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Item 7. Management’s Discussion and Analysis

2025-02-25 compared with 2024-02-27 · 410 added, 305 removed, 508 unchanged (58% of the section changed)

9 unchanged sentences

Overview – Strategy and Results

Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”), a financial holding company, registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), is one of the largest community banks in Florida, with $14.6 billion in assets and $11.8 billion in deposits as of December 31, 2023.

Its principal subsidiary is Seacoast National Bank

(“Seacoast Bank”), a wholly owned national banking association.

The Company provides integrated financial services including commercial and consumer banking, wealth management, mortgage and insurance services to customers through advanced online and mobile banking solutions, and Seacoast Bank's network of 77 traditional branches and commercial banking centers.

Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”), a financial holding company registered under the BHC Act of 1956, is one of the largest banks in Florida, with $15.2 billion in assets and $12.2 billion in deposits as of December 31, 2024.

Its principal subsidiary is Seacoast National Bank (“Seacoast Bank”), a wholly owned national banking association.

Seacoast is executing a balanced growth strategy, combining organic growth with strategic acquisitions in Florida's most attractive growing markets.

The Company has expanded its presence across the state with 16 acquisitions since 2014, strengthening market share, increasing the customer base and lowering operating costs through economies of scale.

The acquisition of Professional Holding Corp.

(“Professional”), parent company of Professional Bank, was completed on January 31, 2023.

The acquisition of Professional Holding Corp., parent company of Professional Bank, was completed on January 31, 2023.

The transaction further expanded Seacoast’s presence in the tri-county South Florida market, which includes Miami-Dade, Broward, and Palm Beach counties, Florida’s largest MSA and the 8th largest in the nation.

The Company's acquisition strategy has not only increased customer households and been accretive to earnings, but has also opened markets and expanded Seacoast's customer base.

The table below summarizes acquisition activity in the past ten years:

(In millions) Primary Market(s) Year of Acquisition Acquired Loans Acquired Deposits

Professional Bank/ Professional Holding Corp.

Miami-Dade County and West Palm Beach 2023 $ 1,986 $ 2,119

Drummond Community Bank/ Drummond Banking Company Gainesville and Ocala 2022 545 881

Apollo Bank/ Apollo Bancshares, Inc.

Miami-Dade County 2022 667 855

Florida Business Bank/ Business Bank of Florida, Corp.

Melbourne 2022 122 166

Sabal Palm Bank/ Sabal Palm Bancorp, Inc.

Sarasota 2022 246 396

Legacy Bank of Florida Boca Raton and Palm Beach 2021 477 495

Freedom Bank/ Fourth Street Banking Company Tampa- St.

Petersburg 2020 303 330

First Bank of the Palm Beaches West Palm Beach 2020 147 174

First Green Bank/ First Green Bancorp, Inc.

Orlando and Fort Lauderdale 2018 631 624

Palm Beach Community Bank West Palm Beach 2017 270 269

NorthStar Bank/ NorthStar Banking Corporation, Inc.

Petersburg 2017 137 182

GulfShore Bank/ GulfShore BancShares, Inc.

Petersburg 2017 251 285

Orlando banking operations of BMO Harris Bank, N.A.

Orlando 2016 63 314

Floridian Bank/ Floridian Financial Group, Inc.

Orlando 2016 266 337

Grand Bank & Trust of Florida/ Grand Bankshares, Inc.

West Palm Beach 2015 111 188

BankFirst/ The BANKshares, Inc.

Orlando 2014 365 516

Results of Operations

2024 Financial Performance Highlights

• Net income of $104 million, a decrease of $2.5 million, or 2%, compared to 2022, and adjusted net income 1 of $154.7 million, an increase of $18.5 million, or 14%, compared to 2022.

• Net interest income increased $122.1 million, or 33%, to $488.2 million, and net interest margin (on a fully tax equivalent basis) 1 increased to 3.77% in 2023 from 3.69% in 2022 .

• Pre-tax pre-provision earnings 1 were $172.6 million in 2023, an increase of 5% compared to 2022.

Adjusted pre-tax pre-provision earnings 1 were $242.6 million in 2023, an increase of 19% compared to 2022.

• Net income of $121.0 million, an increase of $17.0 million, or 16%, compared to 2023, and adjusted net income 1 of $132.5 million, a decrease of $0.8 million, or 1%, compared to 2023.

• Noninterest income increased $4.3 million, or 5%, compared to 2023, to $83.4 million.

• Return on average tangible assets for the year ended December 31, 2024 was 0.98%, compared to 0.91% for the year ended December 31, 2023.

• Return on tangible common equity for the year ended December 31, 2024 was 10.39%, compared to 10.38% for the year ended December 31, 2023.

• New loan production was $2.5 billion, an increase of 40%, or $714.8 million, compared to 2023, while net loans grew 3%, or $237.0 million from 2023, to $10.2 billion.

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

• Continued strong capital, with a Tier 1 capital ratio of 14.5%, and the ratio of tangible common equity to tangible assets increasing to 9.31%.

• Growth in total deposits from 2023 of 4%, or $465.5 million, to $12.2 billion.

• Continued strong capital position, with a Tier 1 capital ratio of 14.8%, and a tangible common equity to tangible assets ratio of 9.60%.

• Tangible book value per share increased to $16.12 at December 31, 2024 from $15.08 at December 31, 2023.

• Executed strategic expense management actions in 2023 to optimize efficiency in 2024.

Fourth quarter 2023 expenses were 8% lower than the prior quarter.

Net Interest Income and Margin

Net interest income for the year ended December 31, 2023, totaled $488.2 million, increasing $122.1 million, or 33%, compared to the year ended December 31, 2022.

The increase in net interest income is primarily due to higher balances added through the Professional acquisition and higher yields on securities and loans, partially offset by the higher cost of deposits.

Net interest income (on a fully taxable equivalent basis) 1 for the year ended December 31, 2023, was $489.0 million, increasing $122.4 million, or 33%, compared to the year ended December 31, 2022.

Accretion on acquired loans totaled $56.7 million for the year ended December 31, 2023, compared to $18.4 million for the year ended December 31, 2022.

The year-over-year increase in accretion reflects the impact of purchase marks from bank acquisitions in late 2022 and early 2023.

Net interest margin (on a fully taxable equivalent basis) 1 increased eight basis points to 3.77% for 2023 compared to 3.69% in 2022.

Average interest earning assets increased $3.0 billion, or 31%, during 2023 to $13.0 billion compared to $9.9 billion in 2022, primarily the result of acquisitions in the fourth quarter of 2022 and the first quarter of 2023.

Net interest income for the year ended December 31, 2024, totaled $432.0 million, decreasing $56.3 million, or 12%, compared to the year ended December 31, 2023.

Higher interest expense on deposits resulting from higher short term rates and higher balances was partially offset by higher yields and higher balances on loans and securities.

Net interest income (on a fully taxable equivalent basis) 1 for the year ended December 31, 2024, was $433.0 million, decreasing $56.0 million, or 11%, compared to the year ended December 31, 2023.

Accretion of purchase discount on acquired loans added $41.7 million in interest income for the year ended December 31, 2024, compared to $56.7 million for the year ended December 31, 2023.

Purchase marks from bank acquisitions in previous years are expected to continue to decline.

Net interest margin (on a fully taxable equivalent basis) 1 decreased 53 basis points to 3.24% in 2024 compared to 3.77% in 2023.

Average interest-earning assets increased $379.9 million, or 3%, during 2024 to $13.4 billion compared to $13.0 billion in 2023.

During 2024, yields on interest-earning assets increased to 5.44% from 5.32% in 2023 due to the higher interest rate environment.

Average interest-bearing liabilities increased $797.6 million, or 10%, during 2024 to $9.2 billion, including a $788.2 million, or 10%, increase in interest-bearing deposits.

The cost of average interest-bearing liabilities in 2024 increased 80 basis points to 3.20% from 2.40% in 2023, reflecting the impact of higher interest rates.

During 2023, average securities increased $34.3 million to $2.6 billion, partially due to the acquisition of Professional.

Yields on securities increased 97 basis points from 2.21% in 2022 to 3.18% in 2023, benefiting from the higher rate environment and favorable repricing on variable rate bonds.

Average loans totaled $9.9 billion for the year ended December 31, 2023, reflecting an increase of $3.1 billion, or 45%, compared to $6.8 billion for the year ended December 31, 2022, the result of acquisitions in late 2022 and early 2023.

Yields on loans increased 126 basis points from 4.62% in 2022 to 5.88% in 2023, benefiting from higher rates on new production and increasing rates on variable rate loans.

In the fourth quarter of 2024, net interest income and net interest margin began to improve, with a decline in deposit costs following cuts to the Federal Funds rate.

The Company expects a continued increase in net interest income and expansion of net interest margin into 2025 if short term interest rates remain flat or continue to decline.

During 2024, average securities increased $83.4 million to $2.7 billion.

Yields on securities increased 50 basis points from 3.18% in 2023 to 3.68% in 2024, benefiting from higher rates on new purchases and favorable repricing on variable rate bonds.

Average loans totaled $10.1 billion for the year ended December 31, 2024, increasing $207.1 million, or 2%, compared to $9.9 billion for the year ended December 31, 2023.

Yields on loans increased five basis points from 5.88% in 2023 to 5.93% in 2024, benefiting from higher rates on new production and increasing rates on variable rate loans.

Accretion of purchase discounts on acquired loans added 42 basis points to loan yields in 2024, compared to 57 basis points in 2023.

During 2023, average transaction deposits (noninterest and interest bearing demand deposits) increased $0.9 billion, or 15%, compared to 2022.

During 2024, average transaction deposits (noninterest and interest-bearing demand deposits) decreased $703.5 million, or 10%, compared to 2023, as customers favored money market accounts, which increased $833.4 million, or 28% from 2023.

The Company’s deposit mix remains favorable, with 86% of average deposit balances comprised of savings, money market, and demand deposits in 2024.

The cost of average total deposits (including noninterest-bearing demand deposits) increased by 73 basis points to 2.23% in 2024, compared to 1.50% in 2023, primarily the result of higher short-term interest rates and an increasingly competitive deposit market.

Sweep repurchase agreements with customers had an average balance of $271.0 million for the year ended December 31, 2023, increasing $149.7 million, or 123%, compared to $121.3 million for the year ended December 31, 2022.

Sweep repurchase agreements with customers averaged $269.3 million for the year ended December 31, 2024, a decrease of $1.7 million, or 1%, compared to $271.0 million for the year ended December 31, 2023.

The average rate on customer repurchase accounts was 3.49% in 2024, compared to 3.07% in 2023.

