SBCF filing — read by section

Item 2. Management’s Discussion and Analysis

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
 The purpose of this discussion and analysis is to aid in understanding significant changes in the financial condition of Seacoast Banking Corporation of Florida and its subsidiaries (“Seacoast” or the “Company”) and their results of operations. Nearly all of the Company’s operations are contained in its banking subsidiary, Seacoast National Bank (“Seacoast Bank” or the “Bank”). 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 and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 for the consolidated statements of income. For the consolidated balance sheets, the emphasis of this discussion will be the balances as of September 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. See the following section for additional information regarding forward-looking statements. 
 For purposes of the following discussion, the words “Seacoast” or the “Company” refer to the combined entities of Seacoast Banking Corporation of Florida and its direct and indirect wholly owned subsidiaries. 
 
 Special Cautionary Notice Regarding Forward-Looking Statements 
 Certain statements made or incorporated by reference herein which are not statements of historical fact, including those under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, are “forward-looking statements” within the meaning, and protections, of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, and intentions about future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company’s control, and which may cause the actual results, performance or achievements of 
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 Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) or its wholly-owned banking subsidiary, Seacoast National Bank (“Seacoast Bank”), to be materially different from those set forth in the forward-looking statements. 
 
 
 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,” “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: 
 • The impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within Seacoast’s primary market areas, including the effects of inflationary pressures, changes in interest rates, slowdowns in economic growth, and the potential for high unemployment rates, as well as the financial stress on borrowers and changes to customer and client behavior and credit risk as a result of the foregoing; 
 • 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 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), as well as the impact of fluctuating interest rates on our financial projections and models, sensitivities, and the shape of the yield curve; 
 • Changes in accounting policies, rules, and practices; 
 • Changes in retail distribution strategies, customer preferences and behavior generally and as a result of economic factors, including heightened inflation; 
 • Changes in the availability and cost of credit and capital in the financial markets; 
 • Changes in the prices, values and sales volumes of residential and commercial real estate, especially as they relate to the value of collateral supporting the Company’s loans; 
 • 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 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; 
 • The impact on the valuation of Seacoast’s investments due to market volatility or counterparty payment risk, as well as the effect of a decline in stock market prices on our fee income from our wealth management business; 
 • Statutory and regulatory dividend restrictions; increases in regulatory capital requirements for banking organizations generally; 
 • The risks of mergers, acquisitions and divestitures, including Seacoast’s ability to continue to identify acquisition targets, successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies; 
 • 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 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; 
 • 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; 
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 • 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; 
 • Potential claims, damages, penalties, fines, costs and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; 
 • The risks that deferred tax assets could be reduced if estimates of future taxable income from the Company’s operations and tax planning strategies are less than currently estimated, the results of tax audit findings, challenges to our tax positions, or adverse changes or interpretations of tax laws; 
 • The effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, non-bank financial technology providers, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions; 
 • The failure of assumptions underlying the establishment of reserves for expected credit losses; 
 • Risks related to, and the costs associated with, environmental, social and governance (“ESG”) matters, including the scope and pace of related rulemaking activity and disclosure requirements; 
 • A deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. 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; and 
 • Other factors and risks described under “Risk Factors” herein and in any of the Company’s subsequent reports filed with the SEC and available on its website at www.sec.gov. 
 All written or oral forward-looking statements that are made or are attributable to Seacoast are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in the Company’s annual report on Form 10-K for the year ended December 31, 2023 and in other periodic reports that the Company files with the SEC. The Company assumes no obligation to update, revise or correct any forward-looking statements that are made from time to time, either as a result of future developments, new information or otherwise, except as may be required by law. 
 
 
 
 Results of Operations 
 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 third quarter of 2024 include strong growth in loans and deposits supporting improved 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 for the third quarter of 2024 include: 
 • Net income of $30.7 million, or $0.36 per average diluted share, an increase of $0.4 million, or 1%, from the prior quarter. 
 • Pre-tax pre-provision earnings on an adjusted basis 1 increased $1.9 million to $46.4 million from the prior quarter. 
 • Tangible book value per share increased 20% on an annualized basis to $16.20. 
 • Loans grew 6.6% on an annualized basis to $10.2 billion, and the overall loan pipeline remained strong at $831.1 million. 
 • Growth in customer deposits, excluding brokered deposits, of $195.9 million, or 6.6% annualized. 
 • Noninterest bearing deposits grew $45.5 million, or 5.3% annualized. 
 • Net interest margin was 3.17%, nearly flat compared to 3.18% in the prior quarter, and net interest margin, excluding accretion on acquired loans, expanded to 2.90% from 2.87%. 
 • Net interest income of $106.7 million, an increase of $2.2 million, or 2%, from the second quarter of 2024. 
 • Noninterest income increased to $23.7 million, representing a 33% year-over-year increase compared to the three months ended September 30, 2023. 
 • Strong capital position, with a Tier 1 capital ratio of 14.8%, and a tangible common equity to tangible assets ratio of 9.6%. 
 
 
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 The Company’s focus on organic customer growth and recent talent additions are generating momentum across its markets and business segments. The results for the third quarter of 2024 evidence the inflection in growth and the start of margin expansion expected during the second half of 2024. 
 For the third quarter of 2024, the Company reported net income of $30.7 million, or $0.36 per average diluted share, an increase of $0.4 million, or 1%, from the second quarter of 2024 and a decrease of $0.8 million, or 2%, compared to the third quarter of 2023. Adjusted net income 1 for the third quarter of 2024 totaled $30.5 million, or $0.36 per average diluted share, an increase of $0.2 million, or 1%, compared to the second quarter of 2024 and a decrease of $3.7 million, or 11%, compared to the third quarter of 2023. For the nine months ended September 30, 2024, net income totaled $86.9 million, or $1.02 per average diluted share, an increase of $12.4 million, or 17%, compared to the nine months ended September 30, 2023. For the nine months ended September 30, 2024, adjusted net income 1 totaled $91.9 million, or $1.08 per average diluted share, compared to $101.9 million, or $1.21 per average diluted share for the nine months ended September 30, 2023. 
 
 Third Second Third Nine Months Ended 
 Quarter Quarter Quarter September 30, 
 2024 2024 2023 2024 2023 
 Return on average tangible assets 0.99 % 1.00 % 1.04 % 0.96 % 0.88 % 
 Return on average tangible shareholders’ equity 10.31 10.75 11.90 10.21 10.09 
 
 Efficiency ratio 59.84 60.21 62.60 62.24 65.19 
 
 Adjusted return on average tangible assets 1 
 0.98 % 1.00 % 1.12 % 1.01 % 1.15 % 
 Adjusted return on average tangible shareholders’ equity 1 
 10.27 10.76 12.79 10.72 13.14 
 
 Adjusted efficiency ratio 1 
 59.84 60.21 60.19 60.39 56.47 
 1 Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP. 
 

 
 
 
 Net Interest Income and Margin 
 Net interest income for the third quarter of 2024 totaled $106.7 million, an increase of $2.2 million, or 2%, compared to the second quarter of 2024, and a decrease of $12.6 million , or 11% , c ompared to the third quarter of 2023. For the nine months ended September 30, 2024, net interest income totaled $316.2 million, a decrease of $61.3 million, or 16%, compared to the nine months ended September 30, 2023. In the loan portfolio, higher interest income from new loan production was partially offset by lower accretion of purchase discount on acquired loans. Recent purchases in the securities portfolio contributed to higher securities yields. Higher interest expense on deposits reflects the impact of higher rates, with cuts to the federal funds rate late in the quarter not yet fully impacting the third quarter of 2024 results. 
 Net interest income (on a fully taxable equivalent basis) 1 for the third quarter of 2024 was $107.0 million, an increase of $2.3 million, or 2%, compared to the second quarter of 2024, and a decrease of $12.5 million, or 10%, c ompared to the third quarter of 2023. Accretion on acquired loans totaled $9.2 million for the third quarter of 2024, compared to $10.2 million for the second quarter of 2024, and $14.8 million for the third quarter of 2023. For the nine months ended September 30, 2024, net interest income (on a fully taxable equivalent basis) 1 was $316.9 million, a decrease of $61.1 million, or 16%, compared to the nine months ended September 30, 2023. Accretion on acquired loans totaled $30.0 million for the nine months ended September 30, 2024, compared to $45.4 million for the nine months ended September 30, 2023. 
 Net interest margin (on a fully taxable equivalent basis) 1 decreased one basis point to 3.17% in the third quarter of 2024, compared to 3.18% in the second quarter of 2024, and decreased 40 basis points from 3.57% in the third quarter of 2023, largely driven by higher deposit costs. Compared to the second quarter of 2024, securities yields increased six basis points in the third quarter of 2024 to 3.75% and increased 42 basis points from the third quarter of 2023. The yield on loans increased to 5.94% for the third quarter of 2024, an increase of one basis point from both the second quarter of 2024 and from the third quarter of 2023. The effect on net interest margin of accretion of purchase discounts on acquired loans was an increase of 27 basis points for the third quarter of 2024, 30 basis points in the second quarter, and 44 basis points in the third quarter of 2023. The cost of deposits was 2.34% in the third quarter of 2024, compared to 2.31% in the second quarter of 2024, and 1.79% in the third quarter of 2023. 
 
