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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-08 · 295 added, 224 removed, 481 unchanged (52% of the section changed)

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Such discussion and analysis should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and the related notes included in this report.

The emphasis of this discussion will be on the three months ended March 31, 2024 compared to the three months ended March 31, 2023 for the consolidated statements of income.

For the consolidated balance sheets, the emphasis of this discussion will be the balances as of March 31, 2024 compared to December 31, 2023.

The emphasis of this discussion will be on the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 for the consolidated statements of income.

For the consolidated balance sheets, the emphasis of this discussion will be the balances as of June 30, 2024 compared to December 31, 2023.

This discussion and analysis contain statements that may be considered “forward-looking statements” as defined in, and subject to the protections of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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All statements other than statements of historical fact could be forward-looking statements.

You can identify these forward-looking statements through the use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “support,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “further,” “plan,” “point to,” “project,” “could,” “intend,”

T a b l e o f C o n t e n t s

“target” or other similar words and expressions of the future.

You can identify these forward-looking statements through the use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “support,” “indicate,”

“would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “further,” “plan,” “point to,” “project,” “could,” “intend,” “target” or other similar words and expressions of the future.

These forward-looking statements may not be realized due to a variety of factors, including, without limitation:

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• Potential impacts of adverse developments in the banking industry, including those highlighted by high-profile bank failures, and including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto (including increases in the cost of our deposit insurance assessments), the Company’s ability to effectively manage its liquidity risk and any growth plans, and the availability of capital and funding;

• Governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve, as well as legislative, tax and regulatory changes, including those that impact the money supply and inflation;

• Governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve, as well as legislative, tax and regulatory changes including proposed overdraft and late fee caps, including those that impact the money supply and inflation;

• The risks of changes in interest rates on the level and composition of deposits (as well as the cost of, and competition for, deposits), loan demand, liquidity and the values of loan collateral, securities, and interest rate sensitive assets and liabilities;

• Interest rate risks (including the impact of interest rates on macroeconomic conditions, customer and client behavior, and on our net interest income), sensitivities, and the shape of the yield curve;

• Interest rate risks (including the impact of interest rates on macroeconomic conditions, customer and client behavior, and on our net interest income), as well as the impact of prolonged elevated interest rates on our financial projections and models, sensitivities, and the shape of the yield curve;

• Changes in accounting policies, rules, and practices;

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• The Company’s concentration in commercial real estate loans and in real estate collateral in Florida;

• Seacoast’s ability to comply with any regulatory requirements and the risk that the regulatory environment may not be conducive to or may prohibit the consummation of future mergers and/or business combinations, may increase the length of time and amount of resources required to consummate such transactions, and may reduce the anticipated benefit;

• Seacoast’s ability to comply with any regulatory requirements and the risk that the regulatory environment may not be conducive to or may prohibit or delay the consummation of future mergers and/or business combinations, may increase the length of time and amount of resources required to consummate such transactions, and may reduce the anticipated benefit;

• Inaccuracies or other failures from the use of models, including the failure of assumptions and estimates, as well as differences in, and changes to, economic, market and credit conditions;

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• Changes in technology or products that may be more difficult, costly, or less effective than anticipated;

• The Company’s ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties which may be exacerbated by recent developments in generative artificial intelligence;

• The Company’s ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties which may be exacerbated by developments in generative artificial intelligence;

• Fraud or misconduct by internal or external parties, which Seacoast may not be able to prevent, detect or mitigate;

• Inability of Seacoast’s risk management framework to manage risks associated with the Company’s business;

• Dependence on key suppliers or vendors to obtain equipment or services for the business on acceptable terms, including the impact of supply chain distruptions;

• Dependence on key suppliers or vendors to obtain equipment or services for the business on acceptable terms;

• Reduction in or the termination of Seacoast’s ability to use the online- or mobile-based platform that is critical to the Company’s business growth strategy;

• The effects of war or other conflicts, including the impacts related to or resulting from Russia’s military action in Ukraine and the escalating conflicts in the Middle East, acts of terrorism, natural disasters, including hurricanes in the Company’s footprint, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions and/or increase costs, including, but not limited to, property and casualty and other insurance costs;

• The effects of war or other conflicts, acts of terrorism, natural disasters, including hurricanes in the Company’s footprint, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions and/or increase costs, including, but not limited to, property and casualty and other insurance costs;

• Seacoast’s ability to maintain adequate internal controls over financial reporting;

T a b l e o f C o n t e n t s

• Potential claims, damages, penalties, fines, costs and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions;

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long-term sovereign debt, actions that the U.S.

government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget;

government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the federal budget and economic policy;

• The risk that balance sheet, revenue growth, and loan growth expectations may differ from actual results;

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Results of Operations

For the first quarter of 2024, the Company reported net income of $26.0 million, or $0.31 per average diluted share, a decrease of $3.5 million, or 12%, from the fourth quarter of 2023 and an increase of $14.2 million, or 120%, compared to the first quarter of 2023.

Adjusted net income 1 for the first quarter of 2024 totaled $31.1 million, or $0.37 per average diluted share, a decrease of $0.2 million, or 1%, compared to the fourth quarter of 2023 and an increase of $7.5 million, or 31%, compared to the first quarter of 2023.

In the first quarter of 2023, the Company completed the acquisition of Professional Holding Corp.

(“Professional”), parent company of Professional Bank, adding deposits of approximately $2.1 billion and loans of approximately $2.0 billion.

First Fourth First

Quarter Quarter Quarter

Seacoast provides integrated financial services including commercial and consumer banking, wealth management, and mortgage services to customers at 77 full-service branches across Florida, and through advanced mobile and online banking solutions.

The Company’s financial results in the second quarter of 2024 include emerging loan growth and stabilizing deposit costs, supporting an improved outlook for net interest income.

Growth in noninterest income continues, and with significant cost-saving initiatives now complete, Seacoast continues to prudently manage expenses while strategically investing to support continued growth.

Highlights include:

• Net income of $30.2 million, or $0.36 per average diluted share, an increase of 16% from the prior quarter.

• Pre-tax pre-provision earnings on an adjusted basis 1 increased $2.0 million to $44.5 million from the prior quarter.

• Demonstrating the Company’s consistent focus on driving efficiency while making investments for organic growth, adjusted noninterest expense 1 is down 10% from the prior year quarter.

• Continued success in the wealth management division, with assets under management increasing 12% year to date to reach a record $1.9 billion.

• Continued growth in lending pipelines, with the overall pipeline increasing to $834.4 million.

• Asset quality remains well controlled, including a reduction in nonperforming loans compared to the prior quarter.

• Tangible book value per share increased to $15.41.

• Strong capital position, with a Tier 1 capital ratio of 14.8%, and a tangible common equity to tangible assets ratio of 9.3%.

As the Company completes its transition from a successful period of sequential bank acquisitions, the most recent of which was integrated in the second quarter of 2023, the renewed focus on organic customer growth is generating momentum across all markets and business segments.

For the second quarter of 2024, the Company reported net income of $30.2 million, or $0.36 per average diluted share, an increase of $4.2 million, or 16%, from the first quarter of 2024 and a decrease of $1.0 million, or 3%, compared to the second quarter of 2023.

Adjusted net income 1 for the second quarter of 2024 totaled $30.3 million, or $0.36 per average diluted share, a decrease of $0.9 million, or 3%, compared to the first quarter of 2024 and a decrease of $13.2 million, or 30%, compared to the second quarter of 2023.

For the six months ended June 30, 2024, net income totaled $56.3 million, or $0.66 per average diluted share, an

1 Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.

increase of $13.2 million, or 31%, compared to the six months ended June 30, 2023.

For the six months ended June 30, 2024, adjusted net income 1 totaled $61.4 million, or $0.72 per average diluted share, compared to $67.7 million, or $0.81 per average diluted share for the six months ended June 30, 2023.

Second First Second Six Months Ended

Quarter Quarter Quarter June 30,

2024 2024 2023 2024 2023

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Net Interest Income and Margin

Net interest income for the first quarter of 2024 totaled $105.1 million, a decrease of $5.7 million, or 5% , compared to the fourth quarter of 2023, and a decrease of $26.1 million , or 20% , c ompared to the first quarter of 2023.

The decrease from the prior quarter reflects higher interest expense on deposits driven by higher deposit costs attributed in part to overall growth in deposit balances.

Net interest income for the second quarter of 2024 totaled $104.4 million, a modest decrease of $0.7 million, or 1%, compared to the first quarter of 2024, and a decrease of $22.5 million , or 18% , c ompared to the second quarter of 2023.

The decrease from the prior quarter reflects higher interest expense on deposits resulting from growth in deposit balances and the impact of the continued elevated rate environment.

The decrease was partially offset by higher yields on loans and securities.

The decrease from the prior year is primarily due to the higher cost of deposits.

1 Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.

T a b l e o f C o n t e n t s

Net interest income (on a fully taxable equivalent basis) 1 for the first quarter of 2024 was $105.3 million, a decrease of $5.7 million, or 5%, compared to the fourth quarter of 2023, and a decrease of $26.1 million, or 20%, c ompared to the first quarter of 2023.

Accretion on acquired loans totaled $10.6 million for the first quarter of 2024, compared to $11.3 million for the fourth quarter of 2023, and $15.9 million for the first quarter of 2023.

Net interest margin (on a fully tax equivalent basis) 1 was 3.24% in the first quarter of 2024, compared to 3.36% in the fourth quarter of 2023, and 4.31% in the first quarter of 2023.

The decrease during the first quarter of 2024 was largely driven by the growth in deposit costs.

Compared to the fourth quarter of 2023, securities yields expanded five basis points to 3.47% and loan yields increased to 5.90% during the first quarter of 2024.

