Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Sensitivity
Fluctuations in interest rates may result in changes in the fair value of the Company’s financial instruments, cash flows and net interest income. This risk is managed using simulation modeling to calculate the most likely interest rate risk. The objective is to optimize the Company’s financial position, liquidity, and net interest income while limiting volatility.
Senior management regularly reviews the overall interest rate risk position and evaluates strategies to manage the risk. The Company uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust balance sheet exposures to assess the impact of market interest rate swings. The analysis of the impact on net interest income is subjected to instantaneous changes in market rates and is monitored at least quarterly.
The following table presents the ALCO simulation model’s projected impact of a change in interest rates on the net interest income for the 12- and 24-month periods beginning January 1, 2026, holding all balances on the balance sheet static. It is important to note that the results in the table below assume parallel shifts in the yield curve and do not take into account changes in the yield curve slope nor changes in balance sheet size or mix.
% Change in Projected Baseline Net Interest Income
December 31, 2025
Change in Interest Rates 1-12 months 13-24 months
+3.00% (1.7) 4.6
+2.00% — 4.2
+1.00% 0.7 2.8
Current — —
-1.00% 1.3 (1.1)
-2.00% 3.5 (2.0)
-3.00% 5.8 (3.7)
The computations of interest rate risk do not necessarily include certain actions management may undertake to manage this risk in response to changes in interest rates. Management may adjust asset or liability pricing or structure in order to manage interest rate risk through an economic cycle. This may include the use of investment portfolio purchases or sales or the use of derivative financial instruments, such as interest rate swaps, options, caps, floors, futures or forward contracts.
The Company's calculation of interest rate sensitivity for the year ended December 31, 2025 is presented below. The balances of interest rate sensitive assets and liabilities are presented in the periods in which they reprice to market rates or mature. The amounts are aggregated to reflect the interest rate sensitivity gap. This analysis includes assumptions for prepayments of loans and securities and assumptions for core deposit re-pricing.
The computations of interest rate sensitivity are based on the static balance sheet and do not necessarily include certain actions management may undertake to manage this risk in response to changes in interest rates in the future. This may include specific efforts to change the size of the balance sheet or the relative composition of fixed versus variable rate assets and liabilities as well as qualitative changes that could impact quantitative performance.
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Interest Rate Sensitivity Analysis 1
December 31, 2025
(In thousands) 0-3
Months 4-12
Months 1-5
Years Over
5 Years Total
Federal funds sold and interest-bearing deposits $ 226,950 $ — $ — $ — $ 226,950
Debt securities 2
908,067 376,361 1,705,673 2,760,644 5,750,745
Loans 3
4,495,734 1,919,959 4,996,658 1,231,930 12,644,281
Other Assets — — — 151,817 151,817
Earning assets $ 5,630,751 $ 2,296,320 $ 6,702,331 $ 4,144,391 $ 18,773,793
Non-maturity deposits 4,853,369 805,367 658,855 3,791,847 10,109,438
Time deposits 1,234,721 988,481 25,698 20 2,248,920
Borrowings 904,380 260,000 135,000 37,384 1,336,764
Interest-bearing liabilities $ 6,992,470 $ 2,053,848 $ 819,553 $ 3,829,251 $ 13,695,122
Interest rate swaps 350,000 (200,000) (150,000) — —
Interest sensitivity gap $ (1,011,719) $ 42,472 $ 5,732,778 $ 315,140 $ 5,078,671
Cumulative gap $ (1,011,719) $ (969,247) $ 4,763,531 $ 5,078,671
Cumulative gap to total earning assets (5 %) (5 %) 25 % 27 %
Earning assets to interest-bearing liabilities 81 % 112 % 818 % 108 %
1 The repricing dates may differ from contractual maturity dates for certain assets due to prepayment assumptions.
2 Securities are stated at carrying value.
3 Includes loans held for sale.
Market Risk
See also Management’s discussion and analysis “Interest Rate Sensitivity.”
Market risk refers to potential losses arising from changes in interest rates, and other relevant market rates or prices.
Interest rate risk, defined as the exposure of net interest income and EVE to adverse movements in interest rates, is the Company’s primary market risk, and mainly arises from the structure of the balance sheet (non-trading activities). The Company is also exposed to market risk in its investing activities. The ALCO meets regularly and is responsible for reviewing the interest rate sensitivity position of the Company and establishing policies to monitor and limit exposure to interest rate risk. The policies established by the ALCO are reviewed and approved by the Company’s board of directors. The primary goal of interest rate risk management is to control exposure to interest rate risk, within policy limits approved by the board of directors. These limits reflect the Company’s tolerance for interest rate risk over short-term and long-term horizons.