 1 Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP. 
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 For the nine months ended September 30, 2024, net interest margin (on a fully taxable equivalent basis) 1 decreased 72 basis points to 3.19% compared to the nine months ended September 30, 2023, largely driven by higher deposit costs. The yield on securities was 3.65% for the nine months ended September 30, 2024, compared to 3.10% for the nine months ended September 30, 2023. The yield on total loans increased from 5.89% for the nine months ended September 30, 2023 to 5.93% for the nine months ended September 30, 2024. The effect on net interest margin of accretion of purchase discounts on acquired loans was an increase of 30 basis points for the nine months ended September 30, 2024, and 47 basis points for the nine months ended September 30, 2023. The cost of deposits was 2.28% for the nine months ended September 30, 2024, an increase of 95 basis points compared to the nine months ended September 30, 2023. 
 In the remainder of 2024, the Company expects to continue growing customer relationships resulting in growth in loans and deposits. This growth, combined with lower rates on deposits resulting from expected short-term interest rate reductions, should benefit net interest income and net interest margin in the fourth quarter of 2024. 
 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 
 Income 1 
 Net Interest 
 Margin 1 
 Yield on 
 Earning Assets 1 
 Rate on Interest
Bearing Liabilities 
 Third quarter 2024 $ 106,975 3.17 % 5.46 % 3.32 % 
 Second quarter 2024 104,657 3.18 % 5.47 % 3.33 % 
 Third quarter 2023 119,505 3.57 % 5.38 % 2.76 % 
 
 Nine months ended September 30, 2024 316,930 3.19 % 5.44 % 3.28 % 
 Nine months ended September 30, 2023 378,009 3.91 % 5.30 % 2.19 % 
 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 increased $123.7 million, or 1%, for the third quarter of 2024 compared to the second quarter of 2024, and increased $85.2 million, or 1%, from the third quarter of 2023. For the nine months ended September 30, 2024, average loans increased $216.0 million, or 2%, from the nine months ended September 30, 2023. 
 Average loans as a percentage of average earning assets totaled 75% for the third quarter of 2024, 76% for the second quarter of 2024 and 76% for the third quarter of 2023. For each of the nine months ended September 30, 2024 and September 30, 2023, average loans as a percentage of average earning assets totaled 76%. 
 
 During the third quarter of 2024, average investment securities increased $127.1 million, or 4.8%, compared to the second quarter of 2024, and increased $171.9 million, or 6.6%, compared to the third quarter of 2023. Securities yields increased six basis points to 3.75% during the third quarter of 2024 from 3.69% in the second quarter of 2024, benefiting from recent purchases. For the nine months ended September 30, 2024, average investment securities were $2.7 billion, a decrease of $3.7 million compared to the nine months ended September 30, 2023. 
 The cost of average interest-bearing liabilities decreased one basis point in the third quarter of 2024 to 3.32% from 3.33% in the second quarter of 2024, and increased 56 basis points from 2.76% in the third quarter of 2023. The cost of average total deposits (including noninterest bearing demand deposits) was 2.34% in the third quarter of 2024, 2.31% in the second quarter of 2024 and 1.79% in the third quarter of 2023. For the nine months ended September 30, 2024, the cost of average total deposits (including noninterest bearing demand deposits) was 2.28% compared to 1.33% for the nine months ended September 30, 2023. 
 During the third quarter of 2024, average transaction deposits (noninterest and interest-bearing demand) decreased $273.4 million, or 4%, compared to the second quarter of 2024 and decreased $909.2 million, or 13%, compared to the third quarter of 2023. For the nine months ended September 30, 2024, average transaction deposits decreased $751.8 million, or 11%, compared to the nine months ended September 30, 2023. Declines reflect shifts in customer preference during the periods toward money market accounts, which increased $276.5 million, or 8%, in the third quarter of 2024 compared to the prior quarter, and increased $841.7 million, or 30%, in the nine months ended September 30, 2024 compared to the prior year period. The Company’s deposit mix remains favorable, with 86% of average deposit balances comprised of savings, money market, and demand deposits for the nine months ended September 30, 2024. 
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 Average balances of sweep repurchase agreements with customers decreased $52.5 million, or 18%, from the second quarter of 2024 and decreased $86.6 million, or 26%, compared to the third quarter of 2023. The average rate on customer sweep repurchase accounts was 3.37% for the third quarter of 2024, compared to 3.68% for the second quarter of 2024, and 3.48% for the third quarter of 2023. For the nine months ended September 30, 2024, the average balance was $289.2 million, compared to an average balance of $249.2 million for the nine months ended September 30, 2023 with average rates of 3.61% and 2.86%, respectively. 
 The Company had an average balance of $237.9 million in FHLB borrowings outstanding for the third quarter of 2024, with an average interest rate of 4.26%, compared to $149.2 million for the second quarter of 2024, with an average interest rate of 4.29%, and $111.1 million for the third quarter of 2023, with an average interest rate of 3.17%. The Company had an average balance of $163.5 million in FHLB borrowings outstanding for the nine months ended September 30, 2024, with an average interest rate of 4.17%, compared to $214.4 million for the nine months ended September 30, 2023, with an average interest rate of 3.70%. 
 Long-term debt balances averaged $106.7 million in the third quarter of 2024, $106.5 million in the second quarter of 2024, and $106.0 million in the third quarter of 2023. The average rate on long-term debt for the third quarter of 2024 was 7.05%, an increase of two basis points compared to the second quarter of 2024 and a decrease of 13 basis points compared to the third quarter of 2023. For the nine months ended September 30, 2024, long-term debt averaged $106.5 million, compared to $103.5 million for the nine months ended September 30, 2023. The average rate on long-term debt for the nine months ended September 30, 2024 was 7.13%, an increase of 25 basis points compared to the nine months ended September 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. 
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 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 
 Third Quarter Second Quarter Third Quarter 
 Average Yield/ Average Yield/ Average Yield/ 
 (In thousands, except ratios) Balance Interest Rate Balance Interest Rate Balance Interest Rate 
 Assets 
 Earning assets: 
 Securities: 
 Taxable ` $ 2,756,502 $ 25,963 3.75 % $ 2,629,716 $ 24,155 3.69 % $ 2,575,002 $ 21,401 3.32 % 
 Nontaxable 5,701 42 2.93 5,423 40 2.97 15,280 119 3.11 
 Total Securities 2,762,203 26,005 3.75 2,635,139 24,195 3.69 2,590,282 21,520 3.32 
 
 Federal funds sold 433,423 5,906 5.42 510,401 6,967 5.49 547,576 7,415 5.37 
 Interest bearing deposits with other banks and other investments 102,700 1,232 4.77 98,942 1,361 5.53 90,039 1,062 4.68 
 Total Loans, net 10,128,822 151,282 5.94 10,005,122 147,518 5.93 10,043,611 150,048 5.93 
 Total Earning Assets 13,427,148 184,425 5.46 13,249,604 180,041 5.47 13,271,508 180,045 5.38 
 
 Allowance for credit losses (141,974) (146,380) (158,440) 
 Cash and due from banks 167,103 168,439 168,931 
 Premises and equipment, net 109,699 110,709 116,704 
 Intangible assets 812,761 818,914 839,787 
 Bank owned life insurance 304,703 302,165 295,272 
 Other assets including deferred tax assets 317,406 336,256 372,241 
 Total Assets $ 14,996,846 $ 14,839,707 $ 14,906,003 
 