The Company had an average balance of $184.0 million in FHLB borrowings outstanding for the year ended December 31, 2024, with an average interest rate of 4.20%.

The average balance of FHLB borrowings was $10.3 million in 2022.

In 2023, average long-term debt of $104.2 million carried an average cost of 6.96%, up from 4.09% in 2022, reflecting the impact of higher interest rates.

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

The average balance of FHLB borrowings was $175.2 million at 3.64% in 2023.

In 2024, average long-term debt of $106.6 million had an average rate of 7.02%.

In 2023, average long-term debt of $104.2 million had an average rate of 6.96%.

The following table details the Company’s average balance sheets, interest income and expenses, and yields and rates 1 , for the past three years:

1 unchanged sentence

2024 2023 2022

(In thousands, except percentages) Average

(In thousands, except ratios) Average

Balance Interest Yield/

6 unchanged sentences

Federal funds sold 446,149 23,619 5.29 368,659 18,871 5.12 433,359 4,103 0.95

Other investments 90,692 5,718 6.30 69,604 3,517 5.05 65,533 1,947 2.97

Loans 9,889,070 581,825 5.88 6,838,266 316,073 4.62 5,751,064 251,834 4.38

Interest-bearing deposits with other banks and other investments 102,552 4,983 4.86 90,692 5,718 6.30 69,604 3,517 5.05

Total Loans, net 10,096,189 598,411 5.93 9,889,070 581,825 5.88 6,838,266 316,073 4.62

Total Earning Assets 13,353,360 726,633 5.44 12,973,453 689,778 5.32 9,931,985 380,994 3.84

Allowance for credit losses on loans (150,982) (94,693) (88,659)

Allowance for credit losses (144,280) (150,982) (94,693)

Cash and due from banks 167,367 184,035 305,775

Bank premises and equipment, net 116,516 85,568 71,771

Premises and equipment, net 110,341 116,516 85,568

Intangible assets 815,945 816,662 360,217

Bank owned life insurance 303,486 290,218 214,468

Other assets 392,872 248,108 170,210

Other assets including deferred tax assets 327,539 392,872 248,108

Total Assets $ 14,933,758 $ 14,622,774 $ 11,051,428

6 unchanged sentences

Securities sold under agreements to repurchase 269,255 9,390 3.49 270,999 8,323 3.07 121,318 986 0.81

Federal Home Loan Bank borrowings 175,247 6,378 3.64 10,264 330 3.22 — — —

Other borrowings 104,158 7,245 6.96 74,713 3,056 4.09 71,495 1,685 2.36

FHLB borrowings 183,962 7,726 4.20 175,247 6,378 3.64 10,264 330 3.22

Long-term debt, net 106,624 7,485 7.02 104,158 7,245 6.96 74,713 3,056 4.09

Total Interest-Bearing Liabilities 9,176,401 293,588 3.20 8,378,755 200,735 2.40 5,842,246 14,334 0.25

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Shareholders' equity 2,152,061 2,025,382 1,418,855

Total Liabilities & Shareholders' Equity $ 14,622,774 $ 11,051,428 $ 9,337,054

Total Liabilities & Equity $ 14,933,758 $ 14,622,774 $ 11,051,428

Cost of deposits 2.23 % 1.50 % 0.11 %

Interest expense as % of earning assets 1.55 % 0.14 % 0.10 %

Net interest income/yield on earning assets $ 489,043 3.77 % $ 366,660 3.69 % $ 276,541 3.27 %

Interest expense as a % of earning assets 2.20 % 1.55 % 0.14 %

Net interest income as a % of earning assets $ 433,045 3.24 % $ 489,043 3.77 % $ 366,660 3.69 %

1 On a fully taxable equivalent basis.

2 unchanged sentences

Nonaccrual loans are included in loan balances.

The following table shows the impact of changes in volume and rate on earning assets and interest bearing liabilities 1 :

The following table shows the impact of changes in volume and rate on interest-earning assets and interest-bearing liabilities 1 :

2024 vs 2023 2023 vs 2022

Due to Change in:

2 unchanged sentences

Amount of increase (decrease)

Earning Assets:

Interest-Earning Assets:

Taxable $ 3,135 $ 13,395 $ 16,530 $ 1,149 $ 25,166 $ 26,315

4 unchanged sentences

Loans 12,231 4,355 16,586 160,253 105,499 265,752

Total Earning Assets 160,372 148,412 308,784 48,125 48,109 96,234

Total Interest-Earning Assets 19,819 17,036 36,855 160,372 148,412 308,784

Interest-Bearing Liabilities:

5 unchanged sentences

Securities sold under agreements to repurchase (57) 1,124 1,067 2,907 4,431 7,338

Federal Home Loan Bank borrowings 5,654 394 6,048 330 — 330

FHLB borrowings 342 1,006 1,348 5,654 394 6,048

Other borrowings 172 68 240 1,626 2,563 4,189

7 unchanged sentences

Provision for Credit Losses

The provision for credit losses was $37.5 million for the full year 2023 compared to $26.2 million for the full year 2022.

Included is $26.6 million in 2023 and $20.2 million in 2022 of day-1 provision for credit losses on loans added through bank acquisitions.

The provision for credit losses was $16.3 million in 2024 compared to $37.5 million in 2023.

In 2024, the provision reflects additions to the allowance for credit losses in keeping with higher loan balances, partially offset by lower overall allowance coverage on total loans, consistent with generally stabilizing economic trends.

Included in 2023 is $26.6 million of day-1 provision for credit losses on loans added through the acquisition of Professional.

Noninterest Income

9 unchanged sentences

Insurance agency income 5,196 4,510 15

SBA gains 2,105 842 150

BOLI income 10,065 8,401 20

Other 20,304 14,559 39

Other income 30,790 22,409 37

91,444 82,045 11

Securities losses, net (2,893) (1,096) 164

Securities (losses) gains, net (8,016) (2,893) 177

Total Noninterest Income $ 83,428 $ 79,152 5 %

Service charges on deposits for the year ended December 31, 2023 compared to the prior year increased $4.6 million, or 33%, to $18.3 million.

This increase primarily reflects the benefit of an expanded deposit base, including from acquisitions, and the continued benefit of the expansion of treasury management services to commercial customers.

Service charges on deposits for the year ended December 31, 2024 increased $2.6 million, or 14%, compared to the prior year to $20.9 million.

This increase primarily reflects the Company's investments in talent and market expansion across the state, which have resulted in continued growth, particularly in treasury management services to commercial customers.

Overdraft-related fees for both consumer and commercial accounts represented 32% of total service charges on deposits in 2024 compared to 35% in 2023.

Interchange revenue totaled $7.6 million in 2024, a decrease of 45% from $13.9 million in 2023.

The decrease in interchange income was due to the impact of the Durbin amendment, which became effective for the first time for the Company on July 1, 2023, limiting network interchange fees earned on debit card transactions.

The decrease in interchange income was primarily due to the impact of the Durbin amendment, which became effective for the first time for the Company on July 1, 2023, limiting network interchange fees earned on debit card transactions.

Wealth management revenues, including brokerage commissions and fees and trust income, increased $2.4 million, or 19%, to $15.2 million for the year ended December 31, 2024.

The wealth management team continued to demonstrate notable success in building relationships, resulting in a 23% increase in assets under management year-over-year to $1.7 billion as of December 31, 2023.

Insurance agency income totaled $4.5 million in 2023, an increase of 460% from $0.8 million in 2022.

The Company acquired a commercial insurance agency during the fourth quarter of 2022 in conjunction with the acquisition of Drummond, adding another source of noninterest income.

Mortgage banking fees decreased $1.7 million, or 49%, to $1.8 million for the year ended December 31, 2023 compared to 2022, reflecting lower saleable production due to the impact on demand of higher interest rates and limited housing inventory.

Gains on sale of the guaranteed portion of SBA loans totaled $2.1 million for the year ended December 31, 2023, an increase of $1.3 million compared to 2022.

Bank owned life insurance (“BOLI”) income totaled $8.4 million in 2023, an increase of $2.8 million, or 51%, compared to the prior year.

The Company added $53.1 million in BOLI in the fourth quarter of 2022 and $55.1 million in the first quarter of 2023 from bank acquisitions.

The wealth management team continued to demonstrate notable success in building relationships, contributing to a 20% increase in assets under management year-over-year to $2.1 billion as of December 31, 2024.

Insurance agency income totaled $5.2 million in 2024, an increase of 15% from $4.5 million in 2023, reflecting continued growth and expansion of insurance services.

Mortgage banking fees remained flat at $1.8 million for the year ended December 31, 2024 compared to 2023.

The impact on demand of higher interest rates and limited housing inventory have continued to result in lower saleable production.

BOLI income totaled $10.1 million in 2024, an increase of $1.7 million, or 20%, compared to the prior year, with policy exchanges executed in the first quarter of 2024 resulting in improved ongoing yields.

Other income totaled $30.8 million in 2024, reflecting an increase of $8.4 million, or 37%, year-over-year.

The increase was attributable to BOLI death benefits totaling $2.1 million in 2023, higher SBIC investment income, and increases in other fees correlating to growth in customers and accounts.

Securities losses in 2023 totaled $2.9 million, resulting from the sale in the fourth quarter of 2023 of approximately $82.9 million, or 3%, of the bank’s investment securities portfolio.

The Company recognized an opportunity to sell low-yielding holdings with modest losses and use the proceeds to reinvest into higher-yielding bonds with strong prepayment protection and good convexity, expecting an earnback period of only 1.3 years.

Securities losses in 2022 totaled $1.1 million resulting solely from the decline in the market value of the CRA-qualified mutual fund investment.

The increase reflects variability in income from SBIC investments, loan swap-related fees, gains on the strategic sales of nonperforming commercial real estate loans, and other fees correlating with growth in customers and accounts.

Securities losses in 2024 totaled $8.0 million compared to securities losses in 2023 of $2.9 million.

In 2024 , the Company sold approximately $217.0 million in available-for-sale securities, resulting in losses of $12.0 million , allowing for reinvestment at higher yields.

These losses were partially offset by gains of $4.1 million on the sale of the Company’s holdings of Visa Class B stock.

Noninterest Expense

The Company has demonstrated its commitment to efficiency through disciplined, proactive management of its cost structure.

Noninterest expenses in 2023 totaled $395.6 million, including $33.2 million in acquisition-related expenses, and $5.2 million related to branch consolidation and other expense reduction initiatives.

In 2022, noninterest expenses totaled $267.9 million, including $27.9 million in acquisition-related expenses and $1.2 million in expenses related to branch consolidation and other expense reduction initiatives.

Adjusted noninterest expense 1 in 2023 totaled $328.5 million, an increase of 43% from 2022, reflecting overall growth of the organization.

Noninterest expenses in 2024 totaled $343.3 million, including $7.1 million related to branch consolidation and other expense reduction initiatives, and $0.3 million in costs to prepare for and recover from hurricane events.

In 2023, noninterest expenses totaled $395.6 million, including $33.2 million in acquisition-related expenses and $5.2 million in expense reduction initiatives.

Adjusted noninterest expense 1 in 2024 totaled $335.9 million, a decrease of 6% from 2023, reflecting the success of strategic expense reduction initiatives executed in late 2023 and early 2024.

For the Year Ended December 31,

3 unchanged sentences

Outsourced data processing costs 36,638 52,098 (30)

Telephone / data lines 5,204 3,799 37

Occupancy 29,547 31,872 (7)

4 unchanged sentences

Amortization of intangibles 23,884 28,726 (17)

Other real estate owned expense and net loss (gain) on sale 985 (1,534) N/A

Other real estate owned expense and net loss (gain) on sale 440 985 (55)

Provision for credit losses on unfunded commitments 1,001 1,239 (19)

Other 29,155 23,690 23

Other expense 24,322 29,155 (17)

Total Noninterest Expense $ 343,301 $ 395,622 (13 %)

Salaries and wages totaled $177.6 million in 2023, an increase of $47.5 million, or 37%, compared to 2022.

Results in 2023 include $10.4 million in bank acquisition-related charges compared to $9.2 million in 2022.

Excluding merger-related charges, the increase is the result of the net addition of branch locations, associates, and bankers from recent acquisitions.

In the third quarter of 2023, the Company completed a 6% reduction in headcount, resulting in $3.2 million in severance-related expenses.

During 2023, employee benefit costs, which include costs associated with the Company's self-funded health insurance benefits, 401(k) plan, payroll taxes, and unemployment compensation, increased $10.9 million, or 57%, compared to 2022.

The increase reflects the overall growth of the organization, including as a result of the acquisitions completed in 2023 and 2022.

Salaries and wages totaled $162.3 million in 2024, a decrease of $15.3 million, or 9%, compared to 2023.

The decline in 2024 reflects workforce reductions implemented in late 2023 and early 2024 to reduce overhead and offset revenue compression associated with higher interest rates.

Results in 2023 also included $5.8 million in merger-related costs.

During 2024, employee benefit costs, which include costs associated with the Company's self-funded health insurance benefits, 401(k) plan, payroll taxes, and unemployment compensation, decreased $1.7 million, or 6%, compared to 2023.

The decreases compared to 2023 are related to reductions in the workforce completed in late 2023 and early 2024.

The Company utilizes third parties for 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 $52.1 million in 2023, an increase of $24.6 million, or 89%, compared to 2022.

Results in 2023 include $17.4 million in direct acquisition-related costs, including termination penalties on acquired technology contracts upon system conversion, compared to $3.4 million in 2022.

The remainder of the increase reflects the overall growth of the organization.

Total occupancy, furniture, equipment, and communication expenses in 2023 totaled $40.6 million, an increase of $11.8 million, or 41%, compared to 2022, primarily due to expansion of the Company's footprint across Florida.

Outsourced data processing costs totaled $36.6 million in 2024, a decrease of $15.5 million, or 30%, compared to 2023.

Results in 2023 included $17.4 million in merger-related costs.

Total occupancy, furniture and equipment expenses in 2024 totaled $37.6 million, a decrease of $3.0 million, or 7%, compared to 2023.

Lower costs in 2024 were achieved through consolidation of locations as part of the Company's expense reduction initiatives.

During 2024, marketing expenses totaled $10.8 million, an increase of $1.6 million, or 18%, compared to $9.2 million in 2023.

The Company has increasingly invested in targeted marketing campaigns focused on deposit growth, and on advertising and branding campaigns across the footprint.

Legal and professional fees decreased by $3.2 million in 2023, or 15%, to $17.5 million, and included $6.5 million in merger-related expenses in 2023, compared to $10.3 million in 2022.

Planned investments in branding and in marketing campaigns across the state led to higher marketing expenses in 2024.

Legal and professional fees decreased by $7.9 million in 2024, or 45%, to $9.6 million.

Results in 2023 included $6.5 million in merger-related costs.

FDIC assessments were $8.4 million in 2024, compared to $8.6 million in 2023.

The increase reflects the Company's growth in asset size.

Amortization of intangibles increased $19.6 million, or 216%, to $28.7 million during 2023 from $9.1 million in 2022.

The acquisitions in 2022 and in 2023 added $118.8 million in core deposit intangible assets, which are amortized using an accelerated amortization method.

Other real estate owned expense and net loss (gain) on sale was a net loss of $1.0 million in 2023, compared to a net gain of $1.5 million in 2022.

Charges during 2023 related to valuation adjustments on former branch properties.

The Company expects the final disposition of several properties in the first quarter of 2024.

Provision for credit losses on unfunded commitments totaled $1.2 million in both 2023 and 2022.

The expense in each period is primarily related to the increase in customer relationships from bank acquisitions.

Amortization of intangibles decreased $4.8 million, or 17%, to $23.9 million during 2024 from $28.7 million in 2023.

The acquisition of Professional in 2023 added $48.9 million in core deposit intangible assets, which are amortized using an accelerated amortization method.

Other real estate owned expense and net loss (gain) on sale was a net loss of $0.4 million in 2024, compared to a net loss of $1.0 million in 2023.

Charges in each year primarily relate to valuation adjustments on former branch properties.

Provision for credit losses on unfunded commitments was $1.0 million in 2024 and $1.2 million in 2023.

Other expense totaled $24.3 million and $29.2 million in 2024 and 2023, respectively.

The increase of $5.5 million, or 23%, includes higher costs in general business and customer support activities resulting from growth in the customer base and the expanded branch footprint and to maintaining parallel activities and processes prior to the conversion of Professional in June 2023.

The decrease of $4.8 million, or 17%, reflects the Company's achievement of expense reduction initiatives in late 2023 and early 2024.

In 2024, the provision for income taxes totaled $34.9 million, compared to $30.2 million in 2023.

The decrease reflects lower pre-tax income in 2023.

Discrete tax benefits related to share-based compensation were $0.5 million and $1.1 million in 2023 and 2022, respectively.

The increase reflects higher pre-tax income in 2024.

Discrete taxes related to share-based compensation resulted in a net expense of $0.2 million and a benefit of $0.5 million in 2024 and 2023, respectively.

Fourth Quarter Results and Analysis

Net income totaled $29.5 million in the fourth quarter of 2023, a decrease of $1.9 million, or 6%, from the third quarter of 2023, and an increase of $5.6 million, or 23%, compared to the fourth quarter of 2022.

Adjusted net income 1 totaled $36.5 million, a decrease of $3.2 million, or 8%, from the third quarter of 2023, and a decrease of $3.4 million, or 9%, compared to the fourth quarter of 2022.

Diluted earnings per share (“EPS”) was $0.35 and adjusted diluted EPS 1 2 was $0.43 in the fourth quarter of 2023, compared to diluted EPS of $0.37 and adjusted diluted EPS 1 of $0.46 in the third quarter of 2023 and compared to diluted EPS of $0.34 and adjusted diluted EPS 1 of $0.56 in the fourth quarter of 2022.

Net revenues, which are calculated as net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses were $128.2 million, a decrease of $8.9 million, or 7%, from the third quarter of 2023 and a decrease of $9.2 million, or 7%, from the fourth quarter of 2022.

Net interest income totaled $110.8 million in the fourth quarter of 2023, a decrease of $8.5 million, or 7%, from the third quarter of 2023 and a decrease of $8.9 million, or 7%, compared to the fourth quarter of 2022.

During the fourth quarter of 2023, higher interest expense on deposits was driven by higher rates and changes in product mix.

Net income totaled $34.1 million in the fourth quarter of 2024, an increase of $3.4 million, or 11%, from the third quarter of 2024, and an increase of $4.5 million, or 15%, compared to the fourth quarter of 2023.

Adjusted net income 1 totaled $40.6 million, an increase of $10.0 million, or 33%, from the third quarter of 2024, and an increase of $9.2 million, or 29%, compared to the fourth quarter of 2023.

Diluted earnings per share was $0.40 and adjusted diluted EPS 1 2 was $0.48 in the fourth quarter of 2024, compared to diluted EPS of $0.36 and adjusted diluted EPS 1 of $0.36 in the third quarter of 2024 and compared to diluted EPS of $0.35 and adjusted diluted EPS 1 of $0.37 in the fourth quarter of 2023.

Net revenues, which are calculated as net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses were $132.9 million, an increase of $2.5 million, or 2%, from the third quarter of 2024 and an increase of $4.7 million, or 4%, from the fourth quarter of 2023.

Net interest income totaled $115.8 million in the fourth quarter of 2024, an increase of $9.1 million, or 9%, from the third quarter of 2024 and an increase of $5.0 million, or 4%, compared to the fourth quarter of 2023.

The increase in the fourth quarter of 2024 was largely driven by a 26 basis point decline in the cost of deposits.

Accretion on acquired loans totaled $11.7 million in the fourth quarter of 2024, $9.2 million in the third quarter of 2024, and $11.3 million in the fourth quarter of 2023.

Net interest margin decreased 21 basis points to 3.36% in the fourth quarter of 2023 compared to 3.57% in the third quarter of 2023.

Excluding the effects of accretion on acquired loans, net interest margin decreased 11 basis points to 3.02% in the fourth quarter of 2023 compared to 3.13% in the third quarter of 2023.

Loan yields contracted eight basis points from the prior quarter to 5.85% due to lower accretion of purchase discount on acquired loans.

Excluding the effects of accretion on acquired loans, loan yields increased six basis points, from 5.34% in the third quarter of 2023 to 5.40% in the fourth quarter of 2023.

Securities yields increased 10 basis points to 3.42%, compared to 3.32% in the prior quarter.

The cost of deposits increased 21 basis points, from 1.79% in the prior quarter, to 2.00% for the fourth quarter of 2023.

Net interest margin increased 22 basis points to 3.39% in the fourth quarter of 2024, compared to 3.17% in the third quarter of 2024.

Excluding the effects of accretion on acquired loans, net interest margin expanded 15 basis points to 3.05% in the fourth quarter of 2024, compared to 2.90% in the third quarter of 2024.

Loan yields decreased one basis point from the prior quarter to 5.93%.

Excluding the effects of accretion on acquired loans, loan yields decreased 10 basis points, from 5.58% in the third quarter of 2024 to 5.48% in the fourth quarter of 2024.

Securities yields increased two basis points to 3.77%, compared to 3.75% in the prior quarter.

The cost of deposits declined 26 basis points, from 2.34% in the prior quarter, to 2.08% in the fourth quarter of 2024.

Lower interest expense on deposits reflects the impact of recent cuts to the Federal Funds rate.

The provision for credit losses was $3.7 million in the fourth quarter of 2024, compared to $6.3 million in the third quarter of 2024 and $4.0 million in the fourth quarter of 2023.

Included in the fourth quarter of 2022 was a $15.0 million day-1 provision associated with two bank acquisitions.

Noninterest income, excluding securities gains and losses, totaled $25.5 million for the fourth quarter of 2024, an increase of $2.0 million, or 8%, when compared to the third quarter of 2024, and an increase of $5.7 million, or 29%, compared to the fourth quarter of 2023.

Results for the fourth quarter of 2024 included an $8.0 million loss on the repositioning of a portion of the available-for-sale securities portfolio.

Securities with an average book yield of 2.8% were sold, and the proceeds of approximately $113 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.

Other changes compared to the third quarter of 2024 included the following:

• Service charges on deposits totaled $5.1 million, a decrease of $0.3 million, or 5%, from the prior quarter and an increase of $0.3 million, or 6%, from the prior year quarter.

The fourth quarter of 2024 was modestly impacted by hurricane-related fee waivers, while our investments in talent and significant market expansion across the state resulted in continued growth in treasury management services to commercial customers compared to the prior year.

• Wealth management income totaled $4.0 million, an increase of $0.2 million, or 5%, from the prior quarter and an increase of $0.8 million, or 23%, from the prior year quarter.

• Insurance agency income totaled $1.2 million, a decrease of 18% from the prior quarter, reflecting typical fourth quarter seasonality, and an increase of 8% from the prior year quarter.

• Other income totaled $10.3 million, an increase of $2.5 million, or 31%, from the prior quarter and an increase of $4.7 million, or 85% from the prior year quarter.

Fourth quarter 2024 results include gains on SBIC investments and gains on the sale of two nonperforming commercial real estate loans.

Noninterest expenses for the fourth quarter of 2024 totaled $85.6 million, an increase of $0.8 million, or 1%, from the third quarter of 2024 and a decrease of $0.8 million, or 1%, from the fourth quarter of 2023.

Results in the fourth quarter of 2024 included:

1 2 Non-GAAP measure, see “ Explanation of Certain Unaudited Non-GAAP Financial Measures ” for more information and a reconciliation to GAAP.

• Interchange income increased $0.7 million, or 44%, to $2.4 million, benefiting from an annual volume-based incentive earned from the payment network provider.

• SBA gains increased $0.3 million, or 50%, to $0.9 million due to higher saleable originations.

• Other income increased $0.4 million, or 8%, to $4.7 million, reflecting higher loan swap-related income.

Noninterest expenses for the fourth quarter of 2023 totaled $86.4 million, a decrease of $7.5 million, or 8%, from the third quarter of 2023 and a decrease of $5.1 million, or 6%, from the fourth quarter of 2022.

• Salaries and wages decreased $8.0 million to $38.4 million.

The third quarter of 2023 included $3.2 million in severance-related expenses arising from the Company’s reduction in workforce.

Of the remaining $4.8 million decrease, $1.7 million reflects the full quarter impact of the workforce reduction on salaries expense, and $2.8 million is attributed to higher loan production resulting in higher deferral of salary-related costs.

• Marketing expense increased $1.1 million to $3.0 million reflecting additional investments in branding and targeted campaigns.

• Legal and professional fees increased $0.6 million to $3.3 million in the fourth quarter of 2023, primarily the result of one-time legal fees associated with a closed matter.

• FDIC assessments increased $0.6 million to $2.8 million, with the full year expense reflecting the year-over-year growth in the Company’s asset size.

• Other real estate owned expense increased $0.3 million to $0.6 million in the fourth quarter of 2023 due to write-downs in the value of properties previously used in bank operations.

• Other noninterest expenses decreased $0.7 million to $6.5 million, benefiting from ongoing expense discipline.

• Salaries and wages totaled $42.4 million, an increase of $1.7 million , or 4% , compared to the prior quarter and an increase of $3.9 million, or 10%, from the prior year quarter, reflecting continued onboarding of banking teams and talent across our footprint.

• Employee benefits totaled $6.5 million, a decrease of $0.4 million, or 6%, compared to the prior quarter and a decrease of $0.1 million, or 2%, from the prior year quarter.

The decrease from the prior quarter is due to seasonally lower 401(k) and payroll tax expense.

• Outsourced data processing costs totaled $8.3 million, an increase of $0.3 million, or 4%, compared to the prior quarter and a decrease of $0.3 million, or 4%, from the prior year quarter.

Higher customer transaction volume contributed to the increase over the prior quarter.

• Occupancy costs totaled $7.2 million, an increase of $0.1 million, or 2%, compared to the prior quarter and a decrease of $0.3 million, or 4%, from the prior year quarter.

The fourth quarter of 2024 included $0.2 million in preparation and recovery costs related to Hurricane Milton.

• Marketing expenses totaled $2.1 million, reflecting a decrease of $0.6 million, or 22%, compared to the prior quarter and a decrease of $0.9 million, or 29%, from the prior year quarter, primarily associated with the timing of various marketing campaigns.

We will continue to invest in marketing and branding supporting customer growth initiatives.

• Legal and professional fees totaled $2.8 million, an increase of $0.1 million, or 4%, compared to the prior quarter and a decrease of $0.5 million, or 15%, from the prior year quarter.

Explanation of Certain Unaudited Non-GAAP Financial Measures

This report contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”).

This report contains financial information determined by methods other than Generally Accepted Accounting Principles.

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.

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The following table provides reconciliations between GAAP and adjusted (non-GAAP) financial measures.

Fourth Third Fourth Full Year Full Year

Fourth Third Fourth Full Year

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

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Total adjusted noninterest income $ 25,456 $ 23,492 $ 19,775 $ 91,444 $ 79,928

Noninterest expense $ 86,367 $ 93,915 $ 91,510 $ 395,622 $ 267,934

Total noninterest expense $ 85,575 $ 84,818 $ 86,367 $ 343,301 $ 395,622

Merger-related charges — — — — (33,180)

— — (16,140) (33,180) (27,925)

Amortization of intangibles (6,888) (7,457) (4,763) (28,726) (9,101)

Business continuity expenses - hurricane events (280) — — (280) —

Branch reductions and other expense initiatives 1

Fourth Third Fourth Full Year Full Year

— — — (7,094) (5,167)

Adjustments to noninterest expense (280) — — (7,374) (38,347)

Adjusted noninterest expense 2

$ 85,295 $ 84,818 $ 86,367 $ 335,927 $ 357,275

Fourth Third Fourth Full Year

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

Total Adjustments to Noninterest Expense (6,888) (10,762) (21,079) (67,073) (38,236)

Total Adjusted Noninterest Expense $ 79,479 $ 83,153 $ 70,431 $ 328,549 $ 229,698

Income taxes $ 9,513 $ 8,602 $ 8,257 $ 34,854 $ 30,219

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Adjusted net income 2

$ 40,556 $ 30,511 $ 31,363 $ 132,476 $ 133,240

Earnings per diluted share, as reported $ 0.40 $ 0.36 $ 0.35 $ 1.42 $ 1.23

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Other real estate owned expense and net (loss) gain on sale (84) (491) (573) (440) (985)

Amortization of intangibles (5,587) (6,002) (6,888) (23,884) (28,726)

Net adjusted noninterest expense $ 79,374 $ 78,075 $ 78,906 $ 310,602 $ 326,325

Revenue $ 128,157 $ 137,099 $ 137,360 $ 567,392 $ 432,253

Total Adjustments to Revenue 2,437 387 (18) 776 1,096

Net adjusted noninterest expense $ 79,374 $ 78,075 $ 78,906 $ 310,602 $ 326,325

Average tangible assets 14,397,331 14,184,085 13,906,005 14,117,813 13,806,112

Net adjusted noninterest expense to average tangible assets 2.19 % 2.19 % 2.25 % 2.20 % 2.36 %

Net revenue $ 132,872 $ 130,344 $ 128,157 $ 515,399 $ 567,392

Total adjustments to net revenue 8,388 (187) 2,437 8,016 776

Impact of FTE adjustment 311 310 216 1,074 803

Adjusted revenue on a fully tax equivalent basis $ 130,810 $ 137,685 $ 137,491 $ 568,971 $ 433,847

Adjusted net revenue on a fully taxable equivalent basis $ 141,571 $ 130,467 $ 130,810 $ 524,489 $ 568,971

Adjusted efficiency ratio 56.07 % 59.84 % 60.32 % 59.22 % 57.35 %

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Total noninterest income 17,068 23,679 17,338 83,428 79,152

Total noninterest expense 86,367 93,915 91,510 395,622 267,934

Total noninterest expense less provision for credit losses on unfunded commitments 85,325 84,568 86,367 342,300 394,383

Pre-tax pre-provision earnings 47,858 46,086 42,006 174,173 173,812

Total adjustments to noninterest income 8,388 (187) 2,437 8,016 776

Total Adjustments to Noninterest Expense (7,461) (11,036) (20,668) (69,297) (37,859)

Total adjustments to noninterest expense including other real estate owned expense and net gain (loss) on sale 364 491 573 7,814 39,332

Adjusted pre-tax pre-provision earnings 2

$ 56,610 $ 46,390 $ 45,016 $ 190,003 $ 213,920

Average assets $ 15,204,041 $ 14,996,846 $ 14,738,034 $ 14,933,758 $ 14,622,774

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Return on average assets (ROA) 0.89 % 0.81 % 0.80 % 0.81 % 0.71 %

0.80 % 0.84 % 0.78 % 0.71 % 0.96 %

Impact of removing average intangible assets and related amortization 0.17 0.18 0.19 0.17 0.19

Return on average tangible assets (ROTA) 1.06 0.99 0.99 0.98 0.91

0.99 1.04 0.94 0.91 1.06

Impact of other adjustments for adjusted net income 0.18 (0.01) 0.05 0.08 0.22

Adjusted return on average tangible assets 1.24 % 0.98 % 1.04 % 1.06 % 1.12 %

Pre-Tax Pre-Provision Return on average tangible assets 1.35 % 1.38 % 1.69 % 1.41 % 1.61 %

Impact of adjustments on Pre-Tax Pre-Provision earnings 0.13 0.17 0.59 0.35 0.30

Adjusted Pre-Tax Pre-Provision Return on Tangible Assets 1.48 1.55 2.28 1.76 1.91

Fourth Third Fourth Full Year

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

Average shareholders’ equity $ 2,203,052 $ 2,168,444 $ 2,058,912 $ 2,152,061 $ 2,025,382

Less average goodwill and intangible assets (806,710) (812,761) (832,029) (815,945) (816,662)

Fourth Third Fourth Full Year Full Year

(In thousands except per share data) 2023 2023 2022 2023 2022

Average tangible equity $ 1,396,342 $ 1,355,683 $ 1,226,883 $ 1,336,116 $ 1,208,720

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Return on average tangible common equity (ROTCE) 10.90 10.31 11.22 10.39 10.38

11.22 11.90 10.36 10.38 10.70

Impact of other adjustments for adjusted net income 1.84 (0.04) 0.58 0.86 2.42

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Loan interest income excluding accretion on acquired loans 3

$ 140,586 $ 142,100 $ 136,680 $ 556,739 $ 525,136

Yield on loans 3

2 unchanged sentences

Yield on loans excluding accretion on acquired loans 3

5.48 % 5.58 % 5.40 % 5.51 % 5.31 %

Net interest income 3

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Net interest income excluding accretion on acquired loans 3

$ 104,398 $ 97,793 $ 99,711 $ 391,373 $ 432,354

Net interest margin 3

3.39 % 3.17 % 3.36 % 3.24 % 3.77 %

Impact of accretion on acquired loans (0.34) (0.27) (0.34) (0.31) (0.44)

Net interest margin excluding accretion on acquired loans 3

Security interest income 1

3.05 % 2.90 % 3.02 % 2.93 % 3.33 %

Tax equivalent adjustment to securities (13) (22) (34) (83) (142)

Securities interest income excluding tax equivalent adjustment $ 21,438 $ 21,498 $ 18,660 $ 83,281 $ 57,159

Securities interest income 3

$ 26,986 $ 26,005 $ 21,451 $ 99,620 $ 83,364

Fully taxable equivalent adjustment to securities (7) (8) (13) (29) (83)

Securities interest income excluding fully taxable equivalent adjustment $ 26,979 $ 25,997 $ 21,438 $ 99,591 $ 83,281

Loan interest income 3

$ 152,303 $ 151,282 $ 148,004 $ 598,411 $ 581,825

Tax equivalent adjustment to loans (203) (177) (115) (720) (356)

Loan interest income excluding tax equivalent adjustment $ 147,801 $ 149,871 $ 105,322 $ 581,105 $ 315,717

Fully taxable equivalent adjustment to loans (304) (302) (203) (1,045) (720)

Loan interest income excluding fully taxable equivalent adjustment $ 151,999 $ 150,980 $ 147,801 $ 597,366 $ 581,105

Net interest income 3

$ 116,115 $ 106,975 $ 111,035 $ 433,045 $ 489,043

Tax equivalent adjustment to securities (13) (22) (34) (83) (142)

Tax equivalent adjustment to loans (203) (177) (115) (720) (356)

Net interest income excluding tax equivalent adjustments $ 110,819 $ 119,306 $ 119,709 $ 488,240 $ 366,162

Fully taxable equivalent adjustments to securities (7) (8) (13) (29) (83)

Fully taxable equivalent adjustments to loans (304) (302) (203) (1,045) (720)

Net interest income excluding fully taxable equivalent adjustments $ 115,804 $ 106,665 $ 110,819 $ 431,971 $ 488,240

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 Beginning in 2024, 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.

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Financial Condition

Total assets increased $2.4 billion, or 20%, year-over-year to $14.6 billion at December 31, 2023, largely the result of the acquisition of Professional in January 2023.

Information related to yields, maturities, carrying values and fair value of the Company’s securities is set forth in Tables 7 and 8 and “Note 3 - Securities” of the Company’s consolidated financial statements.

Total assets increased $596.1 million, or 4.1%, year-over-year to $15.2 billion at December 31, 2024, notably due to organic growth of loans and deposits.

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

At December 31, 2024, the Company had $2.4 billion in securities available-for-sale, and $635.2 million in securities held-to-maturity.

The Company's total debt securities portfolio decreased $102.8 million, or 4%, from December 31, 2022.

The Company's total debt securities portfolio increased $340.0 million, or 12%, from December 31, 2023.

During the year ended December 31, 2024, there were $993.9 million of debt securities purchased and $428.0 million in paydowns and maturities.

Debt securities with a fair value of $217.0 million were sold in 2024, resulting in $12.0 million in realized losses.

The Company took advantage of favorable market conditions to reposition a portion of its AFS portfolio and reinvest the proceeds in debt securities at higher yields.

During the year ended December 31, 2023, there were $100.9 million of debt securities purchased, $167.1 million acquired through the acquisition of Professional and $287.9 million in paydowns and maturities over the same period.

$82.9 million of securities were sold in 2023, with $2.9 million in realized losses.

During the year ended December 31, 2022, there were $899.7 million of debt security purchases and $367.7 million in paydowns and maturities over the same period.

For the year ended December 31, 2022, debt securities with a fair value of $515.2 million obtained through bank acquisitions were sold with no gains or losses recognized.

Debt securities generally return principal and interest monthly.

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government agencies, and obligations of U.S.

government sponsored entities totaled $2.1 billion, or 82%, of the total portfolio.

government sponsored entities totaled $2.4 billion, or 82%, of the total portfolio at December 31, 2024.

The portfolio includes $129.5 million, with a fair value of $121.2 million, in private label residential and commercial mortgage-backed securities and collateralized mortgage obligations.

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

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 December 31, 2024, no allowance for credit losses has been recorded.

The maturity distribution of AFS securities is detailed in the following table.

December 31, 2024

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

Years After 5-10

Years After 10

Amortized Cost

Treasury securities and obligations of U.S.

government agencies $ 1 $ 6,288 $ 6,806 $ 15,138 $ 28,233

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

government-sponsored entities 13 1,046 2,336 1,773,879 1,777,274

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

government-sponsored entities — 74,476 58,555 73,506 206,537

Private mortgage-backed securities and collateralized mortgage obligations — — 4,865 124,610 129,475

Collateralized loan obligations — 9,359 145,772 123,211 278,342

Obligations of state and political subdivisions — — 500 6,639 7,139

Other debt securities — 7,389 — — 7,389

Total Available-For-Sale Debt Securities $ 14 $ 98,558 $ 218,834 $ 2,116,983 $ 2,434,389

Treasury securities and obligations of U.S.

government agencies $ 1 $ 6,283 $ 6,794 $ 14,662 $ 27,740

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

government-sponsored entities 13 1,040 2,265 1,584,657 1,587,975

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

government-sponsored entities — 71,163 55,294 70,992 197,449

Private mortgage-backed securities and collateralized mortgage obligations — — 4,638 116,604 121,242

Collateralized loan obligations — 9,369 145,894 123,701 278,964

Obligations of state and political subdivisions — — 432 5,258 5,690

Other debt securities — 7,483 — — 7,483

Total Available-For-Sale Debt Securities $ 14 $ 95,338 $ 215,317 $ 1,915,874 $ 2,226,543

Weighted Average Yield 1

Treasury securities and obligations of U.S.

government agencies 3.17 % 5.46 % 5.48 % 5.46 % 5.46 %

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

government-sponsored entities 3.70 3.98 3.11 3.50 3.50

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

government-sponsored entities — 2.92 4.15 5.77 3.58

Private mortgage-backed securities and collateralized mortgage obligations — — 5.65 3.60 3.68

Collateralized loan obligations — 6.37 6.45 6.17 6.32

Obligations of state and political subdivisions — — 1.55 2.16 2.12

Other debt securities — 5.88 — — 4.34

Total Available-For-Sale Debt Securities 3.65 % 3.64 % 5.74 % 3.75 % 3.93 %

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

The following table details the maturity distribution of HTM securities.

December 31, 2024

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

Years After 5-10

Years After 10

Amortized Cost

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

government-sponsored entities $ — $ — $ — $ 546,444 $ 546,444

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

government-sponsored entities — 54,414 28,092 6,236 88,742

Total Held-to-Maturity Debt Securities $ — $ 54,414 $ 28,092 $ 552,680 $ 635,186

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

government-sponsored entities $ — $ — $ — $ 428,824 $ 428,824

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

government-sponsored entities — 50,102 23,962 4,706 78,770

Total Held-to-Maturity Debt Securities $ — $ 50,102 $ 23,962 $ 433,530 $ 507,594

Weighted Average Yield 1

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

government-sponsored entities — % — % — % 1.89 % 1.89 %

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

government-sponsored entities — 2.55 1.90 1.64 2.28

Total Held-to-Maturity Debt Securities — % 2.55 % 1.90 % 1.88 % 1.94 %

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

Loan Portfolio

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 $383 thousand, and the average commercial loan size is $814 thousand at December 31, 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 table details loan portfolio composition at December 31, 2023 and 2022 for portfolio loans, purchased credit deteriorated loans (“PCD”) and loans purchased which are not considered credit deteriorated (“Non-PCD”) as defined in “Note 4 - Loans”.

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

December 31, 2024

(In thousands) Portfolio Loans Acquired

Non-PCD Loans PCD Loans Total

Non-PCD Loans PCD Loans Total % to Total Loans

Construction and land development $ 568,148 $ 79,370 $ 535 $ 648,053 6 %

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(In thousands) Portfolio Loans Acquired

Non-PCD Loans PCD Loans Total

Non-PCD Loans PCD Loans Total % to Total Loans

Construction and land development $ 519,426 $ 247,654 $ 542 $ 767,622 8 %

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Totals $ 6,571,454 $ 3,227,169 $ 264,317 $ 10,062,940 100 %

Loans, net of unearned income and excluding the allowance for credit losses, were $10.1 billion at December 31, 2023, an increase of $1.9 billion, or 24%, compared to December 31, 2022.

The increase includes the addition of $2.0 billion in loans from the Professional acquisition in the first quarter of 2023.

Loans, net of unearned income and excluding the allowance for credit losses, were $10.3 billion at December 31, 2024, an increase of $237.0 million, or 2.4%, compared to December 31, 2023.

The amortized cost basis of loans at December 31, 2024, and 2023 included net deferred costs of $43.9 million and $43.1 million, respectively.

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

Construction and land development loans increased $180.3 million, or 31%, totaling $767.6 million at December 31, 2023, compared to December 31, 2022.

In the first quarter of 2023, the Company acquired $151.0 million in construction and land development loans from Professional.

Construction and land development loans decreased $119.6 million, or 15.6%, totaling $648.1 million at December 31, 2024, compared to December 31, 2023.

These loans, extended to both commercial and consumer customers, are collateralized by and for the purpose of funding land development and construction projects.

Repayment is from the proceeds of the sale, refinancing or permanent financing of the property.

In 2023, the Company acquired $151.0 million in construction and land development

loans from Professional, and pay downs and conversion of acquired and originated loans to permanent is contributing to the decrease year-over-year.

Commercial real estate owner occupied loans totaled $1.7 billion at December 31, 2024, an increase of $16.3 million, or 1% compared to December 31, 2023.

In the first quarter of 2023, the Company acquired $274.1 million in commercial real estate owner occupied loans from Professional.

Commercial real estate non-owner occupied loans, increased $0.7 billion, or 28%, totaling $3.3 billion at December 31, 2023, compared to December 31, 2022.

In the first quarter of 2023, the Company acquired $692.7 million in commercial real estate non-owner occupied loans from Professional.

Collateral types and characteristics of non-owner occupied commercial real estate loans as of December 31, 2023 were as follows:

December 31, 2023

(In thousands)

Balance Balance % of Total Loans Average Loan Size 30+ Days Past-Accruing Non Accrual Weighted Avg LTV 1

Retail $ 1,091,605 10.8 % $ 2,059 $ — $ — 51 %

Office 576,840 5.7 1,638 11,510 334 55

Multifamily 5+ 353,184 3.5 1,799 — — 55

Hotel/Motel 389,180 3.9 3,819 — 1,012 51

Industrial/Warehouse 357,947 3.6 1,767 — 861 54

Other 551,134 5.5 1,447 752 6,528 51

Total $ 3,319,890 33.0 % $ 1,917 $ 12,262 $ 8,735 53 %

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

Loans in the retail segment are generally grocery or credit tenant anchored shopping plazas, single credit tenant retail buildings, smaller outparcels and other retail units.

The office segment targets low to mid-rise suburban offices, and is broadly diversified across many categories of professional services.

Two loans in the office segment (2.0% of office exposure) were past due 30-59 days at December 31, 2023.

Residential mortgage loans increased $596.2 million, or 32%, year-over-year to $2.4 billion as of December 31, 2023.

Included in the balance as of December 31, 2023 were $1.0 billion of fixed rate mortgages, $865.2 million of adjustable rate mortgages, and $488.2 million in home equity loans and home equity lines of credit ("HELOCs"), compared to $964.3 million, $402.3 million and $482.9 million, respectively, as of December 31, 2022.

In the first quarter of 2023, the Company acquired $483.6 million residential loans from Professional.

Commercial real estate owner occupied loans are extended to commercial customers for the purpose of acquiring or refinancing real estate to be occupied by the borrower's business.

These loans are collateralized by the subject property and the repayment of these loans is largely dependent on the performance of the company occupying the property.

Commercial real estate non-owner occupied loans increased $183.9 million, or 6%, totaling $3.5 billion at December 31, 2024, compared to $3.3 billion 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 $1.2 billion at December 31, 2024, with an average loan size of $2.3 million.

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

The second-largest segment in the non-owner occupied CRE portfolio is office properties, which totaled $568.3 million at December 31, 2024, with an average loan size of $1.7 million.

This segment targets low to mid-rise suburban offices and is broadly diversified across many types of professional services, with limited exposure to central business districts.

Other non-owner occupied CRE loans include $439.1 million in loans collateralized by industrial or warehouse properties, $375.7 million collateralized by multi-family residential properties, $336.2 million collateralized by hotels or motels, and $597.5 million collateralized by other property types, including restaurants, schools and recreation centers.

Residential real estate loans increased $171.1 million, or 7%, year-over-year to $2.6 billion as of December 31, 2024.

Included in the balance as of December 31, 2024 were $1.0 billion of fixed rate mortgages, $970.2 million of ARMs, and $614.7 million in home equity loans and HELOCs, compared to $1.0 billion, $865.2 million and $488.2 million, respectively, as of December 31, 2023.

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

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Commercial and financial loans increased year-over-year by $43.5 million, or 3%, totaling $1.7 billion at December 31, 2024.

The addition of well-established commercial bankers and expansion into new markets across the state have generated disciplined loan growth.

In the first quarter of 2023, the Company acquired $350.6 million in commercial and financial loans from Professional.

The purpose of these loans may be to provide working capital, asset acquisition or for other business purposes, and are generally supported by projected cash flows of the business, collateralized by business assets, and/or guaranteed by the business owners.

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.

The Company also provides consumer loans, which include installment loans, auto loans, marine loans and other consumer loans, which decreased $58.2 million, or 23%, year-over-year to a total of $193.3 million at December 31, 2024, compared to $251.6 million at December 31, 2023.

The decrease is partly due to the transfer to held-for-sale of $20.0 million in consumer loans previously acquired through bank acquisitions.

At December 31, 2024, the Company had unfunded commitments to extend credit of $2.9 billion, compared to $2.7 billion at December 31, 2023 (see “Note 15 - Contingent Liabilities and Commitments with Off-Balance Sheet Risk” to the Company’s consolidated financial statements).

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Commercial and commercial real estate originations in 2024 totaled $1.9 billion, compared to $1.1 billion in 2023.

Lower originations were the result of the impact of higher rates and a continued selective approach on new credit facilities given a cautious economic outlook.

Commercial and commercial real estate pipelines were $306.5 million as of December 31, 2023, a decrease of 17% from $389.7 million at December 31, 2022.

SBA originations totaled $48.9 million in 2023, an increase of $21.4 million from 2022 .

Higher originations are the result of investments made in recent years to attract commercial banking talent.

This talent is onboarding significant new relationships, resulting in increased loan production.

Commercial and commercial real estate pipelines were $605.4 million as of December 31, 2024, an increase of 97% from $306.5 million at December 31, 2023.

SBA originations totaled $82.4 million in 2024, an increase of $33.5 million, or 68%, from 2023 .

The SBA pipeline increased 40% to $28.8 million at December 31, 2024 from $20.6 million at December 31, 2023 .

Residential loans originated for sale in the secondary market totaled $66.3 million in 2023, a decrease of 45% compared to $120.9 million in 2022.

Residential loans originated for sale in the secondary market totaled $71.7 million in 2024, an increase of 8% compared to $66.3 million in 2023.

Residential saleable pipelines were $6.7 million as of December 31, 2024, compared to $2.7 million as of December 31, 2023.

Residential loan production retained in the portfolio for 2024 was $245.3 million, compared to $260.5 million in 2023.

Included in 2022 are purchases of $111.3 million in residential loans from the wholesale market.

The pipeline of residential loans intended to be retained in the portfolio was $35.1 million as of December 31, 2024, compared to $44.4 million as of December 31, 2023.

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The consumer pipeline was $17.4 million as of December 31, 2024, compared to $18.7 million as of December 31, 2023.

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

December 31, 2024

After one year but within five years:

After five years but within fifteen years:

After fifteen years:

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

Construction and Land Development $ 194,664 $ 173,172 $ 23,204 $ 113,335 $ 33,224 $ 93,947 $ 16,507 $ 648,053

Commercial Real Estate - Owner Occupied 94,530 152,191 533,475 269,987 554,197 72,144 10,105 1,686,629

Commercial Real Estate - Non-owner Occupied 292,888 898,941 1,140,652 723,150 413,479 32,175 2,523 3,503,808

Residential Real Estate 60,688 21,226 9,374 334,947 143,112 1,119,388 928,050 2,616,785

Commercial and Financial 341,911 191,129 484,314 98,144 245,979 173,333 116,544 1,651,354

Consumer 9,762 44,873 23,001 9,058 57,434 21,217 27,976 193,321

Total $ 994,443 $ 1,481,532 $ 2,214,020 $ 1,548,621 $ 1,447,425 $ 1,512,204 $ 1,101,705 $ 10,299,950

Loan Concentrations

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

On a consolidated basis,

construction and land development and commercial real estate loans represent 45% and 228%, respectively, of total consolidated risk based capital.

On a consolidated basis, construction and land development and commercial real estate loans represent 36% and 224%, respectively, of total consolidated risk-based capital.

To determine these ratios, the Company defines commercial real estate 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 commercial real estate loans as exposures secured by land development and construction, including 1-4 family residential construction, multifamily 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 commercial real estate markets would also be considered commercial real estate loans under the Guidance.

Loans to real estate investment trusts and unsecured loans to developers that closely correlate to the inherent risks in commercial real estate markets would also be considered commercial real estate loans under the Guidance.

Loans on owner-occupied commercial real estate are generally excluded.

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

Table 6 provides certain information concerning nonperforming assets for the years indicated.

Nonperforming assets (“NPAs”) at December 31, 2023 totaled $72.7 million, an increase of $41.5 million, or 133.3%, compared to 2022, and were comprised of $65.1 million of nonaccrual loans, and $7.6 million of other real estate owned (“OREO”), including $7.3 million of branches taken out of service.

Compared to December 31, 2022, nonaccrual loans totaled $28.8 million and OREO of $2.3 million that includes $1.8 million of branches taken out of service.

Nonperforming assets at December 31, 2024 totaled $98.9 million, an increase of $26.2 million, or 36%, compared to 2023, and were comprised of $92.4 million of nonaccrual loans, and $6.4 million of OREO, including $5.5 million of branches taken out of service.

As of December 31, 2023, nonperforming assets included nonaccrual loans of $65.1 million and OREO of $7.6 million including $7.3 million of branches taken out of service.

Approximately 69% of nonaccrual loans were secured with real estate at December 31, 2024.

Nonperforming loans to total loans outstanding at December 31, 2024 increased to 0.90% from 0.65% at December 31, 2023.

Nonperforming assets to total assets at December 31, 2023 increased to 0.50% from 0.26% at December 31, 2022.

The increases are largely attributed to overall growth including from the acquisition of Professional in January 2023.

NPAs to total assets at December 31, 2024 increased to 0.65% from 0.50% at December 31,

A significant portion of nonaccrual loans have collateral values well in excess of balances outstanding, and therefore, no loss is expected.

The table below sets forth details related to nonaccrual loans.

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Construction & land development $ 113 $ 1,039 $ 1,152

Commercial real estate mortgages - owner occupied 5,234 4,450 9,684

Commercial real estate mortgages - non-owner occupied 4,179 4,556 8,735

Commercial real estate - owner occupied 3,977 4,763 8,740

Commercial real estate - non-owner occupied 5,544 24,338 29,882

Residential real estate 12,161 11,733 23,894

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Construction & land development $ 109 $ 715 $ 824

Commercial real estate mortgages - owner occupied — 2,597 2,597

Commercial real estate mortgages - non-owner occupied 2,892 1,292 4,184

Commercial real estate - owner occupied 5,234 4,450 9,684

Commercial real estate - non-owner occupied 4,179 4,556 8,735

Residential real estate 3,864 6,122 9,986

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Total loans $ 21,469 $ 43,635 $ 65,104

As of December 31, 2023, the Company had troubled borrower modification ("TBM") loans with an amortized cost of $17.5 million.

(In thousands, except percentages) 2024 2023

Ratio of total nonperforming assets to loans outstanding and other real estate owned at end of period 0.96 % 0.72 %

Ratio of total nonaccrual loans to loans outstanding at end of period 0.90 0.65

Ratio of allowance for credit losses on loans to total nonaccrual loans 149 229

The Company recognized interest income of $1.3 million and $0.5 million on nonaccrual loans during the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and December 31, 2023, the Company had troubled borrower modification loans with an amortized cost of $11.6 million and $17.5 million, respectively.

Allowance for Credit Losses on Loans

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

The provision for credit losses was $37.5 million for the year ended December 31, 2023, compared to $26.2 million for the year ended December 31, 2022.

The 2023 provision includes $26.6 million for loans acquired in the Professional acquisition, along with increases reflecting organic loan growth and changes in economic forecast factors.

The 2022 provision included $20.2 million in initial provisioning for loans acquired through bank acquisitions.

Net charge-offs for 2024 were $27.1 million, or 0.27% of average loans, compared to $21.4 million, or 0.22%, for 2023.

Activity in 2023 included the complete charge-off of an $11.3 million acquired loan.

The charge-off had no impact on earnings or capital, as the Company expected and fully reserved for the loss at acquisition through purchase accounting.

The ratio of allowance to total loans increased to 1.48% at December 31, 2023 from 1.40% at December 31, 2022.

The ratio of allowance to total loans decreased to 1.34% at December 31, 2024 from 1.48% at December 31, 2023.

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

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(In thousands) Beginning

Balance Allowance on PCD Loans Acquired During the Period Provision

Balance Provision

Losses Charge-

Offs Recoveries Ending

Balance % of Total Allowance

Construction and land development $ 8,637 $ (1,404) $ (1) $ 20 $ 7,252 5 %

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Losses Charge-

Offs Recoveries TDR

Adjustments Ending

Offs Recoveries Ending

Balance % of Total Allowance

Construction and land development $ 6,464 $ 5 $ 2,160 $ — $ 8 $ 8,637 6 %

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Totals $ 113,895 18,879 $ 37,518 $ (24,795) $ 3,434 $ 148,931 100 %

For the Year Ended December 31,

(In thousands, except percentages) 2024 2023 2022

Daily average loans outstanding 1

$ 10,096,189 $ 9,889,070 $ 6,838,266

Ratio of allowance for credit losses on loans to loans outstanding at end of year 1.34 % 1.48 % 1.40 %

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

Construction and land development — % — % — %

Commercial real estate - owner occupied — — —

Commercial real estate - non-owner occupied 0.02 — —

Residential real estate — — —

Commercial and financial 0.14 0.17 —

Consumer 0.11 0.05 0.01

Total ratio of net charge-offs to average loans outstanding 0.27 % 0.22 % 0.01 %

1 Net of unearned income.

Cash and Cash Equivalents, Liquidity Risk Management and Contractual Commitments

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Funding sources include primarily 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 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 $476.6 million at December 31, 2024, compared to $447.2 million at December 31, 2023.

Higher cash and cash equivalent balances at December 31, 2023 are consistent with the Company’s strategic balance sheet management.

Deposits are a primary source of liquidity.

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The Company has liquidity sources as discussed below, including cash and lines of credit with the FRB and FHLB, that represent 138% of uninsured deposits, and 167% of uninsured and uncollateralized deposits.

In addition to $447.2 million in cash and cash equivalents at December 31, 2023, the Company had $5.5 billion in available borrowing capacity, including $4.5 billion in available collateralized lines of credit, $700.0 million of unpledged debt securities available as collateral for potential additional borrowings, and available unsecured lines of credit of $300.0 million.

Included in available borrowing capacity is $215.0 million under the FRB's Bank Term Funding Program, which the Company has not utilized and does not plan to utilize.

In addition to $476.6 million in cash and cash equivalents at December 31, 2024, the Company had $5.7 billion in available borrowing capacity, including $4.0 billion in available collateralized lines of credit, $1.3 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.

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Savings 519,977 651,454

Time certificates of deposit 1,353,655 518,868

Brokered deposits 122,347 58,575

Time deposits 1,371,522 1,353,655

Brokered time certificates 244,351 122,347

Total deposits $ 12,242,427 $ 11,776,935

Customer sweep accounts 374,573 172,029

Securities sold under agreements to repurchase 232,071 374,573

Total customer funding 1

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Noninterest demand deposit mix 27 % 30 %

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

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

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

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

Total deposits increased $1.8 billion, or 18%, to $11.8 billion at December 31, 2023 compared to December 31, 2022.

The increase includes the addition of $2.1 billion in deposits from the Professional acquisition in the first quarter of 2023.

Noninterest demand deposits represented 30% of total deposits at December 31, 2023 compared to 41% at December 31, 2022 primarily driven by the higher interest rate environment driving a mix shift to interest bearing products.

Total deposits increased $465.5 million, or 4%, to $12.2 billion at December 31, 2024 compared to December 31, 2023.

Noninterest demand deposits represented 27% of total deposits at December 31, 2024 compared to 30% at December 31, 2023 primarily driven by the higher interest rate environment driving a mix shift to money market products.

Transaction account balances (noninterest demand and interest-bearing demand) represented 49% of total deposits at December 31, 2024, compared to 54% at December 31, 2023.

Time deposits over $250,000 were $549.9 million and $550.3 million at December 31, 2024 and December 31, 2023, respectively.

The following table details the maturities of time deposits of $250,000 and greater at December 31, 2023 and December 31, 2022:

The following table details the remaining maturities of time deposits of $250,000 and greater at December 31, 2024 and December 31, 2023:

December 31, % of December 31, % of

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Total Certificates of Deposit of $250,000 and Greater $ 549,934 100% $ 550,262 100%

Customer repurchase agreements totaled $374.6 million at December 31, 2023, increasing $202.5 million, or 118%, from December 31, 2022.

Customer repurchase agreements totaled $232.1 million at December 31, 2024, decreasing $142.5 million, or 38%, 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.

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In 2022, the Company acquired $12.3 million in senior debt through the acquisition of Apollo.

Contractual interest is paid on a semiannual basis at a fixed rate of 5.50% until April 30, 2025, at which point the rate converts to a floating rate of 3-month SOFR plus 533 basis points.

Contractual interest is paid on a semiannual basis at a fixed rate of 5.50% until October 30, 2025, at which point the rate converts to a floating rate of 3-month SOFR plus 533 basis points until maturity in 2030.

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 $50 million at December 31, 2023 with an interest rate of 3.23%, compared to $150.0 million at December 31, 2022 with a weighted average interest rate of 3.42%.

FHLB advances totaled $245.0 million at December 31, 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%.

See “Note 9 - Borrowings” to the Company's consolidated financial statements for more detailed information pertaining to borrowings.

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.

In the normal course of business, the Company may engage in a variety of financial transactions that, under GAAP, 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.

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Capital Resources and Management

Table 1 summarizes the Company’s capital position and selected ratios.

The Company's equity capital at December 31, 2024 increased $75.2 million, or 3.6%, from December 31, 2023, to $2.2 billion.

Changes in equity included increases from net income of $104.0 million, the issuance of $421.0 million in equity in conjunction with the Professional acquisition, and an increase in accumulated other comprehensive income of $28.2 million due to increases in the value of available-for-sale securities associated with changes in the interest rate environment, partially offset by the issuance of common stock dividends totaling $60.6 million.

Changes in equity included increases from net income of $121.0 million, partially offset by the issuance of cash dividends on common stock totaling $61.6 million.

The ratio of shareholders’ equity to period end total assets was 14.39% and 14.46% at December 31, 2024 and December 31, 2023, respectively.

The ratio of tangible shareholders’ equity to tangible assets was 9.60% and 9.31% at December 31, 2024 and December 31, 2023, respectively.

Changes in the value of securities are not reflected in Shareholders' Equity under GAAP;

however, illustratively, if all held-to-maturity securities were presented at fair value, the tangible common equity ratio would have been 8.68% at December 31, 2023.

Activity in shareholders’ equity for the years ended December 31, 2024 and December 31, 2023 follows:

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Net income 120,986 104,033

Issuance of common stock and conversion of options, pursuant to acquisitions 421,042 398,249

Stock compensation (net of Treasury shares acquired) 18,540 14,564

Dividends on common stock (60,591) (41,242)

Change in other comprehensive income 28,155 (181,039)

Repurchases of common stock (10,868) —

Stock-based compensation expense 13,744 13,440

Common stock transactions related to stock-based employee benefit plans 945 5,100

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

Repurchase of common stock (880) (10,868)

Dividends on common stock ($0.72 per share and $0.71 per share, respectively)

(61,649) (60,591)

Change in accumulated other comprehensive income 2,011 28,155

Ending balance at December 31, 2024 and 2023

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

$ 2,183,243 $ 2,108,086

At December 31, 2024, capital ratios for Seacoast and Seacoast Bank 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 “Table 1 - Capital Resources” and “Note 13 - Regulatory Capital”).

(Consolidated) Seacoast

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Tier 1 Capital Ratio 14.81 14.13 8.00

Common Equity Tier 1 Ratio (CET1) 13.87 13.64 6.50

CET1 Ratio 14.15 14.13 6.50

Leverage Ratio 11.19 10.66 5.00

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As of December 31, 2024, the Bank’s leverage ratio (Tier 1 capital to adjusted total assets) was 10.66%, compared to 10.32% at December 31, 2023, well above the minimum to be well-capitalized under regulatory guidelines.

The following table shows the components of regulatory capital to calculate regulatory capital ratios.

(In thousands, except percentages) 2024 2023

Common Stock $ 8,628 $ 8,486

Additional paid-in capital 1,824,935 1,808,883

Retained earnings 526,642 467,305

Treasury stock (19,095) (16,710)

Goodwill (732,417) (732,417)

Intangibles (71,723) (95,645)

24,355 53,597

Common equity tier 1 capital $ 1,561,325 $ 1,493,499

Qualifying Trust Preferred Debt $ 72,488 $ 72,207

Tier 1 capital $ 1,633,819 $ 1,565,710

Allowance for credit losses on loans 1 , as limited

$ 129,465 $ 126,553

Qualifying subordinated debt 21,963 21,534

Tier 2 capital 151,428 148,087

Total capital $ 1,785,247 $ 1,713,797

Risk-weighted assets $ 11,032,279 $ 10,766,942

CET1 ratio 14.15 % 13.87 %

Regulatory minimum 2

Tier 1 capital ratio 14.81 14.54

Regulatory minimum 2

Total capital ratio 16.18 15.92

Regulatory minimum 2

Tier 1 capital to adjusted total assets 11.19 11.00

Regulatory minimum 4.00 4.00

Shareholders' equity to assets 14.39 14.46

Average shareholders' equity to average total assets 14.41 13.85

Tangible shareholders' equity to tangible assets 9.60 9.31

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

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

As of December 31, 2024 and 2023, the adjustment to Tier 1 Capital was $6.2 million and $12.3 million, respectively, and the adjustment to Tier 2 Capital was $7.5 million and $15.1 million, respectively.

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

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.

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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 up to $205.7 million of dividends to the Company (see “Part I.

Seacoast Bank can pay up to $188.9 million of dividends to the Company without OCC approval (see “Part I.

The OCC and the FRB 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.

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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;

(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;

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Critical Accounting Policies and Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S.

generally accepted accounting principles, (“GAAP”), including prevailing practices within the financial services industry.

The Company’s consolidated financial statements are prepared in accordance with GAAP, including prevailing practices within the financial services industry.

The preparation of consolidated financial statements requires management to make judgments in the application of certain of its accounting policies that involve significant estimates and assumptions.

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• intangible assets and impairment testing, and;

• impairment of debt securities.

• fair value of financial instruments

The following is a discussion of the critical accounting policies intended to facilitate a reader’s understanding of the judgments, estimates and assumptions underlying these accounting policies and the possible or likely events or uncertainties known to the Company that could have a material effect on reported financial information.

For more information regarding management’s judgments relating to significant accounting policies and recent accounting pronouncements, see “Note 1 – Significant Accounting Policies” to the Company’s consolidated financial statements.

Allowance for Credit Losses – Critical Accounting Policies and Estimates

For more information regarding management’s

judgments relating to significant accounting policies and recent accounting pronouncements, see “Note 1 – Significant Accounting Policies” to the Company’s consolidated financial statements.

Allowance for Credit Losses

The Allowance for Credit Losses (ACL) represents management’s best estimate of expected future credit losses related to the loan portfolio at the balance sheet date.

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Management establishes the allowance using relevant available information from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

Economic forecast data is sourced from Moody’s Analytics (“Moody’s”), a firm widely recognized for its research, analysis, and economic forecasts.

Economic forecast data is sourced from Moody’s Analytics, a firm widely recognized for its research, analysis, and economic forecasts.

The forecast may utilize one scenario or a composite of scenarios based on management's judgment and expectations around the current and future macroeconomic outlook.

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As of December 31, 2024, the Company utilized a blend of Moody’s most recent “U.S.

Macroeconomic Outlook Baseline” and “Alternative Scenario 3 - Downside - 90th Percentile” scenarios.

The weighting applied in the December 31, 2023 analysis reflects a deterioration in the economic outlook as compared to the December 31, 2022 analysis and considers the continued actions taken by the FRB with regard to monetary policy and interest rates and the potential impact of those actions.

Macroeconomic Outlook Baseline” (Baseline), “Alternative Scenario 1 – Upside- 10th Percentile” (S1), and “Alternative Scenario 3 - Downside - 90th Percentile” (S3) scenarios.

The weighting applied in the December 31, 2024 analysis reflects an improvement in the economic outlook as compared to December 31, 2023, and considers the anticipated actions taken by the FRB with regard to monetary policy and interest rates and the potential impact of those actions.

The forecasted credit losses incorporate numerous macroeconomic variables, although specific variables have a greater impact on the outcome than others.

Specifically, changes in expectations indicated by the Commercial Real Estate Price Index have the most significant impact on the estimate of expected losses for commercial real estate non-owner-occupied loans and construction and land development loans, the housing price index is the economic forecast variable most significantly impacting the estimate of expected losses for residential loans, and the unemployment rate is a significant contributor to commercial and consumer loans.

Changes in the assumptions and forecasts of economic conditions could significantly affect the Company’s estimate of expected credit losses at the balance sheet date or lead to significant changes in the estimate from one reporting period to the next.

Management considers a range of macroeconomic forecast data in connection with the allowance estimation process.

It is difficult to estimate how potential changes in any one economic factor might affect the overall allowance because a wide variety of factors and inputs are considered in the allowance estimate.

Changes in the factors and inputs may not occur at the same rate and may not be consistent across all product types.

Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others.

Under the range of scenarios considered as of December 31, 2024, use of solely Moody’s S3 downside scenario would have resulted in an increase to the modeled allowance results of approximately $66 million or 66 basis points.

This estimate reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data but does not consider other qualitative adjustments that could increase or decrease modeled loss estimates calculated using this alternative economic scenario.

Seacoast conducted an additional sensitivity by increasing loss sensitivities by 5% and 10% to each of the loan pools.

Estimated credit losses increased by $6 million and $11 million, respectively, from the probability weighted model outcomes, but does not consider other qualitative adjustments that could increase or decrease modeled loss estimates.

Changes in the loss assumptions and forecasts of economic conditions could significantly affect the Company’s estimate of expected credit losses at the balance sheet date or lead to significant changes in the estimate from one reporting period to the next.

Qualitative adjustments may be made to modeled reserves based on an assessment of internal and external influences on credit quality not fully reflected in the quantitative components of the allowance model.

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For additional information regarding the Company's methodology for calculating the Allowance for Credit Losses, see Note 1 – Significant Accounting Policies and Note 5 – Allowance for Credit Losses in the Notes to the Consolidated Financial Statements.

Acquisition Accounting and Purchased Loans – Critical Accounting Policies and Estimates

Acquisition Accounting and Purchased Loans

The Company accounts for acquisitions using the acquisition method of accounting.

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The fair value estimates associated with the loans include estimates related to expected prepayments and the amount and timing of expected principal, interest and other cash flows.

Loans are identified as purchased credit deteriorated (“PCD”) when they have experienced more-than-insignificant deterioration in credit quality since origination.

An allowance for expected credit losses on PCD loans is recorded at the date of acquisition through an adjustment to the loans’ amortized cost basis.

Loans are identified as PCD when they have experienced more-than-insignificant deterioration in credit quality since origination.

allowance for expected credit losses on PCD loans is recorded at the date of acquisition through an adjustment to the loans’ amortized cost basis.

In contrast, expected credit losses on loans not considered PCD are recognized through the provision for credit losses at the date of acquisition.

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Fair value estimates for acquired assets and assumed liabilities are based on the information available, and are subject to change for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available.

Intangible Assets and Impairment Testing – Critical Accounting Policies and Estimates

Intangible assets consist of goodwill, core deposit intangible, customer relationship intangibles, and loan servicing rights.

Intangible Assets and Impairment Testing

Goodwill represents the excess purchase price over the fair value of net assets acquired in business acquisitions.

The core deposit intangible represents the excess intangible value of acquired deposit customer relationships.

Core deposit intangibles are

amortized using an amortization method that reflects the expected value over time, and are evaluated for indications of potential

impairment at least annually.

The core deposit intangible, which is the majority of the remaining intangible asset balance, represents the excess intangible value of acquired deposit customer relationships.

Core deposit intangibles are amortized using an amortization method that reflects the expected value over time, and are evaluated for indications of potential impairment at least annually.

Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis.

We performed an annual impairment test of goodwill in the fourth quarter of 2024 and concluded that no impairment existed.

Impairment of Debt Securities – Critical Accounting Policies and Estimates

For held-to-maturity (“HTM”) securities, expected credit losses are estimated over the remaining expected life and this estimate is recognized as an allowance for credit losses.

Available-for-sale (“AFS”) securities are considered impaired if the fair value is less than amortized cost basis.

For AFS securities, if any portion of the decline in fair value is related to credit, the amount of allowance is determined as the portion related to credit, limited to the difference between the amortized cost basis and the fair

value of the security.

If the fair value of the security increases in subsequent periods, or changes in factors used within the credit loss assessment result in a change in the estimated credit loss, the Company would reflect the change by decreasing the allowance.

If the Company has the intent to sell or believes it is more likely than not that it will be required to sell an impaired AFS security before recovery of the amortized cost basis, the credit loss is recorded as a direct write-down of the amortized cost basis.

Declines in the fair value of AFS securities that are not considered credit related are recognized in Accumulated Other Comprehensive Income on the Company’s Consolidated Balance Sheet.

Seacoast analyzes AFS debt securities quarterly for credit losses.

The analysis is performed on an individual security basis for all securities where fair value has declined below amortized cost.

Fair value is based upon pricing obtained from third party pricing services.

Based on internal review procedures and the fair values provided by the pricing services, the Company believes that the fair values provided by the pricing services are consistent with the principles of ASC Topic 820, Fair Value Measurement .

Fair Value of Financial Instruments

AFS securities

AFS securities are measured at fair value on a recurring basis based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flow analyses, using observable market data where available.

The fair value of AFS securities is based upon pricing obtained from third party pricing services.

On occasion, pricing provided by the pricing services may not be consistent with other observed prices in the market for similar securities.

Using observable market factors, including interest rate and yield curves, volatilities, prepayment speeds, loss severities and default rates, the Company may at times validate the observed prices using a discounted cash flow model and using the observed prices for similar securities to determine the fair value of its securities.

The Company utilizes both quantitative and qualitative assessments to determine if a security has a credit loss.

Seacoast analyzes AFS debt securities quarterly for credit losses utilizing both quantitative and qualitative assessments to determine if a security has a credit loss.

Quantitative assessments are based on a discounted cash flow method.

Qualitative assessments consider a range of factors including:

percent decline in fair value, rating downgrades, subordination, duration, amortized loan-to-value, and the ability of the issuers to pay all amounts due in accordance with the contractual terms.

rating downgrades, subordination, amortized loan-to-value, and the ability of the issuers to pay all amounts due in accordance with the contractual terms.

Declines in the fair value of AFS securities that are not considered credit related are recognized in "Accumulated Other Comprehensive Income" on the Company’s Consolidated Balance Sheet.

The Company enters into derivative contracts, including interest rate swaps, to meet the needs of customers who request such services and to manage the Company's interest rate risk.

The fair value of these derivatives is based on a discounted cash flow approach and is based upon the estimated amount the Company would receive or pay to terminate the instruments, taking into account current interest rates and, when appropriate, the current credit worthiness of the counterparties.

For additional information regarding the Company's derivatives see Note 6 – Derivatives.

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What changed 10-K

Item 7. Management’s Discussion and Analysis