The effect on net interest margin of accretion of purchase discounts on acquired loans were increases of 33 basis points in the first quarter of 2024, 34 basis points in the fourth quarter of 2023, and 53 basis points in the first quarter of 2023.

The cost of deposits was 2.19% in the first quarter of 2024, compared to 2.00% in the fourth quarter of 2023, and 0.77% in the first quarter of 2023.

For the first quarter of 2024, the higher cost of deposits reflects the impact of the continuing elevated interest rate environment.

The following table details the trend for net interest income and margin results (on a tax equivalent basis) 1 , the yield on earning assets and the rate paid on interest bearing liabilities for the periods specified:

For the six months ended June 30, 2024, net interest income totaled $209.5 million, a decrease of $48.6 million, or 19%, compared to the six months ended June 30, 2023.

Net interest income (on a fully taxable equivalent basis) 1 for the second quarter of 2024 was $104.7 million, a decrease of $0.6 million, or 1%, compared to the first quarter of 2024, and a decrease of $22.5 million, or 18%, c ompared to the second quarter of 2023.

Accretion on acquired loans totaled $10.2 million for the second quarter of 2024, compared to $10.6 million for the first quarter of 2024, and $14.6 million for the second quarter of 2023.

For the six months ended June 30, 2024, net interest income (on a fully taxable equivalent basis) 1 was $210.0 million, a decrease of $48.6 million, or 1%, compared to the six months ended June 30, 2023.

Net interest margin (on a fully taxable equivalent basis) 1 decreased six basis points from 3.24% in the first quarter of 2024 to 3.18% in the second quarter of 2024, and decreased 68 basis points from 3.86% in the second quarter of 2023, largely driven by the growth in deposit costs.

Compared to the first quarter of 2024, securities yields increased 22 basis points in the second quarter of 2024 to 3.69% and compared to the second quarter of 2023, increased 56 basis points.

The yield on loans increased to 5.93% for the second quarter of 2024 from 5.90% in the first quarter of 2024 and from 5.89% in the second quarter of 2023, reflecting the impact of a higher interest rate environment.

The effect on net interest margin of accretion of purchase discounts on acquired loans was an increase of 30 basis points for the second quarter of 2024, 33 basis points in the first quarter, and 44 basis points in the second quarter of 2023.

The cost of deposits was 2.31% in the second quarter of 2024, compared to 2.19% in the first quarter of 2024, and 1.38% in the second quarter of 2023.

For the six months ended June 30, 2024, net interest margin (on a fully taxable equivalent basis) 1 decreased 88 basis points to 3.21% compared to the six months ended June 30, 2023, largely driven by the growth in deposit costs.

The yield on total loans increased from 5.88% for the six months ended June 30, 2023 to 5.92% for the six months ended June 30, 2024, reflecting the impact of the higher interest rate environment.

The yield on securities was 3.59% for the six months ended June 30, 2024, compared to 2.99% for the six months ended June 30, 2023, also reflecting the impact of a higher interest rate environment.

The effect on net interest margin of accretion of purchase discounts on acquired loans was an increase of 31 basis points for the six months ended June 30, 2024, and 49 basis points for the six months ended June 30, 2023.

The cost of deposits was 2.25% for the six months ended June 30, 2024, an increase of 116 basis points compared to the six months ended June 30, 2023.

The following table details the trend for net interest income and margin results (on a fully taxable equivalent basis) 1 , the yield on earning assets and the rate paid on interest bearing liabilities for the periods specified:

(In thousands, except ratios) Net Interest

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Bearing Liabilities

First quarter 2024 $ 105,298 3.24 % 5.41 % 3.20 %

Fourth quarter 2023 111,035 3.36 % 5.36 % 2.98 %

Second quarter 2024 $ 104,657 3.18 % 5.47 % 3.33 %

First quarter 2024 105,298 3.24 % 5.41 % 3.20 %

1 On tax equivalent basis, a non-GAAP measure - see “ Explanation of Certain Unaudited Non-GAAP Financial Measures ” for more information and a reconciliation to GAAP.

Average loans increased $1.4 million for the first quarter of 2024 compared to the fourth quarter of 2023, and increased $665.5 million, or 7%, from the first quarter of 2023.

Average loans as a percentage of average earning assets totaled 77% for the first quarter of 2024, 77% for the fourth quarter of 2023 and 76% for the first quarter of 2023.

Average investment securities increased $78.0 million, or 3%, during the first quarter of 2024 compared to the fourth quarter of 2023, and were $131.5 million, or 5%, lower compared to the first quarter of 2023.

Securities yields expanded five basis points to 3.47% during the first quarter of 2024 from 3.42% in the fourth quarter of 2023, benefiting from recent portfolio restructurings.

The cost of average interest-bearing liabilities increased 22 basis points in the first quarter of 2024 to 3.20% from 2.98% in the fourth quarter of 2023, and increased 177 basis points from 1.43% in the first quarter of 2023.

The cost of average total deposits (including noninterest bearing demand deposits) was 2.19% in the first quarter of 2024, 2.00% in the fourth quarter of 2023 and 0.77% in the first quarter of 2023.

During the first quarter of 2024, average transaction deposits (noninterest and interest bearing demand) decreased $311.9 million, or 5%, compared to the fourth quarter of 2023 and decreased $539.3 million, or 8%, compared to the first quarter of 2023.

The Company’s deposit mix remains favorable, with 87% of average deposit balances comprised of savings, money market, and demand deposits for the three months ended March 31, 2024.

Average balances of sweep repurchase agreements with customers decreased $2.2 million, or 1%, from the fourth quarter of 2023 and increased $159.9 million, or 92%, compared to the first quarter of 2023.

The average rate on customer sweep repurchase accounts was 3.71% for the first quarter of 2024, compared to 3.54% for the fourth quarter of 2023, and 2.02% for the first quarter of 2023.

The Company had an average balance of $102.4 million in FHLB borrowings outstanding for the first quarter of 2024, with a weighted average interest rate of 4.15%, compared to $59.0 million for the fourth quarter of 2023, with a weighted average interest rate of 3.23%, and $282.4 million for the first quarter of 2023, with a weighted average interest rate of 4.26%.

Long-term debt balances averaged $106.4 million in the first quarter of 2024, $106.2 million in the fourth quarter of 2023, and $98.4 million in the first quarter of 2023.

The average rate on long-term debt for the first quarter of 2024 was 7.31%, an increase of 15 basis points compared to the fourth quarter of 2023 and an increase of 66 basis points compared to the first quarter of 2023.

T a b l e o f C o n t e n t s

The following tables detail average balances, net interest income and margin results (on a tax equivalent basis, a non-GAAP measure) for the periods presented:

Second quarter 2023 127,153 3.86 % 5.30 % 2.26 %

Six months ended June 30, 2024 209,954 3.21 % 5.44 % 3.26 %

Six months ended June 30, 2023 258,504 4.09 % 5.26 % 1.87 %

1 On a fully taxable equivalent basis, a non-GAAP measure - see “ Explanation of Certain Unaudited Non-GAAP Financial Measures ” for more information and a reconciliation to GAAP.

Average loans decreased $29.5 million for the second quarter of 2024 compared to the first quarter of 2024, and decreased $96.1 million, or 1%, from the second quarter of 2023.

For the six months ended June 30, 2024, average loans increased $282.7 million, or 3%, from the six months ended June 30, 2023.

Average loans as a percentage of average earning assets totaled 76% for the second quarter of 2024, 77% for the first quarter of 2024 and 76% for the second quarter of 2023.

For each of the six months ended June 30, 2024 and June 30, 2023, average loans as a percentage of average earning assets totaled 76%.

During the second quarter of 2024, average investment securities increased $50.3 million, or 2%, compared to the first quarter of 2024, and decreased $54.1 million, or 2.0%, compared to the second quarter of 2023.

Securities yields increased 22 basis points to 3.69% during the second quarter of 2024 from 3.47% in the first quarter of 2024, benefiting from recent purchases.

For the six months ended June 30, 2024, average investment securities were $2.6 billion, a decrease of $92.8 million, or 3%, compared to the six months ended June 30, 2023.

The cost of average interest-bearing liabilities increased 13 basis points in the second quarter of 2024 to 3.33% from 3.20% in the first quarter of 2024, and increased 107 basis points from 2.26% in the second quarter of 2023.

The cost of average total deposits (including noninterest bearing demand deposits) was 2.31% in the second quarter of 2024, 2.19% in the first quarter of

2024 and 1.38% in the second quarter of 2023.

For the six months ended June 30, 2024, the cost of average total deposits (including noninterest bearing demand deposits) was 2.25% compared to 1.09% for the six months ended June 30, 2023.

During the second quarter of 2024, average transaction deposits (noninterest and interest-bearing demand) decreased $91.7 million, or 1%, compared to the first quarter of 2024 and decreased $804.4 million, or 12%, compared to the second quarter of 2023.

For the six months ended June 30, 2024, average transaction deposits decreased $672.3 million, or 10%, compared to the six months ended June 30, 2023.

The Company’s deposit mix remains favorable, with 87% of average deposit balances comprised of savings, money market, and demand deposits for the six months ended June 30, 2024.

Average balances of sweep repurchase agreements with customers decreased $39.8 million, or 12%, from the first quarter of 2024 and increased $48.8 million, or 20%, compared to the second quarter of 2023.

The average rate on customer sweep repurchase accounts was 3.68% for the second quarter of 2024, compared to 3.71% for the first quarter of 2024, and 2.61% for the second quarter of 2023.

For the six months ended June 30, 2024, the average balance was $313.5 million compared to an average balance of $209.4 million for the six months ended June 30, 2023 with average rates of 3.70% and 2.37%, respectively.