 Liabilities and Shareholders’ Equity 
 Interest-bearing liabilities: 
 Interest-bearing demand $ 2,489,674 $ 12,905 2.06 % $ 2,670,569 $ 14,946 2.25 % $ 2,804,243 $ 15,013 2.12 % 
 Savings 546,473 601 0.44 584,490 560 0.39 770,503 465 0.24 
 Money market 3,942,357 38,457 3.88 3,665,858 35,813 3.93 2,972,495 22,918 3.06 
 Time deposits 1,716,720 19,002 4.40 1,631,290 17,928 4.42 1,619,572 16,461 4.03 
 Securities sold under agreements to repurchase 241,083 2,044 3.37 293,603 2,683 3.68 327,711 2,876 3.48 
 Federal Home Loan Bank borrowings 237,935 2,549 4.26 149,234 1,592 4.29 111,087 888 3.17 
 Long-term debt, net 106,706 1,892 7.05 106,532 1,862 7.03 106,036 1,919 7.18 
 Total Interest-Bearing Liabilities 9,280,948 77,450 3.32 9,101,576 75,384 3.33 8,711,647 60,540 2.76 
 Noninterest demand 3,393,110 3,485,603 3,987,761 
 Other liabilities 154,344 134,900 133,846 
 Total Liabilities 12,828,402 12,722,079 12,833,254 
 
 Shareholders’ equity 2,168,444 2,117,628 2,072,747 
 
 Total Liabilities & Equity $ 14,996,846 $ 14,839,707 $ 14,906,003 
 
 Cost of deposits 2.34 % 2.31 % 1.79 % 
 Interest expense as a % of earning assets 2.29 % 2.29 % 1.81 % 
 Net interest income as a % of earning assets $ 106,975 3.17 % $ 104,657 3.18 % $ 119,505 3.57 % 
 
 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. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 Average Balances, Interest Income and Expenses, Yields and Rates 1 
 
 
 2024 2023 
 Nine Months Ended September 30, Nine Months Ended September 30, 
 Average Yield/ Average Yield/ 
 (In thousands, except ratios) Balance Interest Rate Balance Interest Rate 
 Assets 
 Earning assets: 
 Securities: 
 Taxable $ 2,655,422 $ 72,511 3.65 % $ 2,649,127 $ 61,543 3.10 % 
 Nontaxable 5,677 123 2.89 15,721 370 3.14 
 Total Securities 2,661,099 72,634 3.65 2,664,848 61,913 3.10 
 
 Federal funds sold 438,089 17,929 5.47 336,022 12,444 4.95 
 Interest bearing deposits with other banks and other investments 102,415 3,721 4.85 90,511 4,530 6.69 
 Total Loans, net 10,056,466 446,108 5.93 9,840,484 433,821 5.89 
 Total Earning Assets 13,258,069 540,392 5.44 12,931,865 512,708 5.30 
 
 Allowance for credit losses (145,579) (151,613) 
 Cash and due from banks 167,424 185,426 
 Premises and equipment, net 110,929 116,840 
 Intangible assets 819,046 811,483 
 Bank owned life insurance 302,220 287,756 
 Other assets including deferred tax assets 330,898 402,175 
 Total Assets $ 14,843,007 $ 14,583,932 
 
 Liabilities and Shareholders' Equity 
 Interest-bearing liabilities: 
 Interest-bearing demand $ 2,626,026 $ 43,117 2.19 % $ 2,642,180 $ 25,780 1.30 % 
 Savings 586,285 1,701 0.39 909,184 1,292 0.19 
 Money market 3,673,493 105,998 3.85 2,831,747 54,540 2.58 
 Time deposits 1,646,285 54,051 4.39 1,288,736 36,490 3.79 
 Securities sold under agreements to repurchase 289,181 7,806 3.61 249,242 5,333 2.86 
 Federal Home Loan Bank borrowings 163,468 5,101 4.17 214,415 5,936 3.70 
 Long-term debt, net 106,538 5,688 7.13 103,469 5,328 6.88 
 Total Interest-Bearing Liabilities 9,091,276 223,462 3.28 8,238,973 134,699 2.19 
 Noninterest demand 3,468,790 4,204,389 
 Other liabilities 148,000 126,487 
 Total Liabilities 12,708,066 12,569,849 
 
 Shareholders' equity 2,134,941 2,014,083 
 
 Total Liabilities & Equity $ 14,843,007 $ 14,583,932 
 
 Cost of deposits 2.28 % 1.33 % 
 Interest expense as a % of earning assets 2.25 % 1.39 % 
 Net interest income as a % of earning assets $ 316,930 3.19 % $ 378,009 3.91 % 
 
 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. 
 

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 Noninterest Income 
 Noninterest income totaled $23.7 million for the third quarter of 2024, an increase of $1.5 million, or 7%, compared to the second quarter of 2024 and an increase of $5.9 million, or 33%, from the third quarter of 2023. Noninterest income totaled $66.4 million for the nine months ended September 30, 2024, an increase of $4.5 million, or 7%, compared to the nine months ended September 30, 2023. 
 Noninterest income is detailed as follows: 
 
 Third Second Third Nine Months Ended 
 Quarter Quarter Quarter September 30, 
 (In thousands) 2024 2024 2023 2024 2023 
 Service charges on deposit accounts $ 5,412 $ 5,342 $ 4,648 $ 15,714 $ 13,450 
 Interchange income 1,911 1,940 1,684 5,739 11,444 
 Wealth management income 3,843 3,766 3,138 11,149 9,519 
 Mortgage banking fees 485 582 410 1,448 1,412 
 Insurance agency income 1,399 1,355 1,183 4,045 3,444 
 SBA gains 391 694 613 1,824 1,184 
 BOLI income 2,578 2,596 2,197 7,438 6,181 
 Other 7,473 5,953 4,307 18,631 15,636 
 23,492 22,228 18,180 65,988 62,270 
 Securities gains (losses), net 187 (44) (387) 372 (456) 
 Total $ 23,679 $ 22,184 $ 17,793 $ 66,360 $ 61,814 

 Service charges on deposits were $5.4 million in the third quarter of 2024, compared to $5.3 million in the second quarter of 2024, and $4.6 million in the third quarter of 2023. For the nine months ended September 30, 2024, service charges on deposits totaled $15.7 million, an increase of $2.3 million, or 17%, compared to the nine months ended September 30, 2023. The Company’s investments in talent and market expansion across the state have resulted in continued growth in treasury management services to commercial customers. 
 Interchange income remained flat compared to the second quarter of 2024 and increased $0.2 million, or 13%, compared to the third quarter of 2023. The increase from the prior year quarter reflects continued organic growth. For the nine months ended September 30, 2024, interchange income totaled $5.7 million, a decrease of $5.7 million, or 50%, compared to the nine months ended September 30, 2023, due to the impact of the Durbin amendment, which became effective for the Company on July 1, 2023. 
 Wealth management income, including trust fees and brokerage commissions and fees, was $3.8 million in both the second and third quarters of 2024, compared to $3.1 million for the third quarter of 2023. For the nine months ended September 30, 2024, wealth management income totaled $11.1 million, an increase of $1.6 million, or 17%, compared to the nine months ended September 30, 2023. The wealth management division continues to demonstrate success in building relationships, and assets under management have increased $276.5 million, or 16%, from December 31, 2023, to $2.0 billion at September 30, 2024. 
 Insurance agency income was similar to the second quarter of 2024 and totaled $1.4 million for the three months ended September 30, 2024, compared to $1.2 million in the third quarter of 2023. For the nine months ended September 30, 2024, insurance agency income totaled $4.0 million, an increase of $0.6 million, or 17%, compared to the nine months ended September 30, 2023, reflecting continued growth and expansion of insurance services. 
 Bank owned life insurance (“BOLI”) income of $2.6 million for the third quarter of 2024 was consistent with the second quarter of 2024 and increased $0.4 million, or 17%, from $2.2 million for the third quarter of 2023. For the nine months ended September 30, 2024, BOLI income totaled $7.4 million, an increase of $1.3 million, or 20%, compared to the nine months ended September 30, 2023, with policy exchanges executed in the first quarter of 2024 resulting in improved ongoing yields. 
 Other income was $7.5 million in the third quarter of 2024, an increase of $1.5 million, or 26%, compared to the second quarter of 2024, and an increase of $3.2 million, or 74%, compared to the third quarter of 2023. For the nine months ended September 30, 2024, other income totaled $18.6 million, an increase of $3.0 million, or 19%, compared to the nine months ended September 30, 2023. Changes in each period reflect variability in income from SBIC investments, loan swap-related fees, and other fees correlating with growth in customers and accounts. 
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 Net securities activity resulted in gains of $0.2 million during the third quarter of 2024, losses of $44 thousand in the second quarter of 2024 , and losses of $0.4 million in the third quarter of 2023. For the nine months ended September 30, 2024, net securities activity resulted in gains of $0.4 million, compared to losses of $0.5 million for the nine months ended September 30, 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 were 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. 
 In October 2024, the Company took advantage of favorable market conditions and repositioned a portion of its available for sale 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. 
 
