 80,379 — 80,379 
 Total Liabilities $ 961,660 $ — $ 961,660 

 
 
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 The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date. 
 
 October 7, 2022 
 (In thousands) Book Balance Fair Value 
 Loans: 
 Construction and land development $ 155,041 $ 140,401 
 Commercial real estate - owner-occupied 112,768 106,152 
 Commercial real estate - non owner-occupied 26,520 24,744 
 Residential real estate 85,767 78,663 
 Commercial and financial 88,026 82,067 
 Consumer 118,880 112,667 
 Total acquired loans $ 587,002 $ 544,694 

 The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination: 
 
 (In thousands) October 7, 2022 
 Book balance of loans at acquisition $ 58,878 
 Allowance for credit losses at acquisition ( 2,566 ) 
 Non-credit related discount ( 4,607 ) 
 Total PCD loans acquired $ 51,705 
 

 The acquisition of Drummond resulted in the addition of $ 12.5 million in allowance for credit losses, including the $ 2.6 million identified in the table above for PCD loans, and $ 9.9 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition. 
 The Company believes the deposits assumed in the acquisition have an intangible value. In determining the valuation amount, deposits were analyzed based on factors such as type of deposit, deposit retention, interest rates and age of deposit relationships. 
 Acquisition of Business Bank of Florida, Corp. 
 On January 3, 2022, the Company completed its acquisition of Business Bank of Florida, Corp., (“BBFC”). Simultaneously, upon completion of the merger of BBFC and the Company, BBFC’s wholly owned subsidiary bank, Florida Business Bank, was merged with and into Seacoast Bank. Prior to the acquisition, Florida Business Bank operated one branch in Melbourne, Florida. 
 As a result of this acquisition, the Company expects to expand its customer base and leverage economies of scale to positively affect the Company’s operating results. 
 The Company acquired 100 % of the outstanding common stock of BBFC. Under the terms of the merger agreement, each share of BBFC common stock was converted into the right to receive 0.7997 of a share of Seacoast common stock. 
 
 (In thousands, except per share data) January 3, 2022 
 Number of BBFC common shares outstanding 1,112 
 
 Per share exchange ratio 0.7997 
 Number of shares of SBCF common stock issued 889 
 Multiplied by common stock price per share on January 3, 2022 $ 35.39 
 Value of SBCF common stock issued $ 31,480 
 
 Fair value of BBFC options converted 497 
 Total purchase price $ 31,977 

 
 
 121 

 
 

 The acquisition of BBFC was accounted for under the acquisition method in accordance with ASC Topic 805, Business Combinations . The Company recognized goodwill of $ 8.0 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. 
 As part of the BBFC acquisition, options were granted to replace outstanding BBFC options. These options were fully vested upon acquisition. The full value of the replacement options, $ 0.5 million, was associated with pre-combination service and was therefore included in the calculation of the total purchase consideration. 
 
 (In thousands) Measured
January 3, 2022 
 Assets: 
 Cash $ 38,332 
 Investment securities 26,011 
 Loans 121,774 
 Bank premises and equipment 2,102 
 Core deposit intangibles 2,621 
 Goodwill 7,962 
 Total assets $ 198,802 
 Liabilities: 
 Deposits 166,326 
 Other liabilities 499 
 Total liabilities $ 166,825 
 

 
 
 122 

 
 

 The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date. 
 
 January 3, 2022 
 (In thousands) Book Balance Fair Value 
 Loans: 
 Construction and land development $ 8,677 $ 8,414 
 Commercial real estate - owner-occupied 45,403 44,564 
 Commercial real estate - non owner-occupied 53,065 52,034 
 Residential real estate 5,377 5,421 
 Commercial and financial 11,335 11,280 
 Consumer 59 61 
 Total acquired loans $ 123,916 $ 121,774 

 The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination: 
 
 (In thousands) January 3, 2022 
 Book balance of loans at acquisition $ 714 
 Allowance for credit losses at acquisition ( 15 ) 
 Non-credit related discount ( 48 ) 
 Total PCD loans acquired $ 651 
 