The Company had an average balance of $149.2 million in FHLB borrowings outstanding for the second quarter of 2024, with an average interest rate of 4.29%, compared to $102.4 million for the first quarter of 2024, with an average interest rate of 3.77%, and $251.6 million for the second quarter of 2023, with an average interest rate of 3.62%.

The Company had an average balance of $125.8 million in FHLB borrowings outstanding for the six months ended June 30, 2024, with an average interest rate of 4.08%, compared to $266.9 million for the six months ended June 30, 2023, with an average interest rate of 3.81%.

Long-term debt balances averaged $106.5 million in the second quarter of 2024, $106.4 million in the first quarter of 2024, and $105.9 million in the second quarter of 2023.

The average rate on long-term debt for the second quarter of 2024 was 7.03%, a decrease of 28 basis points compared to the first quarter of 2024 and an increase of 23 basis points compared to the second quarter of 2023.

For the six months ended June 30, 2024, long-term debt averaged $106.5 million, compared to $102.2 million for the six months ended June 30, 2023.

The average rate on long-term debt for the six months ended June 30, 2024 was 7.17%, an increase of 44 basis points compared to the six months ended June 30, 2023.

The long-term debt is comprised of trust preferred securities issued by subsidiary trusts of the Company, and notes assumed in bank acquisitions in 2022 and 2023.

The following tables detail average balances, net interest income and margin results (on a fully taxable equivalent basis, a non-GAAP measure) for the periods presented:

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

2024 2023 2023

First Quarter Fourth Quarter First Quarter

Second Quarter First Quarter Second Quarter

Average Yield/ Average Yield/ Average Yield/

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Interest bearing deposits with other banks and other investments 98,942 1,361 5.53 95,619 1,128 4.74 90,783 710 3.14

Total Loans 10,034,658 147,308 5.90 10,033,245 148,004 5.85 9,369,201 135,341 5.86

Total Loans, net 10,005,122 147,518 5.93 10,034,658 147,308 5.90 10,101,228 148,432 5.89

Total Earning Assets 13,249,604 180,041 5.47 13,085,616 175,926 5.41 13,208,698 174,473 5.30

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Cash and due from banks 168,439 166,734 165,625

Premises and equipment 112,391 115,556 116,083

Premises and equipment, net 110,709 112,391 117,726

Intangible assets 818,914 825,531 842,988

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Federal Home Loan Bank borrowings 149,234 1,592 4.29 102,418 960 3.77 251,596 2,272 3.62

Long-term debt 106,373 1,934 7.31 106,205 1,916 7.16 98,425 1,614 6.65

Long-term debt, net 106,532 1,862 7.03 106,373 1,934 7.31 105,861 1,795 6.80

Total Interest-Bearing Liabilities 9,101,576 75,384 3.33 8,889,220 70,628 3.20 8,407,547 47,320 2.26

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Nonaccrual loans are included in loan balances.

T a b l e o f C o n t e n t s

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

Six Months Ended June 30, Six Months Ended June 30,

Average Yield/ Average Yield/

(In thousands, except ratios) Balance Interest Rate Balance Interest Rate

Earning assets:

Taxable $ 2,604,327 $ 46,548 3.59 % $ 2,686,804 $ 40,142 2.99 %

Nontaxable 5,665 81 2.88 15,944 251 3.15

Total Securities 2,609,992 46,629 3.59 2,702,748 40,393 2.99

Federal funds sold 440,448 12,023 5.49 228,491 5,787 5.11

Interest bearing deposits with other banks and other investments 97,281 2,489 5.15 90,750 2,710 6.02

Total Loans, net 10,019,890 294,825 5.92 9,737,236 283,773 5.88

Total Earning Assets 13,167,611 355,966 5.44 12,759,225 332,663 5.26

Allowance for credit losses (147,401) (148,143)

Cash and due from banks 167,586 193,811

Premises and equipment, net 111,550 116,909

Intangible assets 822,222 797,096

Bank owned life insurance 300,965 283,936

Other assets including deferred tax assets 342,708 417,393

Total Assets $ 14,765,241 $ 14,420,227

Liabilities and Shareholders' Equity

Interest-bearing liabilities:

Interest-bearing demand $ 2,694,952 $ 30,212 2.25 % $ 2,559,805 $ 10,767 0.85 %

Savings 606,410 1,100 0.36 979,674 827 0.17

Money market 3,537,584 67,541 3.84 2,760,207 31,622 2.31

Time deposits 1,610,680 35,049 4.38 1,120,576 20,029 3.60

Securities sold under agreements to repurchase 313,494 5,762 3.70 209,358 2,456 2.37

Federal Home Loan Bank borrowings 125,826 2,552 4.08 266,935 5,048 3.81

Long-term debt, net 106,453 3,796 7.17 102,164 3,410 6.73

Total Interest-Bearing Liabilities 8,995,399 146,012 3.26 7,998,719 74,159 1.87

Noninterest demand 3,507,046 4,314,498

Other liabilities 144,791 122,746

Total Liabilities 12,647,236 12,435,963

Shareholders' equity 2,118,005 1,984,264

Total Liabilities & Equity $ 14,765,241 $ 14,420,227

Cost of deposits 2.25 % 1.09 %

Interest expense as a % of earning assets 2.23 % 1.17 %

Net interest income as a % of earning assets $ 209,954 3.21 % $ 258,504 4.09 %

1 On a fully taxable equivalent basis, a non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP.

All yields and rates have been computed on an annual basis using amortized cost.

Fees on loans have been included in interest on loans.

Nonaccrual loans are included in loan balances.

Noninterest Income

Noninterest income totaled $20.5 million for the first quarter of 2024, an increase of $3.2 million, or 18%, compared to the fourth quarter of 2023 and a decrease of $1.9 million, or 9% from the first quarter of 2023.

Noninterest income totaled $22.2 million for the second quarter of 2024, an increase of $1.7 million, or 8%, compared to the first quarter of 2024 and an increase of $0.6 million, or 3% from the second quarter of 2023.

Noninterest income totaled $42.7 million for the six months ended June 30, 2024, a decrease of $1.3 million, or 3%, compared to the six months ended June 30, 2023.

Noninterest income is detailed as follows:

First Fourth First

Quarter Quarter Quarter

Second First Second Six Months Ended

Quarter Quarter Quarter June 30,

(In thousands) 2024 2024 2023 2024 2023

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BOLI income 2,596 2,264 2,068 4,860 3,984

Other income 5,205 4,668 6,574

Other 5,953 5,205 4,755 11,158 11,329

22,228 20,268 21,752 42,496 44,090

Securities gains (losses), net 229 (2,437) 107

Securities (losses) gains, net (44) 229 (176) 185 (69)

Total $ 22,184 $ 20,497 $ 21,576 $ 42,681 $ 44,021

Service charges on deposits were $5.0 million in the first quarter of 2024, compared to $4.8 million in the fourth quarter of 2023, and $4.2 million in the first quarter of 2023.

The increase in fees primarily reflects the benefit of an expanded deposit base and the continued expansion of commercial treasury management services and new customer acquisition.

Interchange income decreased to $1.9 million for the first quarter of 2024, compared to $2.4 million for the fourth quarter of 2023, and $4.7 million for the first quarter of 2023.

The decrease in interchange income compared to the prior quarter is due to an annual volume-based incentive earned from the payment network provider in the previous quarter.

Service charges on deposits were $5.3 million in the second quarter of 2024, compared to $5.0 million in the first quarter of 2024, and $4.6 million in the second quarter of 2023.

For the six months ended June 30, 2024, service charges on deposits totaled $10.3 million, an increase of $1.5 million, or 17%, compared to the six months ended June 30, 2023.

Our investments in talent and market expansion across the state have resulted in continued growth in treasury management services to commercial customers.

Interchange income increased $0.1 million, or 3%, compared to the first quarter of 2024 and decreased $3.1 million, or 62%, compared to the second quarter of 2023.

The decrease compared to the prior year quarter is due to the impact of the Durbin amendment, which became effective for the first time for the Company on July 1, 2023, limiting network interchange fees earned on debit card transactions.

Wealth management income, including trust fees and brokerage commissions and fees, was $3.5 million in the first quarter of 2024, compared to $3.3 million for the fourth quarter of 2023 and $3.1 million for the first quarter of 2023.

The wealth management division continues to demonstrate success in building relationships, and during the first quarter of 2024, assets under management grew $160 million, or 9%, to $1.9 billion.

Insurance agency income increased $0.2 million, or 21%, compared to the fourth quarter of 2023 and totaled $1.3 million.

Bank owned life insurance (“BOLI”) income was $2.3 million for the first quarter of 2024 compared to $2.2 million for the fourth quarter of 2023 and $1.9 million for the first quarter of 2023.

The increase of $0.3 million, or 18%, compared to the first quarter of 2023 is attributed to additions, including those from bank acquisitions.

Other income was $5.2 million in the first quarter of 2024, an increase of $0.5 million, or 12%, compared to the fourth quarter of 2023, and a decrease of $1.4 million, or 21% compared to the first quarter of 2023.

The increase compared to the prior quarter reflects higher marine and aircraft loan production sold, as well as higher SBIC income.

The decrease compared to the first quarter of 2023 was attributed to BOLI death benefits of $2.1 million in the first quarter of 2023.

Net securities gains of $0.2 million in the first quarter of 2024 include gains of $4.1 million on the sale of the Company’s holdings of Visa Class B stock.

This was largely offset by losses of $3.8 million on the sale of $86.8 million, or 3%, of the bank’s investment securities portfolio.

For the six months ended June 30, 2024, interchange income totaled $3.8 million, a decrease of $5.9 million, or 61%, compared to the six months ended June 30, 2023.