 Noninterest Expenses 
 Noninterest expense for the third quarter of 2024 totaled $84.8 million, an increase of $2.3 million, or 3%, compared to the second quarter of 2024, and a decrease of $9.1 million, or 10%, from the third quarter of 2023. For the nine months ended September 30, 2024, noninterest expense totaled $257.7 million, a decrease of $51.5 million, or 17%, compared to the nine months ended September 30, 2023. The decreases from 2023 are the result of cost-saving initiatives and prudent management of expenses, while maintaining strategic investments to support continued growth. Noninterest expenses are detailed as follows: 
 
 Third Second Third Nine Months Ended 
 Quarter Quarter Quarter September 30, 
 (In thousands) 2024 2024 2023 2024 2023 
 
 Salaries and wages $ 40,697 $ 38,937 $ 46,431 $ 119,938 $ 139,202 
 Employee benefits 6,955 6,861 7,206 21,705 23,240 
 Outsourced data processing costs 8,003 8,210 8,714 28,331 43,489 
 Occupancy 7,096 7,180 7,758 22,313 24,360 
 Furniture and equipment 2,060 1,956 2,052 6,027 6,664 
 Marketing 2,729 3,266 1,876 8,650 6,161 
 Legal and professional fees 2,708 1,982 2,679 6,841 14,220 
 FDIC assessments 1,882 2,131 2,258 6,171 5,817 
 Amortization of intangibles 6,002 6,003 7,457 18,297 21,838 
 Other real estate owned expense and net (gain) loss on sale 491 (109) 274 356 412 
 Provision for credit losses on unfunded commitments 250 251 — 751 1,239 
 Other 5,945 5,869 7,210 18,346 22,613 
 Total $ 84,818 $ 82,537 $ 93,915 $ 257,726 $ 309,255 
 
 
 

 Salaries and wages totaled $40.7 million for the third quarter of 2024, $38.9 million for the second quarter of 2024, and $46.4 million for the third quarter of 2023. The third quarter of 2024 reflects continued additions to the banking team as the Company focuses on organic growth. For the nine months ended September 30, 2024, salaries and wages totaled $119.9 million, a decrease of $19.3 million, or 14%, compared to the nine months ended September 30, 2023. A workforce reduction in early 2024 partially offset revenue compression from higher interest rates. 
 During the third 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 $7.0 million, an increase of $0.1 million, or 1%, compared to the second quarter of 2024, and a decrease of $0.3 million, or 3%, compared to the third quarter of 2023. For the nine months ended September 30, 2024, employee benefit costs totaled $21.7 million, a decrease of $1.5 million, or 7%, compared to the nine months ended September 30, 2023. The decreases compared to the 2023 periods are related to reductions in the workforce. 
 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 $8.0 million, $8.2 million, and $8.7 million for the third quarter of 2024, second quarter of 2024, and third quarter of 2023, respectively. Lower expenses in the third quarter of 2024 reflect the benefit of lower negotiated rates with key service providers. For the nine months ended September 30, 2024, outsourced data processing costs totaled $28.3 million, a decrease of 
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 $15.2 million, or 35%, compared to the nine months ended September 30, 2023. The 2023 period included $17.5 million in costs directly associated with bank acquisitions. 
 Total occupancy and furniture and equipment expenses were $9.2 million in the third quarter of 2024, $9.1 million in the second quarter of 2024, and $9.8 million in the third quarter of 2023. The decrease in expenses compared to the third quarter of 2023 is the result of expense reduction efforts completed during 2024. For the nine months ended September 30, 2024, occupancy and furniture and equipment expenses totaled $28.3 million, a decrease of $2.7 million, or 9%, compared to the nine months ended September 30, 2023. 
 Marketing expenses totaled $2.7 million in the third quarter of 2024, $3.3 million in the second quarter of 2024, and $1.9 million in the third quarter of 2023. For the nine months ended September 30, 2024, marketing expenses totaled $8.7 million, an increase of $2.5 million, or 40%, compared to the nine months ended September 30, 2023. Planned investments in branding and in marketing campaigns across the state led to higher marketing expenses in 2024, with changes between periods driven by the timing of various campaigns. 
 Legal and professional fees for the third quarter of 2024 were $2.7 million, an increase of $0.7 million, or 37%, compared to the second quarter of 2024, and similar to expenses in the third quarter of 2023. For the nine months ended September 30, 2024, legal and professional fees totaled $6.8 million, a decrease of $7.4 million, or 52%, compared to the nine months ended September 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 $6.3 million for the third quarter of 2024, compared to $4.9 million for the second quarter of 2024, and $2.7 million for the third quarter of 2023. For the nine months ended September 30, 2024, provision for credit losses was $12.6 million, compared to $33.5 million for the nine months ended September 30, 2023. The first quarter of 2023 included a $26.6 million day-one provision recorded in conjunction with the Professional acquisition. Excluding the day-one provision, the increase for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to loan growth. 
 In late September and early October 2024, communities across our corporate footprint were impacted by Hurricanes Helene and Milton. We maintained uninterrupted digital and telephone access for our customers and, having experienced minimal impacts to our branch properties, we fully reopened to serve our communities shortly after each storm passed. Recovery efforts in many areas continue and the full impacts on people and businesses in the most hard-hit regions are not fully known. We do not expect a significant impact from Hurricane Helene, but an additional provision for credit losses may be warranted in the fourth quarter of 2024 for the impacts of Hurricane Milton, in a range between approximately $5 million and $10 million. 
 
 Income Taxes 
 For the third quarter of 2024, the Company recorded tax expense of $8.6 million, a decrease of $0.3 million, or 3%, compared to the second quarter of 2024 and a decrease of $0.5 million, or 5%, compared to the third quarter of 2023. The effective tax rate for the third quarter of 2024 was 21.9%, compared to 22.4% in the second quarter of 2024 and 22.8% in the third quarter of 2023. For the nine months ended September 30, 2024, tax expense totaled $25.3 million, an increase of $3.4 million, or 15%, compared to the nine months ended September 30, 2023, with an effective tax rate of 22.6% for the nine months ended September 30, 2024, compared to 22.8% for the nine months ended September 30, 2023. 
 
 Explanation of Certain Unaudited Non-GAAP Financial Measures 
 This report contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). The financial highlights provide reconciliations between GAAP and adjusted financial measures including net income, fully taxable equivalent net interest income, noninterest income, noninterest expense, tax adjustments, net interest margin and other financial ratios. Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance and if not provided would be requested by the investor community. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might define or calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP. 
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 Reconciliation of Non-GAAP Measures 
 
 Third Second Third Nine Months Ended 
 Quarter Quarter Quarter September 30, 
 (Amounts in thousands, except per share data) 2024 2024 2023 2024 2023 
 Net income $ 30,651 $ 30,244 $ 31,414 $ 86,901 $ 74,490 
 
 Total noninterest income $ 23,679 $ 22,184 $ 17,793 $ 66,360 $ 61,814 
 Securities (gains)/losses, net (187) 44 387 (372) 456 
 BOLI benefits on death (included in other income) — — — — (2,117) 
 Total adjustments to noninterest income (187) 44 387 (372) (1,661) 
 Total adjusted noninterest income $ 23,492 $ 22,228 $ 18,180 $ 65,988 $ 60,153 
 
 Total noninterest expense $ 84,818 $ 82,537 $ 93,915 $ 257,726 $ 309,255 
 Merger related charges — — — — (33,180) 
 Branch reductions and other expense initiatives 1 
 — — (3,305) (7,094) (5,167) 
 Adjustments to noninterest expense — — (3,305) (7,094) (38,347) 
 Adjusted noninterest expense 2 
 $ 84,818 $ 82,537 $ 90,610 $ 250,632 $ 270,908 
 
 Income taxes $ 8,602 $ 8,909 $ 9,076 $ 25,341 $ 21,962 
 Tax effect of adjustments (47) 11 936 1,703 9,298 
 Adjusted income taxes 8,555 8,920 10,012 27,044 31,260 
 Adjusted net income 2 
 $ 30,511 $ 30,277 $ 34,170 $ 91,920 $ 101,878 
 
 Earnings per diluted share, as reported $ 0.36 $ 0.36 $ 0.37 $ 1.02 $ 0.89 
 Adjusted earnings per diluted share 0.36 0.36 0.40 1.08 1.21 
 Average diluted shares outstanding 85,069 84,816 85,666 84,915 83,993 
 
 Adjusted noninterest expense $ 84,818 $ 82,537 $ 90,610 $ 250,632 $ 270,908 
 Provision for credit losses on unfunded commitments (250) (251) — (751) (1,239) 
 Other real estate owned expense and net (gain) loss on sale (491) 109 (274) (356) (412) 
 Amortization of intangibles (6,002) (6,003) (7,457) (18,297) (21,838) 
 Net adjusted noninterest expense $ 78,075 $ 76,392 $ 82,879 $ 231,228 $ 247,419 
 
 Net adjusted noninterest expense $ 78,075 $ 76,392 $ 82,879 $ 231,228 $ 247,419 
 Average tangible assets $ 14,184,085 $ 14,020,793 $ 14,066,216 $ 14,023,961 $ 13,772,449 
 Net adjusted noninterest expense to average tangible assets 2.19 % 2.19 % 2.34 % 2.20 % 2.40 % 
 
 Net revenue $ 130,344 $ 126,608 $ 137,099 $ 382,527 $ 439,235 
 Total adjustments to net revenue (187) 44 387 (372) (1,661) 
 Impact of FTE adjustment 310 233 199 763 588 
 Adjusted net revenue on a fully taxable equivalent basis $ 130,467 $ 126,885 $ 137,685 $ 382,918 $ 438,162 
 Adjusted efficiency ratio 59.84 % 60.21 % 60.19 % 60.39 % 56.47 % 
 
 Net interest income $ 106,665 $ 104,424 $ 119,306 $ 316,167 $ 377,421 
 Impact of FTE adjustment 310 233 199 763 588 
 Net interest income including FTE adjustment 106,975 104,657 119,505 316,930 378,009 

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 Third Second Third Nine Months Ended 
 Quarter Quarter Quarter September 30, 
 (Amounts in thousands, except per share data) 2024 2024 2023 2024 2023 
 Total noninterest income 23,679 22,184 17,793 66,360 61,814 
 Total noninterest expense less provision for credit losses on unfunded commitments 84,568 82,286 93,915 256,975 308,016 
 Pre-tax pre-provision earnings 46,086 44,555 43,383 126,315 131,807 
 Total adjustments to noninterest income (187) 44 387 (372) (1,661) 
 Total adjustments to noninterest expense including other real estate owned expense and net (gain) loss on sale 491 (109) 3,579 7,450 38,759 
 Adjusted pre-tax pre-provision earnings 2 
 $ 46,390 $ 44,490 $ 47,349 $ 133,393 $ 168,905 
 
 Average assets $ 14,996,846 $ 14,839,707 $ 14,906,003 $ 14,843,007 $ 14,583,932 
 Less average goodwill and intangible assets (812,761) (818,914) (839,787) (819,046) (811,483) 
 Average tangible assets $ 14,184,085 $ 14,020,793 $ 14,066,216 $ 14,023,961 $ 13,772,449 
 
 Return on average assets (ROA) 0.81 % 0.82 % 0.84 % 0.78 % 0.68 % 
 Impact of removing average intangible assets and related amortization 0.18 0.18 0.20 0.18 0.20 
 Return on average tangible assets (ROTA) 0.99 1.00 1.04 0.96 0.88 
 Impact of other adjustments for adjusted net income (0.01) — 0.08 0.05 0.27 
 Adjusted return on average tangible assets 0.98 % 1.00 % 1.12 % 1.01 % 1.15 % 
 
 Pre-tax pre-provision return on average tangible assets 1.46 % 1.45 % 1.43 % 1.38 % 1.49 % 
 Impact of adjustments on pre-tax pre-provision earnings 0.01 — 0.12 0.06 0.36 
 Adjusted pre-tax pre-provision return on average tangible assets 2 
 1.47 % 1.45 % 1.55 % 1.44 % 1.85 % 
 
 Average shareholders’ equity $ 2,168,444 $ 2,117,628 $ 2,072,747 $ 2,134,941 $ 2,014,083 
 Less average goodwill and intangible assets (812,761) (818,914) (839,787) (819,046) (811,483) 
 Average tangible equity $ 1,355,683 $ 1,298,714 $ 1,232,960 $ 1,315,895 $ 1,202,600 
 
 Return on average shareholders’ equity 5.62 % 5.74 % 6.01 % 5.44 % 4.94 % 
 Impact of removing average intangible assets and related amortization 4.69 5.01 5.89 4.77 5.15 
 Return on average tangible common equity (ROTCE) 10.31 10.75 11.90 10.21 10.09 
 Impact of other adjustments for adjusted net income (0.04) 0.01 0.89 0.51 3.05 
 Adjusted return on average tangible common equity 10.27 % 10.76 % 12.79 % 10.72 % 13.14 % 
 
 Loan interest income 3 
 $ 151,282 $ 147,518 $ 150,048 $ 446,108 $ 433,821 
 Accretion on acquired loans (9,182) (10,178) (14,843) (29,955) (45,365) 
 Loan interest income excluding accretion on acquired loans 3 
 $ 142,100 $ 137,340 $ 135,205 $ 416,153 $ 388,456 
 
 Yield on loans 3 
 5.94 % 5.93 % 5.93 % 5.93 % 5.89 % 
 Impact of accretion on acquired loans (0.36) (0.41) (0.59) (0.40) (0.61) 
 Yield on loans excluding accretion on acquired loans 3 
 5.58 % 5.52 % 5.34 % 5.53 % 5.28 % 
 
 Net interest income 3 
 $ 106,975 $ 104,657 $ 119,505 $ 316,930 $ 378,009 

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 Third Second Third Nine Months Ended 
 Quarter Quarter Quarter September 30, 
 (Amounts in thousands, except per share data) 2024 2024 2023 2024 2023 
 Accretion on acquired loans (9,182) (10,178) (14,843) (29,955) (45,365) 
 Net interest income excluding accretion on acquired loans 3 
 $ 97,793 $ 94,479 $ 104,662 $ 286,975 $ 332,644 
 
 Net interest margin 3 
 3.17 % 3.18 % 3.57 % 3.19 % 3.91 % 
 Impact of accretion on acquired loans (0.27) (0.30) (0.44) (0.30) (0.47) 
 Net interest margin excluding accretion on acquired loans 3 
 2.90 % 2.87 % 3.13 % 2.89 % 3.44 % 
 
 Securities interest income 3 
 $ 26,005 $ 24,195 $ 21,520 $ 72,634 $ 61,913 
 Fully taxable equivalent adjustment to securities (8) (7) (22) (22) (71) 
 Securities interest income excluding fully taxable equivalent adjustment $ 25,997 $ 24,188 $ 21,498 $ 72,612 $ 61,842 
 
 Loan interest income 3 
 $ 151,282 $ 147,518 $ 150,048 $ 446,108 $ 433,821 
 Fully taxable equivalent adjustment to loans (302) (226) (177) (741) (517) 
 Loan interest income excluding fully taxable equivalent adjustment $ 150,980 $ 147,292 $ 149,871 $ 445,367 $ 433,304 
 
 Net interest income 3 
 $ 106,975 $ 104,657 $ 119,505 $ 316,930 $ 378,009 
 Fully taxable equivalent adjustments to securities (8) (7) (22) (22) (71) 
 Fully taxable equivalent adjustments to loans (302) (226) (177) (741) (517) 
 Net interest income excluding fully taxable equivalent adjustments $ 106,665 $ 104,424 $ 119,306 $ 316,167 $ 377,421 
 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. 
 
