What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-07 · 135 added, 128 removed, 880 unchanged (23% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except per share data) 2024 2023 2024 2023

20 unchanged sentences

23,492 18,180 65,988 62,270

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

Securities gains (losses), net 187 ( 387 ) 372 ( 456 )

Total Noninterest Income 23,679 17,793 66,360 61,814

9 unchanged sentences

Amortization of intangibles 6,002 7,457 18,297 21,838

Other real estate owned expense and net (gain) loss on sale ( 109 ) ( 57 ) ( 135 ) 138

Other real estate owned expense and net loss on sale 491 274 356 412

Provision for credit losses on unfunded commitments 250 — 751 1,239

13 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(In thousands) Three Months Ended June 30, Six Months Ended June 30,

(In thousands) Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

1 unchanged sentence

Other comprehensive income (loss):

Unrealized losses on available-for-sale securities, net of tax benefit of $ 1.2 million and $ 3.7 million for the three and six months ended June 30, 2024, respectively, and net of tax benefit of $ 7.1 million and $ 1.2 million for the three and six months ended June 30, 2023, respectively

Unrealized gains (losses) on available-for-sale securities, net of tax expense of $ 14.4 million and $ 10.6 million for the three and nine months ended September 30, 2024, respectively, and net of tax benefit of $ 8.1 million and $ 9.3 million for the three and nine months ended September 30, 2023, respectively

44,972 ( 26,065 ) 33,477 ( 29,764 )

Amortization of unrealized gains on securities transferred to held-to-maturity, net of tax benefit of $ 4 thousand and $ 7 thousand for the three and six months ended June 30, 2024, respectively, and net of tax benefit of $ 3 thousand and $ 6 thousand for the three and six months ended June 30, 2023, respectively

Amortization of unrealized losses on securities transferred to held-to-maturity, net of tax benefit of $ 3 thousand and $ 11 thousand for the three and nine months ended September 30, 2024, respectively, and net of tax benefit of $ 3 thousand and $ 10 thousand for the three and nine months ended September 30, 2023, respectively

( 11 ) ( 11 ) ( 31 ) ( 32 )

Reclassification adjustment for losses (gains) included in net income, net of tax benefit of $ 1.0 million and tax expense of $ 1 thousand for the six months ended June 30, 2024 and June 30, 2023, respectively

Reclassification adjustment for losses (gains) included in net income, net of tax benefit of $ 68 thousand and $ 1.0 million for the three and nine months ended September 30, 2024, respectively, and net of tax expense of $ 1 thousand for the nine months ended September 30, 2023

201 — 3,006 ( 4 )

Unrealized (losses) gains on derivatives designated as fair value hedges, net of reclassifications to income, net of tax benefit of $ 0.2 million and tax expense of $ 0.2 million for the three and six months ended June 30, 2024, respectively, and net of tax expense of $ 1.6 million for the three and six months ended June 30, 2023, respectively

Unrealized (losses) gains on derivatives designated as fair value hedges, net of reclassifications to income, net of tax benefit of $ 0.8 million and $ 0.6 million for the three and nine months ended September 30, 2024, respectively, and net of tax expense of $ 0.2 million and $ 1.8 million for the three and nine months ended September 30, 2023, respectively

( 2,322 ) 504 ( 1,744 ) 5,236

Unrealized gains on derivatives designated as cash flow hedges, net of reclassifications to income, net of tax expense of $ 38 thousand and $ 71 thousand for the three and six months ended June 30, 2023, respectively

Total other comprehensive (loss) income $ ( 4,054 ) $ ( 17,391 ) $ ( 8,132 ) $ 1,209

Unrealized gains on derivatives designated as cash flow hedges, net of reclassifications to income, net of tax expense of $ 43 thousand and $ 114 thousand for the three and nine months ended September 30, 2023, respectively

Total other comprehensive income (loss) $ 42,840 $ ( 25,447 ) $ 34,708 $ ( 24,238 )

Comprehensive Income $ 73,491 $ 5,967 $ 121,609 $ 50,252

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS (Unaudited)

June 30, December 31,

September 30, December 31,

(In thousands, except share data) 2024 2023

5 unchanged sentences

Securities available-for-sale (at fair value) 2,160,055 1,836,020

Securities held-to-maturity (fair value $ 527.3 million at June 30, 2024 and $ 558.4 million at December 31, 2023)

Securities held-to-maturity (fair value $ 538.5 million at September 30, 2024 and $ 558.4 million at December 31, 2023)