Wealth management income, including trust fees and brokerage commissions and fees, was $3.8 million in the second quarter of 2024, compared to $3.5 million for the first quarter of 2024 and $3.3 million for the second quarter of 2023.

For the six months ended June 30, 2024, wealth management income totaled $7.3 million, an increase of $0.9 million, or 14%, compared to the six months ended June 30, 2023.

The wealth management division continues to demonstrate success in building relationships, and assets under management have increased $202.8 million, or 12%, from December 31, 2023, to $1.9 billion.

Insurance agency income increased $0.1 million, or 5%, compared to the first quarter of 2024 and totaled $1.4 million for the three months ended June 30, 2024.

For the six months ended June 30, 2024, insurance agency income totaled $2.6 million, an increase of $0.4 million, or 17%, compared to the six months ended June 30, 2023, reflecting continued growth and expansion of insurance services.

Bank owned life insurance (“BOLI”) income was $2.6 million for the second quarter of 2024, compared to $2.3 million for the first quarter of 2024 and $2.1 million for the second quarter of 2023.

For the six months ended June 30, 2024, BOLI income totaled $4.9 million, an increase of $0.9 million, or 22%, compared to the six months ended June 30, 2023, with policy exchanges executed in the first quarter of 2024 resulting in improved ongoing yields.

Other income was $6.0 million in the second quarter of 2024, an increase of $0.7 million, or 14%, compared to the first quarter of 2024, and an increase of $1.2 million, or 25%, compared to the second quarter of 2023.

The second quarter of 2024 includes a gain on the sale of a single nonperforming commercial real estate loan.

For the six months ended June 30, 2024, other income totaled $11.2 million, a decrease of $0.2 million, or 2%, compared to the six months ended June 30, 2023.

Net securities activity resulted in losses of $44 thousand during the second quarter of 2024, gains of $0.2 million in the first quarter of 2024 , and losses of $0.2 million in the second quarter of 2023.

The first quarter of 2024 included gains of $4.1 million on the sale of the Company’s holdings of Visa Class B stock, which was largely offset by losses of $3.8 million on the sale of $86.8 million, or 3%, of the bank’s investment securities portfolio.

The proceeds were reinvested at a yield of 5.53%, with an expected earnback on the trade of 1.9 years.

T a b l e o f C o n t e n t s

Noninterest Expenses

Noninterest expense for the first quarter of 2024 totaled $90.4 million, an increase of $4.0 million, or 5%, compared to the fourth quarter of 2023, and a decrease of $17.1 million, or 16%, from the first quarter of 2023.

Noninterest expense for the second quarter of 2024 totaled $82.5 million, a decrease of $7.8 million, or 9%, compared to the first quarter of 2024, and a decrease of $25.3 million, or 23%, from the second quarter of 2023.

For the six months ended June 30, 2024, noninterest expense totaled $172.9 million, a decrease of $42.4 million, or 20%, compared to the six months ended June 30, 2023.

The decreases can be attributed to the completion of cost-saving initiatives and prudent management of expenses while strategically investing to support continued growth, benefiting nearly every category of expense.

Noninterest expenses are detailed as follows:

First Fourth First

Quarter Quarter Quarter

Second First Second Six Months Ended

Quarter Quarter Quarter June 30,

(In thousands) 2024 2024 2023 2024 2023

12 unchanged sentences

Total $ 82,537 $ 90,371 $ 107,865 $ 172,908 $ 215,340

Salaries and wages totaled $40.3 million for the first quarter of 2024, $38.4 million for the fourth quarter of 2023, and $47.6 million for the first quarter of 2023.

The increase compared to the fourth quarter of 2023 reflects severance-related costs arising from reductions in the workforce early in the first quarter of 2024.

The decrease compared to the first quarter of 2023 reflects $4.2 million in merger-related expenses during the first quarter of 2023.

The first quarter of 2023 also included expenses related to the net addition of branch locations and associates, as well as new bankers and operational staff associated with acquisitions.

During the first quarter of 2024, employee benefit costs, which include costs associated with the Company’s self-funded health insurance benefits, 401(k) plan, payroll taxes, and unemployment compensation, were $7.9 million, an increase of $1.2 million, or 18%, compared to the fourth quarter of 2023, and a decrease of $0.7 million, or 8%, compared to the first quarter of 2023.

The increase compared to the fourth quarter of 2023 reflects higher seasonal payroll taxes and 401(k) contributions.

The decrease compared to the first quarter of 2023 is related to reductions in the workforce.

Salaries and wages totaled $38.9 million for the second quarter of 2024, $40.3 million for the first quarter of 2024, and $45.2 million for the second quarter of 2023.

The first quarter of 2024 included $2.1 million in severance-related expenses arising from a reduction in the workforce .

For the six months ended June 30, 2024, salaries and wages totaled $79.2 million, a decrease of $13.5 million, or 15%, compared to the six months ended June 30, 2023.

The company continues to prioritize investment in growth-focused talent.

During the second quarter of 2024, employee benefits, which include costs associated with the Company’s self-funded health insurance benefits, 401(k) plan, payroll taxes, and unemployment compensation, were $6.9 million, a decrease of $1.0 million, or 13%, compared to the first quarter of 2024, and a decrease of $0.6 million, or 8%, compared to the second quarter of 2023.

The decrease compared to the first quarter of 2024 reflects higher seasonal payroll taxes and 401(k) contributions impacting the first quarter.

The decrease compared to the second quarter of 2023 is related to reductions in the workforce.

For the six months ended June 30, 2024, employee benefit costs totaled $14.8 million, a decrease of $1.3 million, or 8%, compared to the six months ended June 30, 2023.

The Company utilizes third parties for its core data processing systems.

Ongoing data processing costs are directly related to the number of transactions processed and the negotiated rates associated with those transactions.

Outsourced data processing costs totaled $12.1 million, $8.6 million, and $14.6 million for the first quarter of 2024, fourth quarter of 2023, and first quarter of 2023, respectively.

The increased costs in the first quarter of 2024 are attributed to $4.1 million in charges associated with contract terminations and modifications to consolidate systems, which should lead to lower ongoing operating expenses.

Total occupancy, furniture and equipment expenses were $10.0 million in the first quarter of 2024, $9.5 million in the fourth quarter of 2023, and $10.3 million in the first quarter of 2023.

Expenses in the first quarter of 2024 included charges of $0.8 million associated with early lease terminations and consolidation of locations as part of the Company’s expense reduction initiative.

Marketing expenses totaled $2.7 million in the first quarter of 2024, $3.0 million in the fourth quarter of 2023, and $2.2 million in the first quarter of 2023.

Legal and professional fees for the first quarter of 2024 were $2.2 million, a decrease of $1.1 million, or 35%, compared to the fourth quarter of 2023, and a decrease of $5.3 million, or 71%, compared to the first quarter of 2023.

There were no acquisition-related expenses in the first quarter of 2024 or the fourth quarter of 2023, compared to $4.8 million in the first quarter of 2023.

T a b l e o f C o n t e n t s

Outsourced data processing costs totaled $8.2 million, $12.1 million, and $20.2 million for the second quarter of 2024, first quarter of 2024, and second quarter of 2023, respectively.

The Company incurred one-time charges of $4.1 million early in the first quarter of 2024 associated with consolidation activities, leading to a comparative decline in expense in these categories in the second quarter of 2024.

For the six months ended June 30, 2024, outsourced data processing costs totaled $20.3 million, a decrease of $14.4 million, or 42%, compared to the six months ended June 30, 2023.

The 2023 period included $17.5 million in costs directly associated with bank acquisitions.

Total occupancy and furniture and equipment expenses were $9.1 million in the second quarter of 2024, $10.0 million in the first quarter of 2024, and $10.9 million in the second quarter of 2023.

The first quarter of 2024 included charges of $0.8 million associated with early lease terminations and consolidation of locations as part of the Company’s expense reduction initiative.

For the six months ended June 30, 2024, occupancy and furniture and equipment expenses totaled $19.2 million, a decrease of $2.0 million, or 10%, compared to the six months ended June 30, 2023.

Marketing expenses totaled $3.3 million in the second quarter of 2024, $2.7 million in the first quarter of 2024, and $2.0 million in the second quarter of 2023.

For the six months ended June 30, 2024, marketing expenses totaled $5.9 million, an increase of $1.6 million, or 38%, compared to the six months ended June 30, 2023.

Planned investments in branding and in marketing campaigns across the state led to higher marketing expenses.

Legal and professional fees for the second quarter of 2024 were $2.0 million, a decrease of $0.2 million, or 8%, compared to the first quarter of 2024, and a decrease of $2.1 million, or 51%, compared to the second quarter of 2023, which included $1.7 million in acquisition-related expenses.

For the six months ended June 30, 2024, legal and professional fees totaled $4.1 million, a decrease of $7.4 million, or 64%, compared to the six months ended June 30, 2023.

The 2023 period included $6.5 million in costs directly associated with bank acquisitions.

Provision for Credit Losses

The provision for credit losses was $1.4 million for the first quarter of 2024, compared to $4.0 million for the fourth quarter of 2023, and $31.6 million for the first quarter of 2023.

The first quarter of 2023 included a $26.6 million day-one provision associated with the acquisition of Professional.

For the first quarter of 2024, the Company recorded tax expense of $7.8 million, compared to $8.3 million in the fourth quarter of 2023 and $2.7 million in the first quarter of 2023.

Lower income tax expense in the first quarter of 2024 compared to the fourth quarter of 2023 and the first quarter of 2023 is primarily due to lower pre-tax income.

The provision for credit losses was $4.9 million for the second quarter of 2024, compared to $1.4 million for the first quarter of 2024, and a net benefit of $0.8 million for the second quarter of 2023.