The Company also performs valuation analyses, which are used for evaluating levels of risk present in the balance sheet that might not be taken into account in the net interest income simulation analyses. Whereas net interest income simulation highlights exposures over a relatively short time horizon, valuation analysis incorporates all cash flows over the estimated remaining life of all balance sheet positions. The valuation of the balance sheet, at a point in time, is defined as the discounted present value of asset cash flows minus the discounted value of liability cash flows, the net result of which is the EVE. The sensitivity of EVE to changes in the level of interest rates is a measure of the longer-term re-pricing risks and options risks embedded in the balance sheet. Similar to net interest income simulation, EVE uses instantaneous changes in rates. Results of both net interest income simulation and EVE analyses are sensitive to changes in key modeling assumptions.
EVE values only the current balance sheet and does not incorporate the reinvestment assumptions that are used in the net interest income simulation model. As with the net interest income simulation model, assumptions about the timing and variability of balance sheet cash flows are critical in the EVE analysis. Particularly important are the assumptions driving prepayments and the expected changes in balances and pricing of the indeterminate maturity deposit portfolios. Stable deposits are a more significant funding source for the Company, making the estimated lives attached to stable deposits more important to the accuracy of our EVE modeling. The Company periodically reassesses its assumptions regarding the indeterminate lives of core deposits utilizing an independent third-party resource to assist.
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The following table presents the projected impact of a change in interest rates on the balance sheet. This change in interest rates assumes parallel shifts in the yield curve and does not take into account changes in the slope of the yield curve.
% Change in Economic Value of Equity
Changes in Interest Rates December 31, 2025
+3.00% (19.7%)
+2.00% (12.2)
+1.00% (5.8)
Current —
-1.00% 6.0
-2.00% 10.0
-3.00% 10.2
While an instantaneous and severe shift in interest rates is used in this analysis, a gradual shift in interest rates would have a much more modest impact. Since EVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon, i.e., the next fiscal year. Further, EVE does not consider factors such as future balance sheet growth, changes in product mix, change in yield curve relationships, and changing product spreads that could mitigate the adverse impact of changes in interest rates.
Effects of Inflation and Changing Prices
The consolidated financial statements and related financial data presented herein have been prepared in accordance with U.S. GAAP, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money, over time, due to inflation.
Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the general level of inflation. However, inflation affects financial institutions by increasing their cost of goods and services purchased, as well as the cost of salaries and benefits, occupancy expense, and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings, and shareholders’ equity. Mortgage origination and refinancing tends to slow as interest rates increase, and higher interest rates likely will reduce the Company’s earnings from such activities and the income from the sale of residential mortgage loans in the secondary market. A decline in interest rates would generally have an opposite impact.
Stock Performance Graph
The line graph below compares the cumulative total stockholder return on Seacoast common stock with the cumulative total return of the NASDAQ Composite Index, the KBW NASDAQ Regional Banking Index, and the S&P U.S. BMI Banks - Southeast Region Index for the same period. The Company has chosen to replace the S&P U.S. BMI Banks - Southeast Region Index with the KBW NASDAQ Regional Banking Index, as the Company believes this index, which is comprised of U.S. regional banks and thrifts, is more indicative of the peers in which investors evaluate our performance. The graph includes both indexes as required when changing the index. The graph and table assume that $100 was invested on December 31, 2020 (the last day of trading for the year ended December 31, 2020) in each of Seacoast common stock, the NASDAQ Composite Index, the KBW NASDAQ Regional Banking Index, and the S&P U.S. BMI Banks - Southeast Region Index. The cumulative total return represents the change in stock price and the amount of dividends received over the period, assuming all dividends were reinvested.
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Index December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025
Seacoast Banking Corporation of Florida 100.00 121.59 109.31 102.78 102.29 119.79
NASDAQ Composite Index 100.00 122.18 82.43 119.22 154.48 187.14
KBW NASDAQ Regional Banking Index 100.00 136.64 127.12 126.67 143.39 152.71
S&P U.S. BMI Banks - Southeast Region Index 100.00 142.83 116.18 119.85 155.47 187.40
Source: S&P Global Market Intelligence © 2026
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SELECTED QUARTERLY INFORMATION
QUARTERLY CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
2025 Quarters 2024 Quarters
(In thousands, except per share data) Fourth Third Second First Fourth Third Second First
Net interest income:
Interest income $ 256,060 $ 202,712 $ 193,347 $ 184,255 $ 185,930 $ 184,115 $ 179,808 $ 175,706
Interest expense 81,433 69,244 66,483 65,738 70,126 77,450 75,384 70,628
Net interest income 174,627 133,468 126,864 118,517 115,804 106,665 104,424 105,078
Provision for credit losses 29,260 8,371 4,379 9,250 3,699 6,273 4,918 1,368
Net interest income after provision for credit losses on loans 145,367 125,097 122,485 109,267 112,105 100,392 99,506 103,710
Noninterest income:
Service charges on deposit accounts 6,472 6,194 5,540 5,180 5,138 5,412 5,342 4,960
Wealth management income 5,540 4,578 4,196 4,248 4,019 3,843 3,766 3,540
Mortgage banking income 3,108 517 685 404 326 485 582 381
Interchange income 2,483 2,008 1,895 1,807 1,860 1,911 1,940 1,888
Insurance agency income 1,191 1,481 1,289 1,620 1,151 1,399 1,355 1,291
BOLI income 2,687 3,875 3,380 2,468 2,627 2,578 2,596 2,264
Other income 7,066 6,006 7,497 6,257 10,335 7,864 6,647 5,944
Securities gains (losses), net 84 (841) 39 196 (8,388) 187 (44) 229
Total noninterest income 28,631 23,818 24,521 22,180 17,068 23,679 22,184 20,497
Noninterest expenses:
Salaries and wages 53,942 46,310 44,438 42,248 42,378 40,697 38,937 40,304
Employee benefits 8,490 7,387 8,106 8,861 6,548 6,955 6,861 7,889
Outsourced data processing costs 11,257 9,337 8,525 8,504 8,307 8,003 8,210 12,118
Occupancy 9,330 7,627 7,483 7,350 7,234 7,096 7,180 8,037
Furniture and equipment 2,935 2,233 2,125 2,128 2,004 2,060 1,956 2,011
Marketing 3,149 2,509 2,958 2,748 2,126 2,729 3,266 2,655
Legal and professional fees 2,106 1,674 2,071 2,740 2,807 2,708 1,982 2,151
FDIC assessments 2,876 2,414 2,108 2,194 2,274 1,882 2,131 2,158
Amortization of intangibles 10,374 6,005 5,131 5,309 5,587 6,002 6,003 6,292
OREO and net (gain) loss on sale (29) (346) 8 241 84 491 (109) (26)
Provision for credit losses on unfunded commitments 812 150 150 150 250 250 251 250
Merger and integration costs 18,142 10,808 2,422 1,051 — — — —
Other 7,162 5,879 6,205 7,073 5,976 5,945 5,869 6,532
Total noninterest expenses 130,546 101,987 91,730 90,597 85,575 84,818 82,537 90,371
Income before income taxes 43,452 46,928 55,276 40,850 43,598 39,253 39,153 33,836
Provision for income tax expense 9,192 10,461 12,589 9,386 9,513 8,602 8,909 7,830
Net income 34,260 36,467 42,687 31,464 34,085 30,651 30,244 26,006
Preferred dividends 2,138 — — — — — — —
Net income available to common shareholders $ 32,122 $ 36,467 $ 42,687 $ 31,464 $ 34,085 $ 30,651 $ 30,244 $ 26,006
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2025 Quarters 2024 Quarters
(In thousands, except per share data) Fourth Third Second First Fourth Third Second First
Per Common Share Data
Net income diluted $ 0.31 $ 0.42 $ 0.50 $ 0.37 $ 0.40 $ 0.36 $ 0.36 $ 0.31
Net income basic 0.32 0.42 0.50 0.37 0.40 0.36 0.36 0.31
Cash dividends declared:
Common and preferred stock 1
$ 0.19 $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18
Market price common stock:
Low close 28.58 27.13 21.36 25.09 25.42 22.70 21.59 22.93
High close 33.23 32.09 27.79 30.06 30.71 28.33 24.25 27.28
Bid price at end of period 31.42 30.43 27.62 25.73 27.53 26.49 23.33 24.86
1 In the fourth quarter of 2025, non-voting convertible preferred shares were issued in connection with the VBI acquisition. Those shares earn dividends pro-rata with common shares, or $0.19 per 1/1,000 th preferred share.
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