 The acquisition of BBFC resulted in the addition of $ 1.8 million in allowance for credit losses, including the $ 15 thousand identified in the table above for PCD loans, and $ 1.8 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition. 
 The Company believes the deposits assumed in the acquisition have an intangible value. In determining the valuation amount, deposits were analyzed based on factors such as type of deposit, deposit retention, interest rates and age of deposit relationships. 
 Acquisition of Sabal Palm Bancorp, Inc. 
 On January 3, 2022, the Company completed its acquisition of Sabal Palm Bancorp, Inc. (“Sabal Palm”). Simultaneously, upon completion of the merger of Sabal Palm and the Company, Sabal Palm’s wholly owned subsidiary bank, Sabal Palm Bank, was merged with and into Seacoast Bank. Prior to the acquisition, Sabal Palm Bank operated three branches in the Sarasota area. 
 As a result of this acquisition, the Company expects to expand its customer base and leverage economies of scale to positively affect the Company’s operating results. 
 The Company acquired 100 % of the outstanding common stock of Sabal Palm. Under the terms of the merger agreement, each share of Sabal Palm common stock was converted into the right to receive 0.2203 of a share of Seacoast common stock. 
 
 (In thousands, except per share data) January 3, 2022 
 Number of Sabal Palm common shares outstanding 7,536 
 
 Per share exchange ratio 0.2203 
 Number of shares of SBCF common stock issued 1,660 
 Multiplied by common stock price per share on January 3, 2022 $ 35.39 
 Value of SBCF common stock issued $ 58,762 
 
 Fair value of Sabal Palm options converted 3,336 
 Total purchase price $ 62,098 

 The acquisition of Sabal Palm was accounted for under the acquisition method in accordance with ASC Topic 805, Business Combinations . The Company recognized goodwill of $ 26.5 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. 
 
 
 123 

 
 

 As part of the Sabal Palm acquisition, options were granted to replace outstanding Sabal Palm options. These options were fully vested upon acquisition. The full value of the replacement options, $ 3.3 million, was associated with pre-combination service and was therefore included in the calculation of the total purchase consideration. 
 
 (In thousands) Measured
January 3, 2022 
 Assets: 
 Cash $ 170,609 
 Time deposits with other banks 6,473 
 Loans 246,152 
 Bank premises and equipment 1,745 
 Core deposit intangibles 5,587 
 Goodwill 26,489 
 Other Assets 5,189 
 Total assets $ 462,244 
 Liabilities: 
 Deposits 395,952 
 Other liabilities 4,194 
 Total liabilities $ 400,146 
 

 The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date. 
 
 January 3, 2022 
 (In thousands) Book Balance Fair Value 
 Loans: 
 Construction and land development $ 9,256 $ 9,009 
 Commercial real estate - owner-occupied 57,690 56,591 
 Commercial real estate - non owner-occupied 89,153 87,280 
 Residential real estate 71,469 72,227 
 Commercial and financial 21,109 20,813 
 Consumer 233 232 
 Total acquired loans $ 248,910 $ 246,152 

 The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination: 
 
 (In thousands) January 3, 2022 
 Book balance of loans at acquisition $ 3,703 
 Allowance for credit losses at acquisition ( 37 ) 
 Non-credit related discount ( 663 ) 
 Total PCD loans acquired $ 3,003 
 

 
 
 124 

 
 

 The acquisition of Sabal Palm resulted in the addition of $ 3.4 million in allowance for credit losses, including the $ 37 thousand identified in the table above for PCD loans, and $ 3.4 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition. 
 The Company believes the deposits assumed in the acquisition have an intangible value. In determining the valuation amount, deposits were analyzed based on factors such as type of deposit, deposit retention, interest rates and age of deposit relationships. 
 Acquisition Costs 
 Acquisition costs included in the Company's income statement for the years ended December 31, 2023, 2022 and 2021 were $ 33.2 million, $ 27.9 million and $ 7.9 million, respectively. 
 Pro-Forma Information (unaudited) 
 Pro-forma data as of 2023 and 2022 present information as if the acquisition of Professional occurred at the beginning of 2022. The pro-forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have occurred if the transactions had been effected on the assumed dates. 
 
 Twelve Months Ended 
 December 31, 
 (In thousands, except per share data) 2023 2022 
 Net interest income $ 499,008 $ 488,143 
 Net income available to common shareholders 128,086 107,398 
 EPS - basic 1.51 1.40 
 EPS - diluted 1.50 1.39 
 

 
 
 
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 

 
 
 None.
SEACOAST BANKING CORP OF FLORIDA 10-K

Item 8. Financial Statements and Supplementary Data