For the six months ended June 30, 2024, provision for credit losses was $6.3 million, compared to $30.8 million for the six months ended June 30, 2023.

The first quarter of 2023 included a $26.6 million day-one provision recorded in conjunction with the Professional acquisition.

For the second quarter of 2024, the Company recorded tax expense of $8.9 million, an increase of $1.1 million, or 14%, compared to the first quarter of 2024 and a decrease of $1.3 million, or 13%, compared to the second quarter of 2023.

The effective tax rate for the second quarter of 2024 was 22.8%, compared to 24.6% in the first quarter of 2024 and 23.1% in the second quarter of 2023.

For the six months ended June 30, 2024, tax expense totaled $16.7 million, an increase of $3.9 million, or 30%, compared to the six months ended June 30, 2023, with an effective tax rate of 22.9% for the six months ended June 30, 2024, compared to 23.0% for the six months ended June 30, 2023.

Explanation of Certain Unaudited Non-GAAP Financial Measures

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These disclosures should not be considered an alternative to GAAP.

T a b l e o f C o n t e n t s

Reconciliation of Non-GAAP Measures

First Fourth First

Quarter Quarter Quarter

Second First Second Six Months Ended

Quarter Quarter Quarter June 30,

(Amounts in thousands, except per share data) 2024 2024 2023 2024 2023

1 unchanged sentence

Total noninterest income $ 22,184 $ 20,497 $ 21,576 $ 42,681 $ 44,021

Securities (gains) losses, net (229) 2,437 (107)

Securities losses (gains), net 44 (229) 176 (185) 69

BOLI benefits on death (included in other income) — — — — (2,117)

Total adjustments to noninterest income 44 (229) 176 (185) (2,048)

Adjusted noninterest income $ 20,268 $ 19,775 $ 20,221

Total adjusted noninterest income $ 22,228 $ 20,268 $ 21,752 $ 42,496 $ 41,973

Total noninterest expense $ 82,537 $ 90,371 $ 107,865 $ 172,908 $ 215,340

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Net adjusted noninterest expense to average tangible assets 2.19 % 2.23 % 2.40 % 2.21 % 2.44 %

Revenue $ 125,575 $ 128,157 $ 153,597

Total adjustments to revenue (229) 2,437 (2,224)

T a b l e o f C o n t e n t s

First Fourth First

Quarter Quarter Quarter

Second First Second Six Months Ended

Quarter Quarter Quarter June 30,

(Amounts in thousands, except per share data) 2024 2024 2023 2024 2023

Net revenue $ 126,608 $ 125,575 $ 148,539 $ 252,183 $ 302,136

Total adjustments to net revenue 44 (229) 176 (185) (2,048)

Impact of FTE adjustment 233 220 190 452 389

Adjusted revenue on a fully taxable equivalent basis $ 125,566 $ 130,810 $ 151,572

Adjusted net revenue on a fully taxable equivalent basis $ 126,885 $ 125,566 $ 148,905 $ 252,450 $ 300,477

Adjusted efficiency ratio 60.21 % 61.13 % 56.44 % 60.67 % 54.76 %

6 unchanged sentences

Total adjustments to noninterest income 44 (229) 176 (185) (2,048)

Total adjustments to noninterest expense including foreclosed property expense 7,068 573 19,018

Total adjustments to noninterest expense including other real estate owned expense and net (gain) loss on sale (109) 7,068 16,162 6,959 35,180

Adjusted pre-tax pre-provision earnings 2

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Adjusted return on average tangible common equity 10.76 % 11.15 % 16.08 % 10.95 % 13.32 %

Second First Second Six Months Ended

Quarter Quarter Quarter June 30,

(Amounts in thousands, except per share data) 2024 2024 2023 2024 2023

Loan interest income 3

8 unchanged sentences

5.52 % 5.48 % 5.31 % 5.50 % 5.24 %

T a b l e o f C o n t e n t s

First Fourth First

Quarter Quarter Quarter

(Amounts in thousands, except per share data) 2024 2023 2023

Net interest income 3

10 unchanged sentences

$ 24,195 $ 22,434 $ 21,018 $ 46,629 $ 40,393

Tax equivalent adjustment to securities (7) (13) (26)

Securities interest income excluding tax equivalent adjustment $ 22,427 $ 21,438 $ 19,349

Fully taxable equivalent adjustment to securities (7) (7) (23) (14) (49)

Securities interest income excluding fully taxable equivalent adjustment $ 24,188 $ 22,427 $ 20,995 $ 46,615 $ 40,344

Loan interest income 3

$ 147,518 $ 147,308 $ 148,432 $ 294,825 $ 283,773

Tax equivalent adjustment to loans (213) (203) (173)

Loan interest income excluding tax equivalent adjustment $ 147,095 $ 147,801 $ 135,168

Fully taxable equivalent adjustment to loans (226) (213) (167) (438) (340)

Loan interest income excluding fully taxable equivalent adjustment $ 147,292 $ 147,095 $ 148,265 $ 294,387 $ 283,433

Net interest income 3

$ 104,657 $ 105,298 $ 127,153 $ 209,954 $ 258,504

Tax equivalent adjustments to securities (7) (13) (26)

Tax equivalent adjustments to loans (213) (203) (173)

Net interest income excluding tax equivalent adjustments $ 105,078 $ 110,819 $ 131,152

Fully taxable equivalent adjustments to securities (7) (7) (23) (14) (49)

Fully taxable equivalent adjustments to loans (226) (213) (167) (438) (340)

Net interest income excluding fully taxable equivalent adjustments $ 104,424 $ 105,078 $ 126,963 $ 209,502 $ 258,115

1 Includes severance, contract termination costs, disposition of branch premises and fixed assets, and other costs to effect the Company’s branch consolidation and other expense reduction strategies.

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Financial Condition

Total assets as of March 31, 2024 were $14.8 billion, an increase of $0.2 billion, or 2%, from December 31, 2023.

Total assets as of June 30, 2024 were $15.0 billion, an increase of $372.4 million, or 3%, from December 31, 2023.

Information related to yields, maturities, carrying values and fair value of the Company’s securities is set forth in “Note 3 – Securities” of the Company’s condensed consolidated financial statements.

At March 31, 2024, the Company had $1.9 billion in AFS securities and $669.9 million in HTM securities.

At June 30, 2024, the Company had $2.0 billion in AFS securities and $658.1 million in HTM securities.

The Company’s total debt securities portfolio increased $108.9 million from December 31, 2023.

During the three months ended March 31, 2024, the Company recognized a $4.1 million gain on the opportunistic sale of Visa Class B shares.

The gain was offset by a partial repositioning of the securities portfolio, in which $86.8 million of securities were sold, with $3.8 million in realized losses.

Additionally, during the three months ended March 31, 2024, there were $261.0 million of debt securities purchased and $61.2 million in paydowns and maturities over the same period.

During the first quarter of 2024, the Company recognized a $4.1 million gain on the opportunistic sale of its Visa Class B shares.

The gain was offset by a partial repositioning

of the securities portfolio, in which $86.8 million of securities were sold, with $3.8 million in realized losses.

During the six months ended June 30, 2024, there were $376.7 million of debt securities purchased and $167.2 million in paydowns and maturities over the same period.

Debt securities generally return principal and interest monthly.

The modified duration of the AFS securities portfolio and the total portfolio was 4.5 and 4.9, respectively, at both March 31, 2024 and December 31, 2023.

At March 31, 2024, AFS securities had gross unrealized losses of $223.6 million and gross unrealized gains of $3.6 million, compared to gross unrealized losses of $217.7 million and gross unrealized gains of $4.4 million at December 31, 2023.

T a b l e o f C o n t e n t s

The modified duration of the AFS securities portfolio and the total portfolio was 4.5 and 4.8, respectively, at June 30, 2024 compared to 4.5 and 4.9, respectively, at December 31, 2023.

At June 30, 2024, AFS securities had gross unrealized losses of $228.1 million and gross unrealized gains of $3.3 million, compared to gross unrealized losses of $217.7 million and gross unrealized gains of $4.4 million at December 31, 2023.

The credit quality of the Company’s securities holdings is primarily investment grade.

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Collateralized loan obligations are special purpose vehicles that purchase first lien broadly syndicated corporate loans while providing support to senior tranche investors.

As of March 31, 2024, all of the Company’s collateralized loan obligations were in AAA/AA tranches with weighted average credit support of 34%.

As of June 30, 2024, all of the Company’s collateralized loan obligations were in AAA/AA tranches with weighted average credit support of 34%.

The Company utilizes credit models with assumptions of loan level defaults, recoveries, and prepayments to evaluate each security for potential credit losses.

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The Company has significant liquidity and available borrowing capacity through other sources if needed, and has the intent and ability to hold these investments to maturity.

At March 31, 2024, the Company has determined that all debt securities in an unrealized loss position are the result of both broad investment type spreads and the current interest rate environment.

At June 30, 2024, the Company has determined that all debt securities in an unrealized loss position are the result of both broad investment type spreads and the current interest rate environment.

Management believes that each investment will recover any price depreciation over its holding period as the debt securities move to maturity, and management has the intent and ability to hold these investments to maturity if necessary.

Therefore, at March 31, 2024, no allowance for credit losses has been recorded.

Therefore, at June 30, 2024, no allowance for credit losses has been recorded.

Loan Portfolio

Loans, net of unearned income and excluding the allowance for credit losses, were $10.0 billion at March 31, 2024, an $84.9 million, or 1%, decrease from December 31, 2023.

Loans, net of unearned income and excluding the allowance for credit losses, were $10.0 billion at June 30, 2024, a $24.4 million, or 0.2%, decrease from December 31, 2023.