646,050 680,313

20 unchanged sentences

Shareholders’ Equity

Common stock, par value $ 0.10 per share, authorized 120,000,000 shares, issued 86,003,198 and outstanding 85,299,154 at June 30, 2024, and authorized 120,000,000 , issued 85,480,183 and outstanding 84,861,498 shares at December 31, 2023

Common stock, par value $ 0.10 per share, authorized 120,000,000 shares, issued 86,142,157 and outstanding 85,441,001 at September 30, 2024, and authorized 120,000,000 , issued 85,480,183 and outstanding 84,861,498 shares at December 31, 2023

Additional paid-in capital 1,821,050 1,808,883

10 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2024 2023

11 unchanged sentences

Deferred income taxes 7,321 ( 3,348 )

Gain on securities ( 185 ) ( 69 )

(Gains) losses on securities ( 372 ) 456

Gains on sale of loans ( 4,251 ) ( 2,993 )

Gains on sale and write-downs of other real estate owned ( 135 ) ( 64 )

Losses (gains) on sale and write-downs of other real estate owned 134 ( 37 )

Losses on disposition of fixed assets and write-downs upon transfer of bank premises to other real estate owned 284 1,755

1 unchanged sentence

Net decrease in other assets 24,973 5,046

Net decrease in other liabilities ( 6,977 ) ( 24,002 )

Net increase in other liabilities 4,606 1,684

Net cash provided by operating activities $ 134,909 $ 120,730

18 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2024 2023

8 unchanged sentences

Dividends paid ( 46,170 ) ( 45,236 )

Net cash provided by financing activities $ 324,786 $ 139,292

Net cash provided by (used in) financing activities $ 451,176 $ ( 114,646 )

Net increase in cash and cash equivalents 189,876 494,042

2 unchanged sentences

Supplemental disclosure of cash flow information:

Cash paid during the period for interest $ 144,396 $ 67,991

Cash paid during the period for taxes 5,888 6,080

Cash paid for interest $ 219,201 $ 124,927

Cash paid (refunded) for taxes, net 10,888 ( 7,920 )

Recognition of operating lease right-of-use assets, other than through bank acquisitions, net of terminations — 2,068

13 unchanged sentences

(In thousands) Shares Amount Total

Balance at March 31, 2024

Balance at June 30, 2024

85,299 $ 8,530 $ 1,815,800 $ 492,805 $ ( 18,744 ) $ ( 168,010 ) $ 2,130,381

Comprehensive income (loss) — — — 30,244 — ( 4,054 ) 26,190

Comprehensive income — — — 30,651 — 42,840 73,491

Stock based compensation expense — — 4,128 — — — 4,128

Common stock transactions related to stock based employee benefit plans 142 84 1,122 — 64 — 1,270

Repurchase of common stock ( 40 ) — — — ( 880 ) — ( 880 )

Dividends on common stock ($ 0.18 per share)

— — — ( 15,420 ) — — ( 15,420 )

Three months ended June 30, 2024 364 36 3,859 14,788 ( 1,998 ) ( 4,054 ) 12,631

Balance at June 30, 2024

Three months ended September 30, 2024 142 84 5,250 15,231 64 42,840 63,469

Balance at September 30, 2024

85,441 $ 8,614 $ 1,821,050 $ 508,036 $ ( 18,680 ) $ ( 125,170 ) $ 2,193,850

8 unchanged sentences

84,861 $ 8,486 $ 1,808,883 $ 467,305 $ ( 16,710 ) $ ( 159,878 ) $ 2,108,086

Comprehensive income (loss) — — — 56,250 — ( 8,132 ) 48,118

Comprehensive income — — — 86,901 — 34,708 121,609

Stock based compensation expense — — 10,233 — — — 10,233

3 unchanged sentences

— — — ( 46,170 ) — — ( 46,170 )

Six months ended June 30, 2024 438 44 6,917 25,500 ( 2,034 ) ( 8,132 ) 22,295

Balance at June 30, 2024

Nine months ended September 30, 2024 580 128 12,167 40,731 ( 1,970 ) 34,708 85,764

Balance at September 30, 2024

85,441 $ 8,614 $ 1,821,050 $ 508,036 $ ( 18,680 ) $ ( 125,170 ) $ 2,193,850

6 unchanged sentences

(In thousands) Shares Amount Total

Balance at March 31, 2023

Balance at June 30, 2023

85,086 $ 8,509 $ 1,809,431 $ 437,087 $ ( 14,171 ) $ ( 186,824 ) $ 2,054,032

2 unchanged sentences

Common stock transactions related to stock based employee benefit plans 34 6 443 — 136 — 585