 2 As of 1Q’24, amortization of intangibles is excluded from adjustments to noninterest expense; prior periods have been updated to reflect the change. 
 
 3 On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost. 
 

 
 Financial Condition 
 Total assets as of September 30, 2024 were $15.2 billion, an increase of $588.1 million, or 4%, from December 31, 2023. 
 Securities 
 Information related to yields, maturities, carrying values and fair value of the Company’s securities is set forth in “Note 3 – Securities” in this report. 
 At September 30, 2024, the Company had $2.2 billion in AFS securities and $646.1 million in HTM securities. The Company’s total debt securities portfolio increased $289.8 million from December 31, 2023. 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. 
 Debt securities generally return principal and interest monthly. The modified duration of the AFS securities portfolio and the total portfolio was 4.1 and 4.5, respectively, at September 30, 2024 compared to 4.5 and 4.9, respectively, at December 31, 2023. 
 At September 30, 2024, AFS securities had gross unrealized losses of $179.0 million and gross unrealized gains of $13.8 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. U.S. Treasury securities, obligations of U.S. government agencies, and obligations of U.S. government sponsored entities totaled $2.4 billion, or 85%, of the total portfolio. 
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 The portfolio includes $136.0 million, with a fair value of $129.3 million, in private label residential and commercial mortgage-backed securities and collateralized mortgage obligations. Included are $121.6 million, with a fair value of $111.4 million, in private label residential securities with weighted average credit support of 23%. The collateral underlying these mortgage investments includes both fixed-rate and adjustable-rate residential mortgage loans. Commercial securities totaled $9.6 million, with a fair value of $9.2 million. These securities have weighted average credit support of 22%. The collateral underlying these mortgages are primarily pooled multifamily loans. 
 The Company also has invested $286.0 million in floating rate collateralized loan obligations. Collateralized loan obligations are special purpose vehicles that purchase first lien broadly syndicated corporate loans while providing support to senior tranche investors. As of September 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. The result of this analysis did not indicate expected credit losses. 
 HTM securities consist solely of mortgage-backed securities and collateralized mortgage obligations guaranteed by U.S. government-sponsored entities, each of which is expected to recover any price depreciation over its holding period as the debt securities move to maturity. 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 September 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 September 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 $10.2 billion at September 30, 2024, a $142.3 million, or 1.4%, increase 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 $360 thousand, and the average commercial loan size is $789 thousand at September 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”). 
 The following tables detail loan portfolio composition at September 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”. 
 
 September 30, 2024 
 (In thousands) Portfolio Loans Acquired Non-PCD Loans PCD Loans Total 
 Construction and land development $ 495,458 $ 99,756 $ 539 $ 595,753 
 Commercial real estate - owner occupied 1,150,809 493,986 32,019 1,676,814 
 Commercial real estate - non-owner occupied 2,228,137 1,214,092 130,847 3,573,076 
 Residential real estate 1,811,941 734,399 18,563 2,564,903 
 Commercial and financial 1,332,939 213,109 29,180 1,575,228 
 Consumer 158,902 60,293 312 219,507 
 Totals $ 7,178,186 $ 2,815,635 $ 211,460 $ 10,205,281 
 
 

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

 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. 
 Collateral types and characteristics of non-owner occupied commercial real estate (“CRE”) loans as of September 30, 2024 were as follows: 
 
 September 30, 2024 
 (In thousands) 
 Balance Balance % of Total Loans Average Loan Size 30+ Days Past Due-Accruing Non Accrual Weighted Avg LTV 1 
 
 Retail $ 1,135,452 11.1 % $ 2,248 $ 324 $ — 50 % 
 Office 561,984 5.5 1,678 — 2,914 54 
 Multifamily 5+ 458,588 4.5 2,259 — 3,189 51 
 Hotel/Motel 363,324 3.6 3,707 3,341 15,684 49 
 Industrial/Warehouse 429,894 4.2 2,128 2,554 195 54 
 Other 623,834 6.1 1,147 2,377 6,724 51 
 Total $ 3,573,076 35.0 % $ 1,893 $ 8,596 $ 28,706 51 % 
 1 Loan-to-value is calculated based on the real estate value at the time of origination, renewal, or update, whichever is more recent. 
 

 Non-owner occupied CRE loans increased by $253.2 million in the nine months ended September 30, 2024, totaling $3.6 billion at September 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 $1.1 billion at September 30, 2024. This segment 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 $562.0 million at September 30, 2024. This segment targets low to mid-rise suburban offices and is broadly diversified across many types of professional services. There is limited exposure to central business districts. Loans in this segment have a weighted average loan to value of 54% and an average loan size of $1.7 million. 
 Owner-occupied CRE loans increased by $6.5 million in the nine months ended September 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 $32.7 million, or 2%, from December 31, 2023, totaling $1.6 billion at September 30, 2024. 
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 Residential mortgage loans increased $119.2 million to $2.6 billion during the nine months ended September 30, 2024. Included in the balance as of September 30, 2024, were $981.3 million of fixed rate mortgages, $981.1 million of adjustable rate mortgages and $602.5 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 64%, with 32% of the loans being in first lien position at September 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 $32.1 million, or 13%, to total $219.5 million at September 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. Pipelines include lines of credit at the full proposed commitment amount, which may not result in fully funded originations. 
 
 Third Second Third 
 Quarter Quarter Quarter 
 (In thousands) 2024 2024 2023 
 Commercial/commercial real estate loan pipeline at period end $ 744,548 $ 743,789 $ 259,445 
 Commercial/commercial real estate loans closed 499,655 405,957 94,021 
 
 SBA pipeline at period end 28,944 29,296 41,353 
 SBA originations 18,386 8,226 12,476 
 
 Residential pipeline - saleable at period end 11,222 12,095 6,820 
 Residential loans - sold 23,200 21,417 17,625 
 
 Residential pipeline - portfolio at period end 21,920 24,721 20,945 
 Residential loans - retained 51,507 42,431 43,962 
 
 Consumer pipeline at period end 24,447 24,532 24,482 
 Consumer originations 65,140 59,973 76,531 

 Commercial and commercial real estate originations during the third quarter of 2024 were $499.7 million, an increase of $93.7 million, or 23%, compared to the second quarter of 2024, and an increase of $405.6 million, or 431%, compared to the third quarter of 2023. The Company continues to exercise a disciplined approach to lending and is benefiting from the investments made in recent years to attract talent from large regional banks across its markets. This talent is onboarding significant new relationships, resulting in increased loan production. Commercial and commercial real estate pipelines were $744.5 million as of September 30, 2024, an increase of $0.8 million from $743.8 million at June 30, 2024, and an increase of 187% from $259.4 million at September 30, 2023. 
 SBA originations totaled $18.4 million during the third quarter of 2024, an increase of $10.2 million compared to the second quarter of 2024, and an increase of $5.9 million compared to the third quarter of 2023. 
 Residential loans originated for sale in the secondary market totaled $23.2 million in the third quarter of 2024, compared to $21.4 million in the second quarter of 2024 and $17.6 million in the third quarter of 2023. Residential saleable pipelines were $11.2 million as of September 30, 2024, compared to $12.1 million as of June 30, 2024 and $6.8 million as of September 30, 2023. 
 Residential loan production retained in the portfolio for the third quarter of 2024 was $51.5 million, compared to $42.4 million in the second quarter of 2024 and $44.0 million in the third quarter of 2023. The pipeline of residential loans intended to be retained in the portfolio was $21.9 million as of September 30, 2024, compared to $24.7 million as of June 30, 2024, and $20.9 million as of September 30, 2023. 
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 Consumer originations, which include HELOCs, totaled $65.1 million during the third quarter of 2024, compared to $60.0 million in the second quarter of 2024 and $76.5 million in the third quarter of 2023. The consumer pipeline was $24.4 million as of September 30, 2024, compared to $24.5 million as of June 30, 2024 and $24.5 million at September 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 $2.6 billion, representing 26% of the total portfolio at September 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 September 30, 2024 aggregated to $550.7 million, of which $441.4 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 guidelines. Construction and land development and CRE loan concentrations as a percentage of subsidiary bank total risk based capital were 36% and 241%, respectively, at September 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 34% and 227%, respectively, of total consolidated risk based capital as of September 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. Loans to real estate investment trusts (“REITs”) and unsecured loans to developers that closely correlate to the inherent risks in CRE markets would also be considered CRE loans under the Guidance. Loans on owner-occupied CRE are generally excluded. In addition, the Company is subject to a geographic concentration of credit because it primarily operates in Florida. 
 Nonperforming Loans, Troubled Borrower Modifications, Other Real Estate Owned and Credit Quality 
 Nonperforming assets (“NPAs”) at September 30, 2024 totaled $87.3 million, and were comprised of $80.9 million of nonaccrual loans, and $6.4 million of other real estate owned (“OREO”), including $5.7 million of branches taken out of service. Overall, NPAs increased $14.6 million, or 20%, from $72.7 million as of December 31, 2023. NPAs to total assets at September 30, 2024 increased to 0.58% from 0.50% at December 31, 2023. 
 Compared to December 31, 2023, nonaccrual loans increased $15.8 million, or 24%. Approximately 75% of nonaccrual loans were secured with real estate at September 30, 2024. Nonperforming loans to total loans outstanding at September 30, 2024 increased to 0.79% from 0.65% at December 31, 2023. A significant portion of nonaccrual loans have collateral values well in excess of balances outstanding, and therefore, no loss is expected. 
 
 
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 The tables below set forth details related to nonaccrual loans. 
 
 September 30, 2024 
 (In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans Allowance for Credit Losses 
 Construction and land development $ 94 $ 744 $ 838 $ 177 
 Commercial real estate - owner occupied 2,664 7,002 9,666 1,188 
 Commercial real estate - non-owner occupied 25,452 3,254 28,706 1,715 
 Residential real estate 6,379 14,690 21,069 562 
 Commercial and financial 3,571 15,533 19,104 6,676 
 Consumer — 1,474 1,474 221 
 Totals $ 38,160 $ 42,697 $ 80,857 $ 10,539 
 

 
 December 31, 2023 
 (In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans Allowance for Credit Losses 
 Construction and land development $ — $ 824 $ 824 $ — 
 Commercial real estate - owner occupied 4,859 4,825 9,684 41 
 Commercial real estate - non-owner occupied 3,938 4,797 8,735 230 
 Residential real estate 1,792 8,194 9,986 58 
 Commercial and financial 4,868 29,825 34,693 2,319 
 Consumer — 1,182 1,182 257 
 Totals $ 15,457 $ 49,647 $ 65,104 $ 2,905 

 
 
 In accordance with regulatory reporting requirements, loans are placed on nonaccrual following the Retail Classification of Loan interagency guidance. The accrual of interest is generally discontinued on loans that become 90 days past due as to principal or interest unless collection of both principal and interest is assured by way of collateralization, guarantees or other security. Consumer loans that become 120 days past due are generally charged off. The loan carrying value is analyzed and any changes are appropriately made quarterly, as described above. 
 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 nine months ended September 30, 2024 are included in “Note 4 - Loans”. 
 
 
 
 Allowance for Credit Losses on Loans 
 Management establishes the allowance using relevant available information from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The forecasts of future economic conditions are over a period that has been deemed reasonable and supportable, and in segments where it can no longer develop reasonable and supportable forecasts, the Company reverts to longer-term historical loss experience to estimate losses over the remaining life of the loans. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments. 
 The Company recorded provision expense of $6.3 million and $12.6 million, respectively, for the three and nine months ended September 30, 2024, compared to $2.7 million and $33.5 million, respectively, for the three and nine months ended September 30, 2023. The Company recorded net charge-offs of $7.4 million and $21.0 million, respectively, in the three and nine months ended September 30, 2024, compared to $12.7 million and $16.6 million, respectively, for the three and nine months ended September 30, 2023. 
 The ratio of allowance for credit losses to total loans was 1.38% at September 30, 2024, 1.47% at December 31, 2023, and 1.49% at September 30, 2023. 
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 Cash and Cash Equivalents and Liquidity Risk Management 
 Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liability, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations cost effectively and to meet current and future potential obligations such as loan commitments and unexpected deposit outflows. 
 Funding sources primarily include customer-based deposits, collateral-backed borrowings, brokered deposits, cash flows from operations, cash flows from the loan and investment portfolios and asset sales, primarily secondary marketing for residential real estate mortgages. 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 $637.1 million at September 30, 2024, compared to $447.2 million at December 31, 2023. Higher cash and cash equivalent balances at September 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 $4.3 billion at September 30, 2024, representing 36% 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 31% of total deposits at September 30, 2024. The Company has liquidity sources as discussed below, including cash and lines of credit with the FRB and FHLB, that represent 145% of uninsured deposits, and 167% of uninsured and uncollateralized deposits. 
 In addition to $637.1 million in cash and cash equivalents at September 30, 2024, the Company had $5.7 billion in available borrowing capacity, including $4.1 billion in available collateralized lines of credit, $1.2 billion 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 September 30, 2024 totaled $256.5 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. Sources of liquidity are maintained through a portfolio of high-quality marketable assets, such as residential mortgage loans, debt securities available-for-sale and interest-bearing deposits. The Company is also able to provide short-term financing of its activities by selling, under an agreement to repurchase, United States Treasury and Government agency debt securities not pledged to secure public deposits or trust funds. 
 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 third quarter of 2024, Seacoast Bank distributed $15.4 million to the Company and, at September 30, 2024, is eligible to distribute dividends to the Company of approximately $172.1 million without prior regulatory approval. At September 30, 2024, the Company had cash and cash equivalents at the parent of approximately $97.4 million, compared to $101.7 million at December 31, 2023. 
 
 
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 Deposits and Borrowings 
 Customer relationship funding is detailed in the following table for the periods specified: 
 
 
 September 30, December 31, 
 (In thousands, except ratios) 2024 2023 
 Noninterest demand $ 3,443,455 $ 3,544,981 
 Interest-bearing demand 2,487,448 2,790,210 
 Money market 4,034,371 3,314,288 
 Savings 524,474 651,454 
 Time deposits 1,497,301 1,353,655 
 Brokered deposits $ 256,536 $ 122,347 
 Total deposits $ 12,243,585 $ 11,776,935 
 
 Securities sold under agreements to repurchase 210,176 374,573 
 
 Total customer funding 1 
 $ 12,197,225 $ 12,029,161 
 
 Noninterest demand deposits as % of total deposits 28 % 30 % 
 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 $466.7 million, or 4.0%, to $12.2 billion at September 30, 2024 compared to December 31, 2023. 
 Noninterest demand deposits represented 28% and 30% of total deposits at September 30, 2024 and December 31, 2023, respectively. Customer transaction account balances (noninterest demand and interest-bearing demand) represented 49% of total deposits at September 30, 2024, compared to 54% at December 31, 2023. 
 Customer sweep accounts totaled $210.2 million at September 30, 2024, decreasing $164.4 million, or 44%, 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 September 30, 2024 and December 31, 2023, long-term debt included $72.4 million and $72.2 million, respectively, related to trust preferred securities issued by trusts organized or acquired by the Company. At September 30, 2024, the average interest rate in effect on our outstanding subordinated debt related to trust preferred securities was 6.80%, compared to 7.34% at December 31, 2023. All trust preferred securities are guaranteed by the Company on a junior subordinated basis. Under Basel III and FRB rules, qualified trust preferred securities and other restricted capital elements can be included as Tier 1 capital, within limitations. The Company believes that its trust preferred securities qualify under these capital rules. 
 In 2022, the Company acquired $12.3 million in senior debt through the acquisition of Apollo Bancshares, Inc. Contractual interest is paid on a semiannual basis at a fixed rate of 5.50% until April 30, 2025, at which point the rate converts to a floating rate of 3-month SOFR plus 533 basis points. The debt was recorded at fair value, resulting in a $0.4 million premium that is being amortized into interest expense over the remaining term to maturity. 
 In 2023, the Company acquired $25.0 million in subordinated debt through the acquisition of Professional that qualifies as Tier 2 Capital. Contractual interest is paid on a semiannual basis at a fixed interest rate of 3.375% until January 30, 2027, at which point the rate converts to a 3-month SOFR rate plus 203 basis points paid quarterly. The debt was recorded at fair value, resulting in a $3.9 million discount that is being accreted into interest expense over the remaining term to maturity. 
 Federal Home Loan Bank advances totaled $245.0 million at September 30, 2024 with a weighted average interest rate of 4.19%, compared to $50.0 million at December 31, 2023 with an interest rate of 3.23%. 
 
 
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 Off-Balance Sheet Transactions 
 In the normal course of business, the Company may engage in a variety of financial transactions that, under generally accepted accounting principles, either are not recorded on the balance sheet or are recorded on the balance sheet in amounts that differ from the full contract or notional amounts. These transactions involve varying elements of market, credit and liquidity risk. 
 Lending commitments include unfunded loan commitments and standby and commercial letters of credit. For loan commitments, the contractual amount of a commitment represents the maximum potential credit risk that could result if the entire commitment had been funded, the borrower had not performed according to the terms of the contract, and no collateral had been provided. A large majority of loan commitments and standby letters of credit expire without being funded, and accordingly, total contractual amounts are not representative of actual future credit exposure or liquidity requirements. Loan commitments and letters of credit expose the Company to credit risk in the event that the customer draws on the commitment and subsequently fails to perform under the terms of the lending agreement. 
 For commercial customers, loan commitments generally take the form of revolving credit arrangements. For retail customers, loan commitments generally are lines of credit secured by residential property. These instruments are not recorded on the balance sheet until funds are advanced under the commitment. Unfunded commitments to extend credit were $2.8 billion at September 30, 2024 and $2.7 billion at 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. A summary of the most restrictive items follows. 
 Seacoast Bank may be required to maintain reserve balances with the FRB. There was no reserve requirement at September 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 September 30, 2024, the maximum amount available for transfer from Seacoast Bank to the Company in the form of loans approximated $196.1 million, if the Company has sufficient acceptable collateral. There were no loans made to affiliates during the nine months ended September 30, 2024. 
 
 Capital Resources 
 The Company’s equity capital at September 30, 2024 increased $85.8 million, or 4%, from December 31, 2023 to $2.2 billion. Changes in equity included an increase from net income of $86.9 million, partially offset by the payment of common stock dividends totaling $46.2 million. 
 The ratio of shareholders’ equity to period end total assets was 14.46% at both September 30, 2024 and December 31, 2023, respectively. The ratio of tangible shareholders’ equity to tangible assets was 9.64% and 9.31% at September 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 9.11% at September 30, 2024 and 8.68% at December 31, 2023. 
 Activity in shareholders’ equity for the nine months ended September 30, 2024 and 2023 follows: 
 
 (In thousands) 2024 2023 
 Beginning balance at December 31, 2023 and 2022 
 $ 2,108,086 $ 1,607,775 
 Net income 86,901 74,490 
 Stock based compensation expense 10,233 10,290 
 Common stock transactions related to stock based employee benefit plans 972 4,316 
 Issuance of common stock and conversion of options pursuant to acquisition — 421,042 
 Repurchase of common stock (880) (45) 
 Dividends on common stock ($0.54 per share and $0.53 per share, respectively) 
 (46,170) (45,236) 
 Change in accumulated other comprehensive income 34,708 (24,238) 
 Ending balance at September 30, 2024 and 2023 
 $ 2,193,850 $ 2,048,394 

 
 
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 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. 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”). 
 
 September 30, 2024 Seacoast
(Consolidated) Seacoast
Bank Minimum to be Well- Capitalized 1 
 
 Total Risk-Based Capital Ratio 16.18% 15.26% 10.00% 
 Tier 1 Capital Ratio 14.76 14.05 8.00 
 Common Equity Tier 1 Ratio (CET1) 14.10 14.05 6.50 
 Leverage Ratio 11.15 10.62 5.00 
 1 For subsidiary bank only. 
 

 The Company and Seacoast Bank are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The appropriate federal bank regulatory authority may prohibit the payment of dividends where it has determined that the payment of dividends would be an unsafe or unsound practice. The Company is a legal entity separate and distinct from Seacoast Bank and its other subsidiaries, and the Company’s primary source of cash and liquidity, other than securities offerings and borrowings, is dividends from its bank subsidiary. Without Office of the Comptroller of the Currency (“OCC”) approval, Seacoast Bank can pay $172.1 million of dividends to the Company. 
 The OCC and the Federal Reserve have policies that encourage banks and bank holding companies to pay dividends from current earnings, and have the general authority to limit the dividends paid by national banks and bank holding companies, respectively, if such payment may be deemed to constitute an unsafe or unsound practice. If, in the particular circumstances, either of these federal regulators determined that the payment of dividends would constitute an unsafe or unsound banking practice, either the OCC or the Federal Reserve may, among other things, issue a cease and desist order prohibiting the payment of dividends by Seacoast Bank or us, respectively. The board of directors of a bank holding company must consider different factors to ensure that its dividend level, if any, is prudent relative to the organization’s financial position and is not based on overly optimistic earnings scenarios such as any potential events that may occur before the payment date that could affect its ability to pay, while still maintaining a strong financial position. As a general matter, the FRB has indicated that the board of directors of a bank holding company, such as Seacoast, should consult with the FRB and eliminate, defer, or significantly reduce the bank holding company’s dividends if: (i) its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or (iii) it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. 
 The Company has paid quarterly dividends to the holders of its common stock since the second quarter of 2021. Whether the Company continues to pay quarterly dividends and the amount of any such dividends will be at the discretion of the Company’s Board of Directors and will depend on the Company’s earnings, financial condition, results of operations, business prospects, capital requirements, regulatory restrictions, and other factors that the Board of Directors may deem relevant. 
 The Company has seven wholly owned trust subsidiaries that have issued trust preferred stock. Trust preferred securities from acquisitions were recorded at fair value when acquired. All trust preferred securities are guaranteed by the Company on a junior subordinated basis. The FRB’s rules permit qualified trust preferred securities and other restricted capital elements to be included under Basel III capital guidelines, with limitations, and net of goodwill and intangibles. The Company believes that its trust preferred securities qualify under these revised regulatory capital rules and believes that it can treat all its trust preferred securities as Tier 1 capital. For regulatory purposes, the trust preferred securities are added to the Company’s tangible common shareholders’ equity to calculate Tier 1 capital. 
 
 
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 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 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. There have been no changes to the Company’s critical accounting policies during 2024. 
 
 
 
 Interest Rate Sensitivity 
 Fluctuations in interest rates may result in changes in the fair value of the Company’s financial instruments, cash flows and net interest income. This risk is managed using simulation modeling to calculate the most likely interest rate risk utilizing estimated loan and deposit growth. The objective is to optimize the Company’s financial position, liquidity, and net interest income while limiting volatility. 
 Senior management regularly reviews the overall interest rate risk position and evaluates strategies to manage the risk. The Company's Asset and Liability Management Committee (“ALCO”) uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to assess the impact of market interest rate swings. 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 October 1, 2024, holding all balances on the balance sheet static. It is important to note that the results in the table below assume parallel shifts in the yield curve and do not take into account changes in the slope of the yield curve nor changes in balance sheet size or mix. 
 
 
 
 % Change in Projected Baseline 
 Net Interest Income 
 September 30, 2024 
 Change in Interest Rates 1-12 months 13-24 months 
 +2.00% (9.9)% (8.4)% 
 +1.00% (4.2)% (3.3)% 
 Current —% —% 
 -1.00% 0.2% (1.6%) 
 -2.00% 0.8% (3.5%) 

 The computations of interest rate risk do not necessarily include certain actions management may undertake to manage this risk in response to changes in interest rates. Management may adjust asset or liability pricing or structure in order to manage interest rate risk through an interest rate cycle. This may include the use of investment portfolio purchases or sales or the use of derivative financial instruments, such as interest rate swaps, options, caps, floors, futures or forward contracts. 
 
 
 
 Effects of Inflation and Changing Prices 
 The condensed consolidated financial statements and related financial data presented herein have been prepared in accordance with U.S. GAAP, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money, over time, due to inflation. 
 Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the general level of inflation. However, inflation affects financial institutions by increasing their cost of goods and services purchased, as well as the cost of salaries and benefits, occupancy expense, and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings, and shareholders’ equity. 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. 
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
SEACOAST BANKING CORP OF FLORIDA 10-Q

Item 2. Management’s Discussion and Analysis