The Company remains committed to sound risk management procedures.

Portfolio diversification in terms of asset mix, industry, and loan type has been and continues to be an important element of the Company’s lending strategy.

The average loan size is only $332 thousand, and the average commercial loan size is only $742 thousand at March 31, 2024, reflecting the Company’s longtime focus on granularity and on creating valuable customer relationships.

The average loan size is only $345 thousand, and the average commercial loan size is only $758 thousand at June 30, 2024, reflecting the Company’s longtime focus on granularity and on creating valuable customer relationships.

Lending policies contain guardrails that pertain to lending by type of collateral and purpose, along with limits regarding loan concentrations and the principal amount of loans.

The Company’s exposure to commercial real estate lending remains well below regulatory limits (see “Loan Concentrations”).

T a b l e o f C o n t e n t s

The following tables detail loan portfolio composition at March 31, 2024 and December 31, 2023 for portfolio loans, purchased credit deteriorated (“PCD”) and loans purchased which are not considered purchased credit deteriorated (“Non-PCD”) as defined in “Note 4 - Loans”.

March 31, 2024

The following tables detail loan portfolio composition at June 30, 2024 and December 31, 2023 for portfolio loans, purchased credit deteriorated (“PCD”) and loans purchased which are not considered purchased credit deteriorated (“Non-PCD”) as defined in “Note 4 - Loans”.

June 30, 2024

(In thousands) Portfolio Loans Acquired Non-PCD Loans PCD Loans Total

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Totals $ 6,571,454 $ 3,227,169 $ 264,317 $ 10,062,940

The amortized cost basis of loans included net deferred costs of $44.9 million at March 31, 2024 and $43.1 million at December 31, 2023.

At March 31, 2024, the remaining fair value adjustments on acquired loans were $163.4 million, or 4.6%, of the outstanding acquired loan balances, compared to $174.0 million, or 4.8%, of the acquired loan balances at December 31, 2023.

The amortized cost basis of loans included net deferred costs of $45.5 million at June 30, 2024 and $43.1 million at December 31, 2023.

At June 30, 2024, the remaining fair value adjustments on acquired loans were $151.4 million, or 4.5%, of the outstanding acquired loan balances, compared to $174.0 million, or 4.8%, of the acquired loan balances at December 31, 2023.

The discount is accreted into interest income over the remaining lives of the related loans on a level yield basis.

Collateral types and characteristics of non-owner occupied commercial real estate (“CRE”) loans as of March 31, 2024 were as follows:

March 31, 2024

Collateral types and characteristics of non-owner occupied commercial real estate (“CRE”) loans as of June 30, 2024 were as follows:

June 30, 2024

(In thousands)

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1 Loan-to-value is calculated based on the real estate value at the time of origination, renewal, or update, whichever is more recent.

CRE non-owner occupied loans increased by $48.4 million in the three months ended March 31, 2024, totaling $3.37 billion at March 31, 2024 compared to $3.32 billion at December 31, 2023.

Non-owner occupied CRE loans increased by $103.4 million in the six months ended June 30, 2024, totaling $3.4 billion at June 30, 2024 compared to $3.3 billion at December 31, 2023.

Non-owner occupied CRE loans are collateralized by properties where the source of repayment is typically from the sale or lease of the property.

Within the non-owner occupied CRE portfolio, the largest segment is Retail properties, which totaled approximately $1.12 billion at March 31, 2024.

T a b l e o f C o n t e n t s

This segment targets grocery or credit tenant-anchored shopping plazas, single credit tenant retail buildings, smaller outparcels, and other small retail units.

Within the non-owner occupied CRE portfolio, the largest segment is Retail properties, which totaled approximately $1.1 billion at June 30, 2024.

targets grocery or credit tenant-anchored shopping plazas, single credit tenant retail buildings, smaller outparcels, and other small retail units.

Loans in this segment have a weighted average loan to value of 50% and an average loan size of $2.2 million.

The second-largest segment in the non-owner occupied CRE portfolio is Office properties, which totaled $565.1 million at March 31, 2024.

The second-largest segment in the non-owner occupied CRE portfolio is office properties, which totaled $535.2 million at June 30, 2024.

This segment targets low to mid-rise suburban offices and is broadly diversified across many types of professional services.

1 unchanged sentence

Loans in this segment have a weighted average loan to value of 54% and an average loan size of $1.5 million.

Owner-occupied CRE loans decreased by $14.2 million in the three months ended March 31, 2024 to $1.7 billion.

Owner-occupied CRE loans decreased by $13.9 million in the six months ended June 30, 2024 to $1.7 billion.

Owner-occupied CRE is used by the owner, where the primary source of repayment is the cash flow from business operations housed within the property.

Commercial and financial loans are extended to commercial customers for working capital, physical asset expansion, asset acquisition or other business purposes.

Balances decreased $41.7 million, or 3%, from December 31, 2023, totaling $1.6 billion at March 31, 2024.

Residential mortgage loans increased $75.7 million to $2.5 billion during the three months ended March 31, 2024.

Included in the balance as of March 31, 2024, were $1.0 billion of fixed rate mortgages, $932.3 million of adjustable rate mortgages and $475.9 million in primarily floating rate home equity lines of credit (“HELOCs”), compared to $1.0 billion, $865.2 million and $488.2 million, respectively, at December 31, 2023.

Borrowers in the residential real estate portfolio have an average credit score of 752.

Balances decreased $25.6 million, or 2%, from December 31, 2023, totaling $1.6 billion at June 30, 2024.

Residential mortgage loans increased $109.6 million to $2.6 billion during the six months ended June 30, 2024.

Included in the balance as of June 30, 2024, were $984.6 million of fixed rate mortgages, $973.9 million of adjustable rate mortgages and $596.9 million in home equity loans and home equity lines of credit (“HELOCs”), compared to $1.0 billion, $865.2 million and $488.2 million, respectively, at December 31, 2023.

Substantially all residential originations have been underwritten to conventional loan agency standards, including loan balances that exceed agency value limitations.

The average LTV of our HELOC portfolio is 63%, with 33% of the loans being in first lien position at March 31, 2024, compared to an average LTV of 63%, with 35% of the portfolio being in the first lien position at December 31, 2023.

The Company also provides consumer loans, which include installment loans, auto loans, marine loans, and other consumer loans, which decreased $8.8 million, or 4%, to total $242.7 million at March 31, 2024, compared to $251.6 million at December 31, 2023.

The average LTV of our HELOC portfolio is 63%, with 34% of the loans being in first lien position at June 30, 2024, compared to an average LTV of 63%, with 35% of the portfolio being in the first lien position at December 31, 2023.

The Company also provides consumer loans, which include installment loans, auto loans, marine loans, and other consumer loans, which decreased $23.9 million, or 9%, to total $227.7 million at June 30, 2024, compared to $251.6 million at December 31, 2023.

Loan production and late-stage pipelines (loans in underwriting and approval or approved and not yet closed) are detailed in the following table for the periods specified.

First Fourth First

Pipelines include lines of credit at the full proposed commitment amount, which may not result in fully funded originations.

Second First Second

Quarter Quarter Quarter

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Consumer originations 59,973 48,244 97,184

Commercial and commercial real estate originations during the first quarter of 2024 were $260.0 million, a decrease of $74.2 million, or 22%, compared to the fourth quarter of 2023, and a decrease of $60.2 million, or 19%, compared to the first quarter of 2023.

Lower originations compared to the fourth quarter of 2023 were consistent with typical seasonality.

Lower originations compared to the first quarter of 2023 were largely the result of the impact of higher rates on customer demand.

Commercial and commercial real estate pipelines were $498.6 million as of March 31, 2024, an increase of 63% from $306.5 million at December 31, 2023, and an increase of 72% from $289.2 million at March 31, 2023.

T a b l e o f C o n t e n t s

SBA originations totaled $18.9 million during the first quarter of 2024, a decrease of $6.1 million compared to the fourth quarter of 2023, and an increase of $17.5 million compared to the first quarter of 2023.

Residential loans originated for sale in the secondary market totaled $4.6 million in the first quarter of 2024, compared to $15.6 million in the fourth quarter of 2023 and $13.9 million in the first quarter of 2023.

Residential saleable pipelines were $9.3 million as of March 31, 2024, compared to $2.7 million as of December 31, 2023 and $6.6 million as of March 31, 2023.

Residential loan production retained in the portfolio for the first quarter of 2024 was $36.4 million, compared to $41.2 million in the fourth quarter of 2023 and $90.1 million in the first quarter of 2023.

The pipeline of residential loans intended to be retained in the portfolio was $24.4 million as of March 31, 2024, compared to $44.4 million as of December 31, 2023, and $48.4 million as of March 31, 2023.

Consumer originations, which include HELOCs, totaled $48.2 million during the first quarter of 2024, compared to $61.8 million in the fourth quarter of 2023 and $110.6 million in the first quarter of 2023.

The consumer pipeline was $25.1 million as of March 31, 2024, compared to $18.7 million as of December 31, 2023 and $38.7 million at March 31, 2023.

Commercial and commercial real estate originations during the second quarter of 2024 were $406.0 million, an increase of $145.9 million, or 56%, compared to the first quarter of 2024, and an increase of $98.5 million, or 32%, compared to the second quarter of 2023.

The Company is benefiting from the investment made in recent years to attract talent from regional banks across its markets.

This talent is onboarding significant new relationships, resulting in growing pipelines.

Commercial and commercial real estate pipelines were $743.8 million as of June 30, 2024, an increase of 49% from $498.6 million at March 31, 2024, and an increase of 274% from $199.0 million at June 30, 2023.