Common stock issued for stock options 103 10 1,248 — — — 1,258

Repurchase of common stock ( 3 ) — ( 45 ) — — — ( 45 )

Dividends on common stock ($ 0.18 per share)

— — — ( 15,384 ) — — ( 15,384 )

Three months ended June 30, 2023 477 48 5,533 15,816 ( 1,058 ) ( 17,391 ) 2,948

Balance at June 30, 2023

Three months ended September 30, 2023 64 6 3,637 16,030 136 ( 25,447 ) ( 5,638 )

Balance at September 30, 2023

85,150 $ 8,515 $ 1,813,068 $ 453,117 $ ( 14,035 ) $ ( 212,271 ) $ 2,048,394

11 unchanged sentences

Common stock transactions related to stock based employee benefit plans 713 74 5,258 — ( 1,016 ) — 4,316

Common stock issued for stock options 231 22 5,018 — — — 5,040

Repurchase of common stock ( 3 ) — ( 45 ) — — — ( 45 )

Issuance of common stock, pursuant to acquisitions 12,792 1,279 409,459 — — — 410,738

Conversion of options, pursuant to acquisitions — — 10,304 — — — 10,304

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

Dividends on common stock ($ 0.53 per share)

— — — ( 45,236 ) — — ( 45,236 )

Six months ended June 30, 2023 13,468 1,347 431,629 13,224 ( 1,152 ) 1,209 446,257

Balance at June 30, 2023

Nine months ended September 30, 2023 13,532 1,353 435,266 29,254 ( 1,016 ) ( 24,238 ) 440,619

Balance at September 30, 2023

85,150 $ 8,515 $ 1,813,068 $ 453,117 $ ( 14,035 ) $ ( 212,271 ) $ 2,048,394

10 unchanged sentences

Certain prior period amounts have been reclassified to conform to the current period presentation.

Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or any other period.

Operating results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or any other period.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

12 unchanged sentences

The Company does not expect the adoption of the standard to have a material impact on its disclosures.

In November 2024, the FASB issued ASU 2024-03, “Expense Disaggregation Disclosures.” ASU 2024-03 requires disclosure to disaggregate prescribed expenses within relevant income statement captions.

The standard is effective for fiscal years beginning after December 15, 2026 and for interim periods after December 15, 2027.

Early adoption is permitted.

The Company is evaluating the impact of the changes to its existing disclosures.

Note 2 – Earnings per Share

Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the 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.

For the three and six months ended June 30, 2024, options to purchase shares of the Company’s common stock totaling 327,805 and 328,166 , respectively, were anti-dilutive.

For the three and six months ended June 30, 2023, options to purchase shares of the Company’s common stock totaling 400,998 and 368,169 , respectively, were anti-dilutive.

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

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.

For the three and nine months ended September 30, 2024, options to purchase shares of the Company’s common stock totaling 327,006 and 328,045 , respectively, were anti-dilutive.

For the three and nine months ended September 30, 2023, 368,968 options to purchase shares of the Company’s common stock were anti-dilutive.

Three Months Ended September 30, Nine Months Ended September 30,

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

10 unchanged sentences

Note 3 – Securities

The amortized cost, gross unrealized gains and losses and fair value of securities available-for-sale (“AFS”) and held-to-maturity (“HTM”) at June 30, 2024 and December 31, 2023 are summarized as follows:

June 30, 2024

The amortized cost, gross unrealized gains and losses and fair value of securities available-for-sale (“AFS”) and held-to-maturity (“HTM”) at September 30, 2024 and December 31, 2023 are summarized as follows:

September 30, 2024

(In thousands) Amortized

40 unchanged sentences

Totals $ 680,313 $ — $ ( 121,954 ) $ 558,359

During each of the three months ended June 30, 2024 and June 30, 2023, there were no sales of securities.

During the six months ended June 30, 2024, debt securities with a fair value of $ 86.8 million were sold, with gross losses of $ 3.8 million.

During the six months ended June 30, 2023, debt securities with a fair value of $ 22.1 million obtained in the acquisition of Professional Holding Corp.

During the three months ended September 30, 2024, debt securities with a fair value of $ 17.6 million were sold, with gross losses of $ 0.3 million.

There were no sales of debt securities during the three months ended September 30, 2023.

nine months ended September 30, 2024, debt securities with a fair value of $ 104.4 million were sold, with gross losses of $ 4.0 million.

During the nine months ended September 30, 2023, debt securities with a fair value of $ 22.1 million obtained in the acquisition of Professional Holding Corp.

(“Professional”) were sold.

No gain or loss was recognized on the sale.

There were $ 8.4 million in other sales of securities during the six months ended June 30, 2023, with gross gains of $ 24 thousand and gross losses of $ 19 thousand.

Included in “Securities (losses) gains, net” are decreases of $ 44 thousand and $ 0.2 million, respectively, for the three and six months ended June 30, 2024, and decreases of $ 0.2 million and $ 0.1 million, respectively, for the three and six months ended June 30, 2023 in the value of investments in mutual funds that invest in Community Reinvestment Act (“CRA”)-qualified debt securities.

At June 30, 2024, debt securities with a fair value of $ 1.5 billion were pledged primarily as collateral for public deposits and secured borrowings.

The amortized cost and fair value of securities as of June 30, 2024, by contractual maturity, are shown below.

There were $ 8.4 million in other sales of securities during the nine months ended September 30, 2023, with gross gains of $ 24 thousand and gross losses of $ 19 thousand.

Included in “Securities gains (losses), net” are increases of $ 0.5 million and $ 0.3 million, respectively, for the three and nine months ended September 30, 2024, and decreases of $ 0.4 million and $ 0.5 million, respectively, for the three and nine months ended September 30, 2023 in the value of investments in mutual funds that invest in Community Reinvestment Act (“CRA”)-qualified debt securities.

At September 30, 2024, debt securities with a fair value of $ 1.5 billion were pledged primarily as collateral for public deposits and secured borrowings.

The amortized cost and fair value of securities HTM and AFS as of September 30, 2024, 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.

18 unchanged sentences

The tables below indicate the fair value of AFS debt securities with unrealized losses for which no allowance for credit losses has been recorded.

June 30, 2024

September 30, 2024

Less Than 12 Months 12 Months or Longer Total 1

32 unchanged sentences

1 Comprised of 504 individual securities.

At June 30, 2024, the Company had unrealized losses of $ 0.5 million on U.S.

At September 30, 2024, the Company had unrealized losses of $ 0.3 million on U.S.

Treasury securities and obligations of U.S.

6 unchanged sentences

Based on the assessment of all relevant factors, 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, on June 30, 2024, no allowance for credit losses has been recorded.

At June 30, 2024, the Company had unrealized losses of $ 215.5 million on commercial and residential mortgage-backed securities and collateralized mortgage obligations issued by government-sponsored entities having a fair value of $ 1.3 billion.

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

At September 30, 2024, the Company had unrealized losses of $ 170.2 million on commercial and residential mortgage-backed securities and collateralized mortgage obligations issued by government-sponsored entities having a fair value of $ 1.1 billion.

These securities are either explicitly or implicitly guaranteed by the U.S.

1 unchanged sentence

The implied government guarantee of principal and interest payments and the high credit rating of the portfolio provide a sufficient basis for the current expectation that there is no risk of loss if default were to occur.

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

At June 30, 2024, the Company had $ 10.6 million of unrealized losses on private label residential and commercial mortgage-backed securities and collateralized mortgage obligations having a fair value of $ 116.5 million.

The securities have a weighted average credit support of 22 %.

Based on the assessment of all relevant factors, 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 September 30, 2024, no allowance for credit losses has been recorded.

At September 30, 2024, the Company had $ 7.0 million of unrealized losses on private label residential and commercial mortgage-backed securities and collateralized mortgage obligations having a fair value of $ 106.7 million.

The securities have weighted average credit support of 22 %.

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

At June 30, 2024, the Company had $ 0.1 million of unrealized losses in floating rate collateralized loan obligations (“CLOs”) having a fair value of $ 67.0 million.

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

At September 30, 2024, the Company had $ 0.2 million of unrealized losses in floating rate collateralized loan obligations (“CLOs”) having a fair value of $ 61.6 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 June 30, 2024, all positions held by the Company are in AAA and AA tranches, with weighted average credit support of 38 % and 30 %, respectively.

As of September 30, 2024, all positions held by the Company are in AAA and AA tranches, with weighted average credit support of 38 % and 30 %, respectively.

The Company evaluates the securities for potential credit losses by modeling expected loan-level defaults, recoveries, and prepayments for each CLO security.

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

At June 30, 2024, the Company had $ 1.4 million of unrealized losses on municipal securities having a fair value of $ 5.8 million.

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

At September 30, 2024, the Company had $ 1.2 million of unrealized losses on municipal securities having a fair value of $ 5.6 million.

These securities are highly rated issuances of state or local municipalities, all of which are continuing to make timely contractual payments.

As a result, as of June 30, 2024, no allowance for credit losses has been recorded.

As a result, as of September 30, 2024, 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.

1 unchanged sentence

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 a default were to occur.

As a result, as of June 30, 2024, no allowance for credit losses has been recorded.

As a result, as of September 30, 2024, 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 June 30, 2024 and December 31, 2023 is $ 73.9 million and $ 67.7 million, respectively, of FHLB and Federal Reserve Bank (“FRB”) stock stated at par value.

Included in Other Assets at September 30, 2024 and December 31, 2023 is $ 77.2 million and $ 67.7 million, respectively, of FHLB and Federal Reserve Bank (“FRB”) 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 $ 7.2 million and $ 0.2 million, respectively, at June 30, 2024, and $ 7.9 million and $ 1.1 million, respectively, at December 31, 2023, is included in Other Assets.

Also included in Other Assets are investments in CRA-qualified mutual funds carried at fair value of $ 13.5 million and $ 13.6 million at June 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable on AFS and HTM debt securities of $ 8.4 million and $ 1.1 million, respectively, at September 30, 2024, and $ 7.9 million and $ 1.1 million, respectively, at December 31, 2023, is included in Other Assets.

Also included in Other Assets are investments in CRA-qualified mutual funds carried at fair value of $ 13.9 million and $ 13.6 million at September 30, 2024 and December 31, 2023, respectively.

At December 31, 2023, the Company held 11,330 shares of Visa Class B stock.

During the six months ended June 30, 2024, the Company sold all of its Visa Class B stock, receiving net proceeds of $ 4.1 million.

During the nine months ended September 30, 2024, the Company sold all of its Visa Class B stock, receiving net proceeds of $ 4.1 million.

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.

21 unchanged sentences

The following tables present net loan balances by segment for portfolio loans, purchased credit deteriorated loans (“PCD”) and loans purchased which are not considered credit deteriorated (“Non-PCD”) as of:

June 30, 2024

September 30, 2024

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

15 unchanged sentences

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

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 amortized cost basis of loans included net deferred costs of $ 44.9 million at September 30, 2024 and $ 43.1 million at December 31, 2023.

At September 30, 2024, the remaining fair value adjustments on acquired loans were $ 141.8 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.

During the three and six months ended June 30, 2024, $ 9.1 million in loans previously held for investment were sold, resulting in a net gain of $ 0.9 million.

Accrued interest receivable is included within Other Assets and was $ 40.1 million and $ 39.4 million at June 30, 2024 and December 31, 2023, respectively.

The following tables present the status of net loan balances as of June 30, 2024 and December 31, 2023.

June 30, 2024

During the nine months ended September 30, 2024, $ 9.1 million in loans previously held for investment were sold, resulting in a net gain of $ 0.9 million.

Accrued interest receivable is included within Other Assets and was $ 38.8 million and $ 39.4 million at September 30, 2024 and December 31, 2023, respectively.

The following tables present the status of net loan balances as of September 30, 2024 and December 31, 2023.

September 30, 2024

(In thousands) Current Accruing

58 unchanged sentences

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 $ 0.7 million and $ 0.3 million in interest income on nonaccrual loans during the three months ended June 30, 2024 and June 30, 2023, respectively.

The Company recognized $ 0.9 million and $ 0.4 million in interest income on nonaccrual loans during the six months ended June 30, 2024 and June 30, 2023, respectively.

The Company recognized interest income of $ 0.2 million and $ 0.4 million on nonaccrual loans during the three months ended September 30, 2024 and September 30, 2023, respectively.

The Company recognized $ 1.1 million and $ 0.8 million in interest income on nonaccrual loans during the nine months ended September 30, 2024 and September 30, 2023, respectively.

The following tables present net balances of loans on nonaccrual status and the related allowance for credit losses, if any, as of:

June 30, 2024

September 30, 2024

(In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans Allowance for Credit Losses

25 unchanged sentences

The following tables present the risk rating of loans and year-to-date 1 gross charge offs by year of origination as of:

June 30, 2024

September 30, 2024

(In thousands) 2024 2023 2022 2021 2020 Prior Revolving Total

48 unchanged sentences

Gross Charge Offs $ 484 $ 394 $ 5,183 $ 13,855 $ 316 $ 3,525 $ 880 $ 24,637

1 Represents gross charge-offs for the six months ended June 30, 2024.

1 Represents gross charge-offs for the nine months ended September 30, 2024.

December 31, 2023

51 unchanged sentences

Troubled Borrower Modifications

The following table presents the amortized cost of troubled borrower modification (“TBM”) loans that were modified during the six months ended June 30, 2024.

There were five loans with an amortized cost of $ 0.9 million modified as a TBM during the six months ended June 30, 2023.

June 30, 2024

The following table presents the amortized cost of troubled borrower modification (“TBM”) loans that were modified during the nine months ended September 30, 2024.

There were five loans with an amortized cost of $ 0.9 million modified as a TBM during the nine months ended September 30, 2023.

September 30, 2024

(In thousands) Rate Reduction or Rate Reduction with Term Extension

1 unchanged sentence

% of Total Class of Loans

Construction and land development $ — $ 86 $ 86 0.01 %

Commercial real estate - owner occupied 514 2,685 3,199 0.19

4 unchanged sentences

Totals $ 7,264 $ 4,921 $ 12,185 0.12 %

1 At June 30, 2024, there were no unfunded lending related commitments associated with TBMs.

The following table presents the payment status of TBM loans that were modified in the twelve months prior to June 30, 2024.

June 30, 2024

1 At September 30, 2024, there were no unfunded lending related commitments associated with TBMs.

The following table presents the payment status of TBM loans that were modified in the twelve months prior to September 30, 2024.

September 30, 2024

(In thousands) Current Accruing

2 unchanged sentences

Than 90 Days Nonaccrual Total

Construction and Land Development $ — $ — — $ — $ — $ 86 $ 86

Commercial real estate - owner occupied 95 — — — 3,199 3,293

4 unchanged sentences

Totals $ 3,721 $ 429 $ 288 $ 191 $ 8,254 $ 12,883

TBM loans modified in the prior 12 months with a payment default during the six months ending June 30, 2024 were immaterial.

TBM loans modified in the prior 12 months with a payment default during the nine months ending September 30, 2024 were immaterial.

Note 5 – Allowance for Credit Losses

Activity in the allowance for credit losses is summarized as follows:

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

(In thousands) Beginning

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Totals $ 141,641 $ 6,273 $ ( 8,584 ) $ 1,139 $ 140,469

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

(In thousands) Beginning

Balance Allowance on PCD Loans Acquired During the Period 1

Balance Provision

Losses Charge-

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Totals $ 159,715 $ 2,694 $ ( 13,123 ) $ 375 $ 149,661

1 Amount represents a measurement period adjustment of a PCD loan acquired through the acquisition of Professional.

See Note 11 - Business Combinations.

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

(In thousands) Beginning

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Totals $ 148,931 $ 12,559 $ ( 24,637 ) $ 3,616 $ 140,469

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In thousands) Beginning Balance Allowance on PCD Loans Acquired During the Period Provision for Credit Losses Charge- Offs Recoveries Ending Balance

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The forecasts of future economic conditions are over the expected remaining life of the loan using economic forecasts that revert to long-term historical averages over time.

As of June 30, 2024 and December 31, 2023, the Company utilized a multiple scenario model comprised of a blend of Moody’s economic scenarios and considered the uncertainty associated with the assumptions in the scenarios, including continued actions taken by the Federal Reserve with regard to monetary policy and interest rates and the potential impact of those actions.

As of September 30, 2024 and December 31, 2023, the Company utilized a multiple scenario model comprised of a blend of Moody’s economic scenarios and considered the uncertainty associated with the assumptions in the scenarios, including continued actions taken by the Federal Reserve with regard to monetary policy and interest rates and the potential impact of those actions.

Outcomes could differ from the scenarios utilized, 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 three months ended June 30, 2024.

In the Construction and Land Development segment, the decrease in the allowance is due to an improvement in the forecast for macroeconomic factors and a decrease in loan balances.

The following section discusses changes in the level of the allowance for credit losses for the three months ended September 30, 2024.

The allowance decreased $ 1.2 million, or 0.8 %, during the third quarter of 2024 to $ 140.5 million, or 1.38 % of loans held for investment as of September 30, 2024.

In the Construction and Land Development segment, the increase in allowance is due to continued uncertainty in connection with commercial real estate markets.

In this segment, the primary source of repayment is typically from proceeds of the sale 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 increased due to continued uncertainty in connection with commercial real estate valuations broadly.

In the Commercial Real Estate - Owner-Occupied segment, the allowance increased nominally due to an increase in loan balances and continued uncertainty in connection with commercial real estate valuations broadly and uncertainty associated with the economy.

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 decrease in the allowance is primarily attributed to improvement in the forecast for macroeconomic factors, partially offset by higher loan balances.

In the Commercial Real Estate - Non-Owner-Occupied segment, the allowance increased slightly driven by higher loan balances and was partially offset by the charge-off of one nonaccrual loan.

Repayment is often dependent upon rental income from the successful operation of the underlying property or from the sale of the property.

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The Residential Real Estate segment includes first mortgages secured by residential property, and home equity lines of credit.

The increase in the allowance is due to an increase in loan balances.

Allowance levels were essentially flat from last quarter.

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 decrease in the allowance is due to charge-offs of previously established reserves on a small number of individually evaluated loans.

The decrease in the allowance is primarily driven by the charge-off of one nonaccrual relationship that was previously individually reserved.

Industry, collateral type, estimated collateral values, and loan seasoning are among the relevant factors in assessing expected losses.

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Risk characteristics considered for this segment include, but are not limited to, collateral type, loan to value ratios, loan seasoning and FICO score.

The decrease in the allowance is due to a decrease in loan balances.

The decrease in allowance for consumer loans was driven by lower loan balances and improved economic forecasts.

Note 6 – Derivatives

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These derivative instruments are primarily for risk management purposes.

For the three and six months ended June 30, 2024, the Company recognized, through other comprehensive income, net losses of $ 0.6 million and net gains of $ 0.8 million, respectively, and reclassified net gains of $ 0.1 million and $ 45 thousand, respectively, out of accumulated other comprehensive income into interest income.

For each of the three and six months ended June 30, 2023, the Company recognized net gains through other comprehensive income of $ 6.3 million, and reclassified net gains of $ 0.1 million out of accumulated other comprehensive income into interest income.

For the three and nine months ended September 30, 2024, the Company recognized, through other comprehensive income, net losses of $ 2.8 million and $ 2.0 million, respectively, and reclassified net gains of $ 0.3 million in each period out of accumulated other comprehensive income into interest income.

For each of the three and nine months ended September 30, 2023, the Company recognized nominal amounts through other comprehensive income, and reclassified $ 0.2 million and $ 0.5 million, respectively, out of accumulated other comprehensive income into interest income.

The Company has 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.

These fair value hedges utilize the portfolio layer method.

The Company considers these derivatives to be highly effective at offsetting changes in interest rates and assesses the effectiveness on a quarterly basis.

1 unchanged sentence

These derivative instruments are primarily for risk management purposes.

For the three and six months ended June 30, 2024, the Company recognized gains through interest income of $ 0.5 million and $ 0.9 million, respectively.

For the three and nine months ended September 30, 2024, the Company recognized gains through interest income of $ 0.9 million and $ 1.8 million, respectively.

(In thousands) Notional Amount Fair Value Balance Sheet Category

June 30, 2024

September 30, 2024

Interest rate contracts 1

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Securities fair value hedges 400,000 692 Other Assets

Residential mortgage fair value hedges 200,000 894 Other Assets

Residential mortgage fair value hedges 400,000 794 Other Liabilities

December 31, 2023

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Residential mortgage fair value hedges 200,000 75 Other Liabilities

1 Interest rate contracts include risk participation agreements with notional amounts of $ 18.4 million and $ 9.4 million at June 30, 2024, and December 31, 2023, respectively with nominal fair value in both periods.

1 Interest rate contracts include risk participation agreements with notional amounts of $ 18.4 million and $ 9.4 million at September 30, 2024, and December 31, 2023, respectively with nominal fair value in both periods.

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 Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items

(In thousands) June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

(In thousands) September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Securities available-for-sale 1

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599,743 633,693 974 44

1 At June 30, 2024, and December 31, 2023, the amortized cost basis and unallocated basis adjustments used in hedging relationships was $ 638.7 million and $ 680.6 million, respectively.

1 At September 30, 2024, and December 31, 2023, the amortized cost basis and unallocated basis adjustments used in hedging relationships was $ 608.4 million and $ 680.6 million, respectively.

Refer to “Note 3 - Securities” for a reconciliation of the amortized cost and fair value of AFS 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 anticipated to be outstanding for the designated hedge period.

At June 30, 2024 and December 31, 2023, the portfolio layer method was $ 200 million, of which $ 200 million was designated as hedged.

At September 30, 2024, the portfolio layer method was $ 400 million, of which $ 400 million was designated as hedged.

At December 31, 2023, the portfolio layer method was $ 200 million, of which $ 200 million was designated as hedged.

Note 7 – Securities Sold Under Agreements to Repurchase

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Company securities pledged were as follows by collateral type and maturity as of:

(In thousands) June 30, 2024 December 31, 2023

(In thousands) September 30, 2024 December 31, 2023

Fair value of pledged securities - overnight and continuous:

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Note 8 – Regulatory Capital

The Company is well-capitalized and at June 30, 2024, the Company and the Company’s principal banking subsidiary, Seacoast Bank, exceeded the Common Equity Tier 1 “(CET1)” capital ratio regulatory threshold of 6.5 % for well-capitalized institutions under the Basel III standardized transition approach, as well as risk-based and leverage ratio requirements for well-capitalized banks under the regulatory framework for prompt corrective action.

The Company is well-capitalized and at September 30, 2024, the Company and the Company’s principal banking subsidiary, Seacoast Bank, exceeded the Common Equity Tier 1 “(CET1)” capital ratio regulatory threshold of 6.5 % for well-capitalized institutions under the Basel III standardized transition approach, as well as risk-based and leverage ratio requirements for well-capitalized banks under the regulatory framework for prompt corrective action.

Note 9 – Contingent Liabilities

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Note 10 – Fair Value

Under ASC Topic 820, fair value measurements for items measured at fair value on a recurring and nonrecurring basis at June 30, 2024 and December 31, 2023 included:

Under ASC Topic 820, fair value measurements for items measured at fair value on a recurring and nonrecurring basis at September 30, 2024 and December 31, 2023 included:

(In thousands) Fair Value

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(Level 2) Significant

At June 30, 2024

At September 30, 2024

Financial Assets

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As such, the fair values of these loans and properties are considered Level 3 in the fair value hierarchy.

Collateral-dependent loans measured at fair value totaled $ 3.2 million with a specific reserve of $ 1.5 million at June 30, 2024, compared to $ 17.8 million with a specific reserve of $ 2.6 million at December 31, 2023.

Collateral-dependent loans measured at fair value totaled $ 6.1 million with a specific reserve of $ 2.1 million at September 30, 2024, compared to $ 17.8 million with a specific reserve of $ 2.6 million at December 31, 2023.

For recurring fair value measurements, 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.

During the six months ended June 30, 2024, there were no such transfers.

During the nine months ended September 30, 2024, there were no such transfers.

For additional information on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities that are measured at fair value on a recurring basis, see “Note 16 - Fair Value” of the Annual Report on Form 10-K for the year ended December 31, 2023.

The carrying amount and fair value of the Company’s other financial instruments that were not disclosed previously in the balance sheet and for which carrying amount is not fair value as of June 30, 2024 and December 31, 2023 is as follows:

(In thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets

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(Level 2) Significant Unobservable Inputs

June 30, 2024

September 30, 2024

Financial Assets

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cash and due from banks, interest bearing deposits with other banks, and securities sold under agreements 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 June 30, 2024 and December 31, 2023:

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 September 30, 2024 and December 31, 2023:

Held-to-maturity debt securities :

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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.

Included within the $ 18.9 million initial PCD allowance is $ 5.5 million recorded as a measurement period adjustment during the three months ended September 30, 2023, reflecting information obtained by the Company relating to events or circumstances existing at the acquisition date.

The Company believes the deposits assumed in the acquisition have an intangible value.

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Acquisition Costs

Acquisition costs included in the Company's income statement for the three and six months ended June 30, 2023 were $ 15.6 million and $ 33.2 million, respectively.

Acquisition costs were $ 33.2 million for the nine months ended September 30, 2023.

Note 12 – Subsequent Event

In October 2024, the Company took advantage of favorable market conditions and repositioned a portion of its AFS securities portfolio.

Securities with an average book yield of 2.8 % were sold, resulting in a pre-tax loss of approximately $ 8.0 million impacting fourth quarter 2024 results.

The proceeds of approximately $ 113.0 million were reinvested in agency mortgage-backed securities with an average book yield of 5.4 %, for an estimated earnback of less than three years .

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 1. Financial Statements