SBA originations totaled $8.2 million during the second quarter of 2024, a decrease of $10.7 million compared to the first quarter of 2024, and a decrease of $1.7 million compared to the second quarter of 2023.

Residential loans originated for sale in the secondary market totaled $21.4 million in the second quarter of 2024, compared to $15.3 million in the first quarter of 2024 and $19.1 million in the second quarter of 2023.

Residential saleable pipelines were $12.1 million as of June 30, 2024, compared to $9.3 million as of March 31, 2024 and $11.5 million as of June 30, 2023.

Residential loan production retained in the portfolio for the second quarter of 2024 was $42.4 million, compared to $51.4 million in the first quarter of 2024 and $85.3 million in the second quarter of 2023.

The pipeline of residential loans intended to be retained in the portfolio was $24.7 million as of June 30, 2024, compared to $24.4 million as of March 31, 2024, and $27.1 million as of June 30, 2023.

Consumer originations, which include HELOCs, totaled $60.0 million during the second quarter of 2024, compared to $48.2 million in the first quarter of 2024 and $97.2 million in the second quarter of 2023.

The consumer pipeline was $24.5 million as of June 30, 2024, compared to $25.1 million as of March 31, 2024 and $28.4 million at June 30, 2023.

Loan Concentrations

The Company has developed guardrails to manage loan types that are most impacted by stressed market conditions to minimize credit risk concentration to capital.

Outstanding balances for commercial and commercial real estate loan relationships greater than $10 million totaled $2.3 billion, representing 23% of the total portfolio, at both March 31, 2024 and December 31, 2023.

The Company’s ten largest commercial and commercial real estate funded and unfunded relationships at March 31, 2024 aggregated to $552.1 million, of which $386.8 million was funded, compared to $505.7 million at December 31, 2023, of which $348.3 million was funded.

Outstanding balances for commercial and commercial real estate loan relationships greater than $10 million totaled $2.4 billion, representing 24% of the total portfolio at June 30, 2024, compared to $2.3 billion, or 23%, at December 31, 2023.

The Company’s ten largest commercial and commercial real estate funded and unfunded relationships at June 30, 2024 aggregated to $546.7 million, of which $400.6 million was funded, compared to $505.7 million at December 31, 2023, of which $348.3 million was funded.

Concentrations in construction and land development loans and CRE loans are maintained well below regulatory limits.

Construction and land development and CRE loan concentrations as a percentage of subsidiary bank total risk based capital were 39% and 236%, respectively, at March 31, 2024, compared to 48% and 244%, respectively, at December 31, 2023.

Construction and land development and CRE loan concentrations as a percentage of subsidiary bank total risk based capital were 36% and 235%, respectively, at June 30, 2024, compared to 48% and 244%, respectively, at December 31, 2023.

Regulatory guidance suggests limits of 100% and 300%, respectively.

On a consolidated basis, construction and land development and commercial real estate loans represent 36% and 222%, respectively, of total consolidated risk based capital as of March 31, 2024.

On a consolidated basis, construction and land development and commercial real estate loans represent 34% and 222%, respectively, of total consolidated risk based capital as of June 30, 2024 compared to 45% and 228%, respectively, at December 31, 2023.

To determine these ratios, the Company defines CRE in accordance with the guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) issued by the federal bank regulatory agencies in 2006 (and reinforced in 2015), which defines CRE loans as exposures secured by land development and construction, including 1-4 family residential construction, multi-family property, and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property (i.e., loans for which 50 percent or more of the source of repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property.

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Nonperforming Loans, Troubled Borrower Modifications, Other Real Estate Owned and Credit Quality

Nonperforming assets (“NPAs”) at March 31, 2024 totaled $84.5 million, and were comprised of $77.2 million of nonaccrual loans, and $7.3 million of other real estate owned (“OREO”), including $7.0 million of branches taken out of service.

Overall, NPAs increased $11.9 million, or 16%, from $72.7 million as of December 31, 2023.

Nonperforming assets to total assets at March 31, 2024 increased to 0.57% from 0.50% at December 31, 2023.

Compared to December 31, 2023, nonaccrual loans increased $12.1 million, or 19%.

Approximately 58% of nonaccrual loans were secured with real estate at March 31, 2024.

Nonperforming loans to total loans outstanding at March 31, 2024 increased to 0.77% from 0.65% at December 31, 2023.

Nonperforming assets (“NPAs”) at June 30, 2024 totaled $66.8 million, and were comprised of $59.9 million of nonaccrual loans, and $6.9 million of other real estate owned (“OREO”), including $5.7 million of branches taken out of service.

Overall, NPAs decreased $5.9 million, or 8%, from $72.7 million as of December 31, 2023.

Nonperforming assets to total assets at June 30, 2024 decreased to 0.45% from 0.50% at December 31, 2023.

Compared to December 31, 2023, nonaccrual loans decreased $5.2 million, or 8%.

Approximately 58% of nonaccrual loans were secured with real estate at June 30, 2024.

Nonperforming loans to total loans outstanding at June 30, 2024 decreased to 0.60% from 0.65% at December 31, 2023.

See the tables below for the payment status of nonaccrual loans.

T a b l e o f C o n t e n t s

The table below sets forth details related to nonaccrual loans.

March 31, 2024

June 30, 2024

Nonaccrual Loans

(In thousands) Non-Current Current Total

Construction and land development $ 419 $ 473 $ 892

Construction & land development $ 202 $ 1,307 $ 1,509

Commercial real estate - owner occupied 4,021 4,322 8,343

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In certain circumstances, the Company provides modifications of loans to borrowers experiencing financial difficulty, which the Company refers to as troubled borrower modifications (“TBMs”).

Loans that were modified as TBMs during the three months ended March 31, 2024 are included in “Note 4 - Loans”.

Loans that were modified as TBMs during the six months ended June 30, 2024 are included in “Note 4 - Loans”.

Allowance for Credit Losses on Loans

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Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments.

During the three months ended March 31, 2024, the Company recorded provision expense of $1.4 million.

The Company reported net charge-offs for the three months ended March 31, 2024 of $3.6 million.

The ratio of allowance for credit losses to total loans was 1.47% at March 31, 2024, 1.48% at December 31, 2023, and 1.54% at March 31, 2023.

T a b l e o f C o n t e n t s

The Company recorded provision expense of $4.9 million and $6.3 million, respectively, for the three and six months ended June 30, 2024, compared to $0.8 million and $30.8 million, respectively, for the three and six months ended June 30, 2023.

The Company recorded net charge-offs of $9.9 million and $13.6 million, respectively, in the three and six months ended June 30, 2024, compared to $0.7 million and $3.9 million, respectively, for the three and six months ended June 30, 2023.

The ratio of allowance for credit losses to total loans was 1.41% at June 30, 2024, 1.48% at December 31, 2023, and 1.58% at June 30, 2023.

Cash and Cash Equivalents and Liquidity Risk Management

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Cash flows from operations are a significant component of liquidity risk management and the Company considers both deposit maturities and the scheduled cash flows from loan and investment maturities and payments when managing risk.

Cash and cash equivalents, including interest bearing deposits, totaled $682.7 million at March 31, 2024, compared to $447.2 million at December 31, 2023.

Higher cash and cash equivalent balances at March 31, 2024 are consistent with the Company’s strategic balance sheet management.

Cash and cash equivalents, including interest bearing deposits, totaled $749.5 million at June 30, 2024, compared to $447.2 million at December 31, 2023.

Higher cash and cash equivalent balances at June 30, 2024 are consistent with the Company’s strategic balance sheet management.

Deposits are a primary source of liquidity.

The stability of this funding source is affected by numerous factors, including returns available to customers on alternative investments, the quality of customer service levels, perception of safety and competitive forces.

Total uninsured deposits were estimated to be $4.2 billion at March 31, 2024, representing 35% of overall deposit accounts.

Total uninsured deposits were estimated to be $4.1 billion at June 30, 2024, representing 34% of overall deposit accounts.

This includes public funds under the Florida Qualified Public Depository program, which provides loss protection to depositors beyond FDIC insurance limits.

Excluding such balances, the uninsured and uncollateralized deposits were 29% of total deposits at March 31, 2024.

Excluding such balances, the uninsured and uncollateralized deposits were 29% of total deposits at June 30, 2024.

The Company has liquidity sources as discussed below, including cash and lines of credit with the FRB and FHLB, that represent 154% of uninsured deposits, and 181% of uninsured and uncollateralized deposits.

In addition to $682.7 million in cash and cash equivalents at March 31, 2024, the Company had $5.1 billion in available borrowing capacity, including $4.4 billion in available collateralized lines of credit, $391.3 million of unpledged debt securities available as collateral for potential additional borrowings, and available unsecured lines of credit of $300.0 million.

In addition to $749.5 million in cash and cash equivalents at June 30, 2024, the Company had $5.6 billion in available borrowing capacity, including $4.3 billion in available collateralized lines of credit, $944.3 million of unpledged debt securities available as collateral for potential additional borrowings, and available unsecured lines of credit of $348.0 million.

The Company may also access funding by acquiring brokered deposits.

Brokered deposits at March 31, 2024 totaled $142.7 million compared to $122.3 million at December 31, 2023.

Brokered deposits at June 30, 2024 totaled $325.0 million compared to $122.3 million at December 31, 2023.

Contractual maturities for assets and liabilities are reviewed to meet current and expected future liquidity requirements.

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The Company has traditionally relied upon dividends from Seacoast Bank and securities offerings to provide funds to pay the Company’s expenses and to service the Company’s debt.

During the first quarter of 2024, Seacoast Bank distributed $15.1 million to the Company and, at March 31, 2024, is eligible to distribute dividends to the Company of approximately $138.7 million without prior regulatory approval.

At March 31, 2024, the Company had cash and cash equivalents at the parent of approximately $101.5 million, compared to $101.7 million at December 31, 2023.

T a b l e o f C o n t e n t s

During the second quarter of 2024, Seacoast Bank distributed $13.3 million to the Company and, at June 30, 2024, is eligible to distribute dividends to the Company of approximately $156.2 million without prior regulatory approval.

At June 30, 2024, the Company had cash and cash equivalents at the parent of approximately $101.5 million, compared to $101.7 million at December 31, 2023.

Deposits and Borrowings

Customer relationship funding is detailed in the following table for the periods specified:

March 31, December 31,

June 30, December 31,

(In thousands, except ratios) 2024 2023

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Total deposits $ 12,116,118 $ 11,776,935

Customer sweep accounts 326,732 374,573

Securities sold under agreements to repurchase 262,103 374,573

Total customer funding 1

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Noninterest demand deposits as % of total deposits 28 % 30 %

1 Total deposits and customer sweep accounts, excluding brokered deposits.

1 Total deposits and securities sold under agreements to repurchase, excluding brokered deposits.

Securities sold under agreements to repurchase consists of customer sweep accounts.

The Company benefits from a diverse and granular deposit base that serves as a significant source of strength.

Total deposits increased $238.9 million, or 2%, to $12.0 billion at March 31, 2024 compared to December 31, 2023.

Noninterest demand deposits represented 30% of total deposits at both March 31, 2024 and December 31, 2023.

Transaction account balances (noninterest demand and interest-bearing demand) represented 52% of total deposits at March 31, 2024, compared to 54% at December 31, 2023.

Customer sweep accounts totaled $326.7 million at March 31, 2024, decreasing $47.8 million, or 13%, from December 31, 2023.

Total deposits increased $339.2 million, or 2.9%, to $12.1 billion at June 30, 2024 compared to December 31, 2023.

Noninterest demand deposits represented 28% and 30% of total deposits at June 30, 2024 and December 31, 2023, respectively.

Customer transaction account balances (noninterest demand and interest-bearing demand) represented 50% of total deposits at June 30, 2024, compared to 54% at December 31, 2023.

Customer sweep accounts totaled $262.1 million at June 30, 2024, decreasing $112.5 million, or 30%, from December 31, 2023.

Repurchase agreements are offered by Seacoast to select customers who wish to sweep excess balances on a daily basis for investment purposes.

At March 31, 2024 and December 31, 2023, long-term debt included $72.3 million and $72.2 million, respectively, related to trust preferred securities issued by trusts organized or acquired by the Company.

At March 31, 2024, the average interest rate in effect on our outstanding subordinated debt related to trust preferred securities was 7.29%, compared to 7.34% at December 31, 2023.

At June 30, 2024 and December 31, 2023, long-term debt included $72.3 million and $72.2 million, respectively, related to trust preferred securities issued by trusts organized or acquired by the Company.

At June 30, 2024, the average interest rate in effect on our outstanding subordinated debt related to trust preferred securities was 7.31%, compared to 7.34% at December 31, 2023.

All trust preferred securities are guaranteed by the Company on a junior subordinated basis.

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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.

Federal Home Loan Bank advances totaled $110.0 million at March 31, 2024 with a weighted average interest rate of 4.15%, compared to $50.0 million at December 31, 2023 with an interest rate of 3.23%.

T a b l e o f C o n t e n t s

Federal Home Loan Bank advances totaled $180.0 million at June 30, 2024 with a weighted average interest rate of 4.18%, compared to $50.0 million at December 31, 2023 with an interest rate of 3.23%.

Off-Balance Sheet Transactions

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These instruments are not recorded on the balance sheet until funds are advanced under the commitment.

Unfunded commitments to extend credit were $2.7 billion at both March 31, 2024 and December 31, 2023.

Unfunded commitments to extend credit were $2.7 billion at both June 30, 2024 and December 31, 2023.

In the normal course of business, the Company and Seacoast Bank enter into agreements, or are subject to regulatory agreements that result in cash, debt and dividend restrictions.

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Seacoast Bank may be required to maintain reserve balances with the FRB.

There was no reserve requirement at March 31, 2024 or December 31, 2023.

There was no reserve requirement at June 30, 2024 or December 31, 2023.

Under FRB regulation, Seacoast Bank is limited as to the amount it may loan to its affiliates, including the Company, unless such loans are collateralized by specified obligations.

At March 31, 2024, the maximum amount available for transfer from Seacoast Bank to the Company in the form of loans approximated $184.1 million, if the Company has sufficient acceptable collateral.

There were no loans made to affiliates during the three months ended March 31, 2024.

At June 30, 2024, the maximum amount available for transfer from Seacoast Bank to the Company in the form of loans approximated $184.5 million, if the Company has sufficient acceptable collateral.

There were no loans made to affiliates during the six months ended June 30, 2024.

Capital Resources

The Company’s equity capital at March 31, 2024 increased $9.7 million from December 31, 2023 to $2.1 billion.

Changes in equity included an increase from net income of $26.0 million, partially offset by the payment of common stock dividends totaling $15.3 million and a decrease in accumulated other comprehensive income of $4.1 million.

The ratio of shareholders’ equity to period end total assets was 14.28% and 14.46% at March 31, 2024 and December 31, 2023, respectively.

The ratio of tangible shareholders’ equity to tangible assets was 9.25% and 9.31% at March 31, 2024 and December 31, 2023, respectively.

The Company’s equity capital at June 30, 2024 increased $22.3 million, or 1%, from December 31, 2023 to $2.1 billion.

Changes in equity included an increase from net income of $56.3 million, partially offset by the payment of common stock dividends totaling $30.8 million.

The ratio of shareholders’ equity to period end total assets was 14.25% and 14.46% at June 30, 2024 and December 31, 2023, respectively.

The ratio of tangible shareholders’ equity to tangible assets was 9.30% and 9.31% at June 30, 2024 and December 31, 2023, respectively.

Changes in the value of HTM securities are not reflected in shareholders’ equity under GAAP;

however, illustratively, if all HTM securities were presented at fair value, the tangible common equity ratio would have been 8.59% at March 31, 2024 and 8.68% at December 31, 2023.

Activity in shareholders’ equity for the three months ended March 31, 2024 and 2023 follows:

however, illustratively, if all HTM securities were presented at fair value, the tangible common equity ratio would have been 8.64% at June 30, 2024 and 8.68% at December 31, 2023.

Activity in shareholders’ equity for the six months ended June 30, 2024 and 2023 follows:

(In thousands) 2024 2023

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Net income 56,250 43,076

Stock based compensation expense 6,105 7,096

Common stock transactions related to stock based employee benefit plans (298) 3,731

Issuance of common stock and conversion of options pursuant to acquisition — 421,042

Stock based compensation expense 2,217 2,642

Repurchase of common stock (880) (45)

Dividends on common stock ($0.36 per share and $0.35 per share, respectively)

1 unchanged sentence

Change in accumulated other comprehensive income (8,132) 1,209

Ending balance at March 31, 2024 and 2023

Ending balance at June 30, 2024 and 2023

$ 2,130,381 $ 2,054,032

T a b l e o f C o n t e n t s

Capital ratios are well above regulatory requirements for well-capitalized institutions.

Management’s use of risk-based capital ratios in its analysis of the Company’s capital adequacy are not GAAP financial measures.

Seacoast’s management uses these measures to assess the quality of capital and believes that investors may find it useful in their analysis of the Company.

Seacoast’s management uses these

measures to assess the quality of capital and believes that investors may find it useful in their analysis of the Company.

The capital measures are not necessarily comparable to similar capital measures that may be presented by other companies and Seacoast does not nor should investors consider such non-GAAP financial measures in isolation from, or as a substitute for GAAP financial information (see “Note 8 – Regulatory Capital”).

March 31, 2024 Seacoast

June 30, 2024 Seacoast

(Consolidated) Seacoast

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For regulatory purposes, the trust preferred securities are added to the Company’s tangible common shareholders’ equity to calculate Tier 1 capital.

T a b l e o f C o n t e n t s

Critical Accounting Policies and Estimates

The Company’s critical accounting policies are discussed in the MD&A in Seacoast’s Annual Report on Form 10-K for the year ended December 31, 2023.

Significant accounting policies and changes in accounting principles and effects of recently issued accounting pronouncements are discussed in “Note 1 – Significant Accounting Policies” in Form 10-K for the year ended December 31, 2023.

Significant accounting policies are discussed in “Note 1 – Significant Accounting Policies” in Form 10-K for the year ended December 31, 2023.

Disclosures regarding the effects of new accounting pronouncements are included in “Note 1 – Basis of Presentation” in this report.

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The analysis of the impact on net interest income over a twelve-month period is subjected to instantaneous changes in market rates and is monitored at least quarterly.

The following table presents the ALCO simulation model’s projected impact of a change in interest rates on the projected baseline net interest income for the 12 and 24 month periods beginning April 1, 2024, holding all balances on the balance sheet static.

The following table presents the ALCO simulation model’s projected impact of a change in interest rates on the projected baseline net interest income for the 12 and 24 month periods beginning July 1, 2024, holding all balances on the balance sheet static.

This change in interest rates assumes parallel shifts in the yield curve and does not take into account changes in the slope of the yield curve nor changes in balance sheet size or mix.

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Net Interest Income

March 31, 2024

June 30, 2024

Change in Interest Rates 1-12 months 13-24 months

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Mortgage origination and refinancing tends to slow as interest rates increase, and higher interest rates likely will reduce the Company’s earnings from such activities and the income from the sale of residential mortgage loans in the secondary market.

T a b l e o f C o n t e n t s

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis