UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to __________________.

Commission File No. 0-13660

Seacoast Banking Corporation of Florida

(Exact Name of Registrant as Specified in its Charter)

Florida

59-2260678

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

815 COLORADO AVENUE,

STUART

34994

(Address of Principal Executive Offices)

(Zip Code)


	(772)	287-4000
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	SBCF	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Common Stock, $0.10 Par Value – ~~61,410,300~~85,086,269 shares as of June 30, ~~2022~~2023

INDEX

SEACOAST BANKING CORPORATION OF FLORIDA


		PAGE #
Part I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	~~Condensed consolidated~~Consolidated statements of income – Three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022	3

	~~Condensed consolidated~~Consolidated statements of comprehensive income – Three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022	5

	~~Condensed consolidated~~Consolidated balance sheets - June 30, ~~2022~~2023 and December 31, ~~2021~~2022	6

	Consolidated statements of cash flows – Six months ended June 30, ~~2022~~2023 and ~~2021~~2022	7

	Consolidated statements of shareholders' equity - Three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022	9

	Notes to ~~condensed~~ consolidated financial statements	1011

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3842

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6468

Item 4.	Controls and Procedures	6569

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	6669

Item 1A.	Risk Factors	6669

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6670

Item 3.	Defaults upon Senior Securities	6670

Item 4.	Mine Safety Disclosures	6770

Item 5.	Other Information	6770

Item 6.	Exhibits	6871

SIGNATURES		7073

Table of ~~Contents~~Content s

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except per share data)	(In thousands, except per share data)	2022		2021		2022		2021		(In thousands, except per share data)	2023		2022		2023		2022
Interest and fees on loans	Interest and fees on loans	$	69,307	$	60,348	$	136,425	$	122,646	Interest and fees on loans	$	148,265	$	69,307	$	283,433	$	136,425

Interest and dividends on securities	Interest and dividends on securities	12,525		6,706		22,706		13,152		Interest and dividends on securities	20,995		12,525		40,344		22,706

Interest on interest bearing deposits and other investments	Interest on interest bearing deposits and other investments	1,917		709		2,850		1,295		Interest on interest bearing deposits and other investments	5,023		1,917		8,497		2,850

Total Interest Income	Total Interest Income	83,749		67,763		161,981		137,093		Total Interest Income	174,283		83,749		332,274		161,981

Interest on deposits	Interest on deposits	994		980		1,761		2,045		Interest on deposits	27,183		994		43,216		1,761

Interest on time certificates	Interest on time certificates	436		524		904		1,711		Interest on time certificates	14,477		436		20,029		904

Interest on borrowed money	Interest on borrowed money	672		457		1,147		925		Interest on borrowed money	5,660		672		10,914		1,147

Total Interest Expense	Total Interest Expense	2,102		1,961		3,812		4,681		Total Interest Expense	47,320		2,102		74,159		3,812

Net Interest Income	Net Interest Income	81,647		65,802		158,169		132,412		Net Interest Income	126,963		81,647		258,115		158,169

Provision for credit losses	Provision for credit losses	822		(4,855)		7,378		(10,570)		Provision for credit losses	(764)		822		30,834		7,378

Net Interest Income after Provision for Credit Losses	Net Interest Income after Provision for Credit Losses	80,825		70,657		150,791		142,982		Net Interest Income after Provision for Credit Losses	127,727		80,825		227,281		150,791

Noninterest income:	Noninterest income:									Noninterest income:
Service charges on deposit accounts	Service charges on deposit accounts	3,408		2,338		6,209		4,676		Service charges on deposit accounts	4,560		3,408		8,802		6,209
Interchange income	Interchange income	4,255		4,145		8,383		7,965		Interchange income	5,066		4,255		9,760		8,383
Wealth management income	Wealth management income	2,774		2,387		5,433		4,710		Wealth management income	3,318		2,774		6,381		5,433
Mortgage banking fees	Mortgage banking fees	932		2,977		2,618		7,202		Mortgage banking fees	576		932		1,002		2,618
Marine finance fees		312		177		503		366
Insurance agency income										Insurance agency income	1,160		—		2,261		—
SBA gains	SBA gains	473		232		629		519		SBA gains	249		473		571		629
BOLI income	BOLI income	1,349		872		2,683		1,731		BOLI income	2,068		1,349		3,984		2,683
Other	Other	3,761		2,249		6,631		5,993		Other	4,755		4,073		11,329		7,134
											21,752		17,264		44,090		33,089
		17,264		15,377		33,089		33,162
Securities losses, net	Securities losses, net	(300)		(55)		(752)		(169)		Securities losses, net	(176)		(300)		(69)		(752)

Total Noninterest Income	Total Noninterest Income	16,964		15,322		32,337		32,993		Total Noninterest Income	21,576		16,964		44,021		32,337

Noninterest Expense:	Noninterest Expense:									Noninterest Expense:

Salaries and wages	Salaries and wages	28,056		22,966		56,275		44,359		Salaries and wages	45,155		28,056		92,771		56,275
Employee benefits	Employee benefits	4,151		3,953		9,652		8,933		Employee benefits	7,472		4,151		16,034		9,652
Outsourced data processing costs	Outsourced data processing costs	6,043		4,676		12,199		9,144		Outsourced data processing costs	20,222		6,043		34,775		12,199
Telephone / data lines	Telephone / data lines	908		838		1,641		1,623		Telephone / data lines	1,518		908		2,599		1,641
Occupancy	Occupancy	4,050		3,310		8,036		7,099		Occupancy	7,065		4,050		14,003		8,036
Furniture and equipment	Furniture and equipment	1,588		1,166		3,014		2,420		Furniture and equipment	2,345		1,588		4,612		3,014
Marketing	Marketing	1,882		1,002		3,053		2,170		Marketing	2,047		1,882		4,285		3,053
Legal and professional fees	Legal and professional fees	2,946		2,182		7,735		4,764		Legal and professional fees	4,062		2,946		11,541		7,735
FDIC assessments	FDIC assessments	699		515		1,488		1,041		FDIC assessments	2,116		699		3,559		1,488
Amortization of intangibles	Amortization of intangibles	1,446		1,212		2,892		2,423		Amortization of intangibles	7,654		1,446		14,381		2,892

Table of ~~Contents~~Content s


Foreclosed property expense and net loss (gain) on sale		(968)		(90)		(1,132)		(155)
Foreclosed property expense and net (gain) loss on sale										Foreclosed property expense and net (gain) loss on sale	(57)		(968)		138		(1,132)
Provision for credit losses on unfunded commitments	Provision for credit losses on unfunded commitments	—		—		142		—		Provision for credit losses on unfunded commitments	—		—		1,239		142
Other	Other	5,347		4,054		10,070		8,083		Other	8,266		5,347		15,403		10,070
Total Noninterest Expense	Total Noninterest Expense	56,148		45,784		115,065		91,904		Total Noninterest Expense	107,865		56,148		215,340		115,065

Income Before Income Taxes	Income Before Income Taxes	41,641		40,195		68,063		84,071		Income Before Income Taxes	41,438		41,641		55,962		68,063

Provision for income taxes	Provision for income taxes	8,886		8,785		14,720		18,942		Provision for income taxes	10,189		8,886		12,886		14,720

Net Income	Net Income	$	32,755	$	31,410	$	53,343	$	65,129	Net Income	$	31,249	$	32,755	$	43,076	$	53,343

Share Data	Share Data									Share Data
Net income per share of common stock	Net income per share of common stock									Net income per share of common stock
Diluted	Diluted	$	0.53	$	0.56	$	0.86	$	1.17	Diluted	$	0.37	$	0.53	$	0.52	$	0.86

Basic	Basic	0.53		0.57		0.87		1.18		Basic	0.37		0.53		0.52		0.87

Average common shares outstanding	Average common shares outstanding									Average common shares outstanding
Diluted	Diluted	61,923		55,901		61,818		55,827		Diluted	85,536		61,923		83,260		61,818

Basic	Basic	61,409		55,421		61,269		55,347		Basic	85,022		61,409		82,600		61,269

See notes to unaudited ~~condensed~~ consolidated financial statements.

Table of ~~Contents~~Content s

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2022 2021 2022 2021
Net Income $ 32,755 $ 31,410 $ 53,343 $ 65,129
Other comprehensive (loss) income:
Available-for-sale securities:
Unrealized (losses) gains on available-for-sale securities, net of tax benefit of $16.0 million and $36.6 million for the three and six months ended June 30, 2022 and net of tax expense of $0.2 million and tax benefit of $3.0 million for the three and six months ended June 30, 2021, respectively $ (50,473) $ 296 $ (116,485) $ (10,555)
Amortization of unrealized gains and losses on securities transferred to held-to-maturity, net of tax benefit of $7 thousand and nominal tax expense for the three and six months ended June 30, 2022, respectively, and tax expense of $5 thousand and $11 thousand for the three and six months ended June 30, 2021, respectively (34) 20 2 44
Reclassification adjustment for losses included in net income, net of tax benefit of $19 thousand for each of the three and six months ended June 30, 2021 — 91 — 91
Available-for-sale securities, net of tax $ (50,507) $ 407 $ (116,483) $ (10,420)
Unrealized losses on derivatives designated as cash flow hedges, net of reclassifications to income, net of tax expense of $3 thousand and tax benefit of $19 thousand for the three and six months ended June 30, 2022, respectively, and tax benefit of $4 thousand and $51 thousand for the three and six months ended June 30, 2021, respectively 9 (11) (55) (149)
Total other comprehensive (loss) income $ (50,498) $ 396 $ (116,538) $ (10,569)
Comprehensive (Loss) Income $ (17,743) $ 31,806 $ (63,195) $ 54,560


(In thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net Income	$	31,249	$	32,755	$	43,076	$	53,343

Other comprehensive income (loss):

Unrealized losses on available-for-sale securities, net of tax benefit of $7.1 million and $1.2 million for the three and six months ended June 30, 2023, respectively, and net of tax benefit of $16.0 million and $36.6 million for the three and six months ended June 30, 2022, respectively	$	(22,215)	$	(50,473)	$	(3,699)	$	(116,485)

Amortization of unrealized (gains) losses on securities transferred to held-to-maturity, net of tax benefit of $3 thousand and $6 thousand for the three and six months ended June 30, 2023, respectively, and net of tax benefit of $7 thousand and nominal tax expense for the three and six months ended June 30, 2022, respectively	(11)		(34)		(21)		2
Reclassification adjustment for gains included in net income, net of tax expense of $1 thousand for the six months ended June 30, 2023	—		—		(4)		—
Unrealized gains on derivatives designated as fair value hedges, net of reclassifications to income, net of tax expense of $1.6 million for the three and six months ended June 30, 2023, respectively	4,732		—		4,732		—
Unrealized gains (losses) on derivatives designated as cash flow hedges, net of reclassifications to income, net of tax expense of $38 thousand and $71 thousand for the three and six months ended June 30, 2023, respectively, and net of tax expense of $3 thousand and net of tax benefit of $19 thousand for the three and six months ended June 30, 2022, respectively	103		9		201		(55)
Total other comprehensive income (loss)	$	(17,391)	$	(50,498)	$	1,209	$	(116,538)

Comprehensive Income (Loss)	$	13,858	$	(17,743)	$	44,285	$	(63,195)

See notes to unaudited ~~condensed~~ consolidated financial statements.

Table of ~~Contents~~Content s

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS (Unaudited)


		June 30,		December 31,			June 30,		December 31,
(In thousands, except share data)	(In thousands, except share data)	2022		2021		(In thousands, except share data)	2023		2022
Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	363,343	$	238,750	Cash and due from banks	$	164,193	$	120,748
Interest bearing deposits with other banks	Interest bearing deposits with other banks	538,025		498,979		Interest bearing deposits with other banks	563,690		81,192
Total cash and cash equivalents	Total cash and cash equivalents	901,368		737,729		Total cash and cash equivalents	727,883		201,940

Time deposits with other banks	Time deposits with other banks	4,730		—		Time deposits with other banks	2,987		3,236

Debt securities:	Debt securities:					Debt securities:
Securities available-for-sale (at fair value)	Securities available-for-sale (at fair value)	1,800,791		1,644,319		Securities available-for-sale (at fair value)	1,916,231		1,871,742
Securities held-to-maturity (fair value $706.2 million at June 30, 2022 and $627.4 million at December 31, 2021)		794,785		638,640
Securities held-to-maturity (fair value $577.6 million at June 30, 2023 and $617.7 million at December 31, 2022)						Securities held-to-maturity (fair value $577.6 million at June 30, 2023 and $617.7 million at December 31, 2022)	707,812		747,408
Total debt securities	Total debt securities	2,595,576		2,282,959		Total debt securities	2,624,043		2,619,150

Loans held for sale (at fair value)	Loans held for sale (at fair value)	14,205		31,791		Loans held for sale (at fair value)	5,967		3,151

Loans	Loans	6,541,548		5,925,029		Loans	10,117,919		8,144,724
Less: Allowance for credit losses	Less: Allowance for credit losses	(90,769)		(83,315)		Less: Allowance for credit losses	(159,715)		(113,895)
Loans, net of allowance for credit losses	Loans, net of allowance for credit losses	6,450,779		5,841,714		Loans, net of allowance for credit losses	9,958,204		8,030,829

Bank premises and equipment, net	Bank premises and equipment, net	74,784		72,404		Bank premises and equipment, net	116,959		116,892
Other real estate owned	Other real estate owned	2,419		13,618		Other real estate owned	7,526		2,301
Goodwill	Goodwill	286,606		252,154		Goodwill	732,910		480,319
Other intangible assets, net	Other intangible assets, net	20,062		14,845		Other intangible assets, net	109,716		75,451
Bank owned life insurance	Bank owned life insurance	207,724		205,041		Bank owned life insurance	293,880		237,824
Net deferred tax assets	Net deferred tax assets	60,080		27,321		Net deferred tax assets	127,941		94,457
Other assets	Other assets	193,371		201,857		Other assets	333,916		280,212
Total Assets	Total Assets	$	10,811,704	$	9,681,433	Total Assets	$	15,041,932	$	12,145,762

Liabilities	Liabilities					Liabilities
Deposits	Deposits	$	9,188,953	$	8,067,589	Deposits	$	12,283,267	$	9,981,595
Securities sold under agreements to repurchase, maturing within 30 days	Securities sold under agreements to repurchase, maturing within 30 days	110,578		121,565		Securities sold under agreements to repurchase, maturing within 30 days	290,156		172,029

Federal Home Loan Bank ("FHLB") borrowings						Federal Home Loan Bank ("FHLB") borrowings	160,000		150,000
Subordinated debt	Subordinated debt	71,786		71,646		Subordinated debt	105,970		84,533
Other liabilities	Other liabilities	110,812		109,897		Other liabilities	148,507		149,830
Total Liabilities	Total Liabilities	9,482,129		8,370,697		Total Liabilities	12,987,900		10,537,987

Shareholders' Equity	Shareholders' Equity					Shareholders' Equity
Common stock, par value $0.10 per share, authorized 120,000,000 shares, issued 61,846,470 and outstanding 61,410,300 at June 30, 2022, and authorized 120,000,000, issued 58,909,369 and outstanding 58,504,250 shares at December 31, 2021		6,141		5,850
Other shareholders' equity		1,323,434		1,304,886
Common stock, par value $0.10 per share, authorized 120,000,000 shares, issued 85,615,136 and outstanding 85,086,269 at June 30, 2023, and authorized 120,000,000, issued 72,099,136 and outstanding 71,617,852 shares at December 31, 2022						Common stock, par value $0.10 per share, authorized 120,000,000 shares, issued 85,615,136 and outstanding 85,086,269 at June 30, 2023, and authorized 120,000,000, issued 72,099,136 and outstanding 71,617,852 shares at December 31, 2022	8,509		7,162
Additional paid-in-capital						Additional paid-in-capital	1,809,431		1,377,802
Retained earnings						Retained earnings	437,087		423,863
Less: Treasury stock						Less: Treasury stock	(14,171)		(13,019)
							2,240,856		1,795,808
Accumulated other comprehensive loss, net						Accumulated other comprehensive loss, net	(186,824)		(188,033)
Total Shareholders' Equity	Total Shareholders' Equity	1,329,575		1,310,736		Total Shareholders' Equity	2,054,032		1,607,775
Total Liabilities and Shareholders' Equity	Total Liabilities and Shareholders' Equity	$	10,811,704	$	9,681,433	Total Liabilities and Shareholders' Equity	15,041,932		12,145,762

See notes to unaudited ~~condensed~~ consolidated financial statements.

Table of ~~Contents~~Content s

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
(In thousands)	(In thousands)	2022		2021		(In thousands)	2023		2022
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income	Net income	$	53,343	$	65,129	Net income	$	43,076	$	53,343
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	Depreciation	2,832		2,792		Depreciation	4,071		2,832
Amortization of premiums and discounts on securities, net	Amortization of premiums and discounts on securities, net	623		4,012		Amortization of premiums and discounts on securities, net	(424)		623
Amortization of operating lease right-of-use assets	Amortization of operating lease right-of-use assets	2,961		2,127		Amortization of operating lease right-of-use assets	3,961		2,961
Other amortization and accretion, net	Other amortization and accretion, net	(635)		(7,307)		Other amortization and accretion, net	(10,558)		(635)
Stock based compensation	Stock based compensation	4,116		4,262		Stock based compensation	7,096		4,116
Origination of loans designated for sale	Origination of loans designated for sale	(121,402)		(283,001)		Origination of loans designated for sale	(56,526)		(121,402)
Sale of loans designated for sale	Sale of loans designated for sale	143,326		318,479		Sale of loans designated for sale	55,710		143,326
Provision for credit losses	Provision for credit losses	7,378		(10,570)		Provision for credit losses	30,834		7,378
Deferred income taxes	Deferred income taxes	4,026		4,833		Deferred income taxes	(9,439)		4,026
Losses on sale of securities		—		73
Gains on sale of securities						Gains on sale of securities	(5)		—
Gains on sale of loans	Gains on sale of loans	(3,992)		(9,411)		Gains on sale of loans	(1,828)		(3,992)
Gains on sale and write-downs of other real estate owned	Gains on sale and write-downs of other real estate owned	(1,302)		(380)		Gains on sale and write-downs of other real estate owned	(64)		(1,302)
Losses on disposition of fixed assets and write-downs upon transfer of bank premises to other real estate owned	Losses on disposition of fixed assets and write-downs upon transfer of bank premises to other real estate owned	172		316		Losses on disposition of fixed assets and write-downs upon transfer of bank premises to other real estate owned	1,726		172

Changes in operating assets and liabilities, net of effects from acquired companies:	Changes in operating assets and liabilities, net of effects from acquired companies:					Changes in operating assets and liabilities, net of effects from acquired companies:
Net decrease in other assets	Net decrease in other assets	11,213		1,086		Net decrease in other assets	14,447		11,213
Net decrease in other liabilities	Net decrease in other liabilities	(4,318)		(10,726)		Net decrease in other liabilities	(24,002)		(4,318)
Net cash provided by operating activities	Net cash provided by operating activities	$	98,341	$	81,714	Net cash provided by operating activities	$	58,075	$	98,341

Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Maturities and repayments of debt securities available-for-sale	Maturities and repayments of debt securities available-for-sale	164,223		288,171		Maturities and repayments of debt securities available-for-sale	107,590		164,223
Maturities and repayments of debt securities held-to-maturity	Maturities and repayments of debt securities held-to-maturity	49,652		73,697		Maturities and repayments of debt securities held-to-maturity	41,995		49,652
Proceeds from sale of debt securities available-for-sale	Proceeds from sale of debt securities available-for-sale	26,011		56,217		Proceeds from sale of debt securities available-for-sale	30,490		26,011
Purchases of debt securities available-for-sale	Purchases of debt securities available-for-sale	(474,124)		(468,430)		Purchases of debt securities available-for-sale	(22,402)		(474,124)
Purchases of debt securities held-to-maturity	Purchases of debt securities held-to-maturity	(206,065)		(172,004)		Purchases of debt securities held-to-maturity	—		(206,065)
Maturities of time deposits with other banks	Maturities of time deposits with other banks	1,743		—		Maturities of time deposits with other banks	249		1,743
Net new loans and principal repayments	Net new loans and principal repayments	(133,458)		346,173		Net new loans and principal repayments	53,434		(133,458)
Purchases of loans held for investment	Purchases of loans held for investment	(111,292)		(38,822)		Purchases of loans held for investment	—		(111,292)
Proceeds from sale of other real estate owned	Proceeds from sale of other real estate owned	14,208		4,954		Proceeds from sale of other real estate owned	294		14,208
Additions to other real estate owned	Additions to other real estate owned	(590)		(1,310)		Additions to other real estate owned	—		(590)
Proceeds from sale of FHLB and Federal Reserve Bank Stock	Proceeds from sale of FHLB and Federal Reserve Bank Stock	—		2,704		Proceeds from sale of FHLB and Federal Reserve Bank Stock	71,352		—
Purchase of FHLB and Federal Reserve Bank Stock	Purchase of FHLB and Federal Reserve Bank Stock	(3,347)		(59)		Purchase of FHLB and Federal Reserve Bank Stock	(87,273)		(3,347)

Net cash from bank acquisitions	Net cash from bank acquisitions	208,933		—		Net cash from bank acquisitions	141,674		208,933
Purchase of bank owned life insurance		—		(25,000)

Additions to bank premises and equipment	Additions to bank premises and equipment	(2,545)		(701)		Additions to bank premises and equipment	(8,827)		(2,545)
Net cash (used in)/provided by investing activities		$	(466,651)	$	65,590
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	$	328,576	$	(466,651)

See notes to unaudited ~~condensed~~ consolidated financial statements.

Table of ~~Contents~~Content s

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
(In thousands)	(In thousands)	2022		2021		(In thousands)	2023		2022
Cash Flows from Financing Activities	Cash Flows from Financing Activities					Cash Flows from Financing Activities
Net increase in deposits	Net increase in deposits	$	559,085	$	903,875	Net increase in deposits	$	182,331	$	559,085
Net (decrease) increase in repurchase agreements		(10,987)		364

Net increase (decrease) in repurchase agreements						Net increase (decrease) in repurchase agreements	118,127		(10,987)
Net decrease in FHLB borrowings with original maturities of three months or less						Net decrease in FHLB borrowings with original maturities of three months or less	(170,000)		—
Repayments of FHLB borrowings with original maturities of more than three months						Repayments of FHLB borrowings with original maturities of more than three months	(75,000)		—
Proceeds from FHLB borrowings with original maturities of more than three months						Proceeds from FHLB borrowings with original maturities of more than three months	110,000		—

Stock based employee benefit plans	Stock based employee benefit plans	2,361		369		Stock based employee benefit plans	3,731		2,361
Repurchase of common stock						Repurchase of common stock	(45)		—
Dividends paid	Dividends paid	(18,510)		(7,155)		Dividends paid	(29,852)		(18,510)
Net cash provided by financing activities	Net cash provided by financing activities	$	531,949	$	897,453	Net cash provided by financing activities	$	139,292	$	531,949
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	163,639		1,044,757		Net increase in cash and cash equivalents	525,943		163,639
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	737,729		404,088		Cash and cash equivalents at beginning of period	201,940		737,729
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	901,368	$	1,448,845	Cash and cash equivalents at end of period	$	727,883	$	901,368

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid during the period for interest	Cash paid during the period for interest	$	3,779	$	6,462	Cash paid during the period for interest	$	67,991	$	3,779
Cash paid during the period for taxes	Cash paid during the period for taxes	9,591		17,700		Cash paid during the period for taxes	6,080		9,591
Recognition of operating lease right-of-use assets, other than through bank acquisitions		3,370		35
Recognition of operating lease right-of-use assets, other than through bank acquisitions, net of terminations						Recognition of operating lease right-of-use assets, other than through bank acquisitions, net of terminations	1,890		3,370

Recognition of operating lease liabilities, other than through bank acquisitions		3,370		35
Recognition of operating lease liabilities, other than through bank acquisitions, net of terminations						Recognition of operating lease liabilities, other than through bank acquisitions, net of terminations	1,902		3,370

Supplemental disclosure of non-cash investing activities:
Transfer of debt securities from available-for-sale to held-to-maturity		$	—	$	210,805
Unsettled purchases of debt securities available-for-sale		—		28,750
Supplemental disclosure of non-cash investing activities: 1						Supplemental disclosure of non-cash investing activities: 1

Transfers from bank premises to other real estate owned	Transfers from bank premises to other real estate owned	1,008		3,318		Transfers from bank premises to other real estate owned	5,455		1,008
1See "Note 11 - Business Combinations" for non cash transactions related to business combinations.						1See "Note 11 - Business Combinations" for non cash transactions related to business combinations.

See notes to unaudited ~~condensed~~ consolidated financial statements.

Table of ~~Contents~~Content s

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

Accumulated
Other
Comprehensive
Income (Loss)
Common Stock Paid-in
Capital Retained
Earnings Treasury
Stock
(In thousands) Shares Amount Total
Balance at March 31, 2022 61,239 $ 6,124 $ 1,062,462 $ 371,192 $ (10,459) $ (73,034) $ 1,356,285
Comprehensive income (loss) — — — 32,755 — (50,498) (17,743)
Stock based compensation expense — — 2,697 — — — 2,697
Common stock transactions related to stock based employee benefit plans 169 17 (31) — (1,173) — (1,187)
Common stock issued for stock options 2 — 39 — — — 39
Dividends on common stock ($0.17 per share) — — — (10,516) — — (10,516)
Three months ended June 30, 2022 171 17 2,705 22,239 (1,173) (50,498) (26,710)
Balance at June 30, 2022 61,410 $ 6,141 $ 1,065,167 $ 393,431 $ (11,632) $ (123,532) $ 1,329,575

Accumulated
Other
Comprehensive
Income (Loss)
Common Stock Paid-in
Capital Retained
Earnings Treasury
Stock
(In thousands) Shares Amount Total
Balance at March 31, 2021 55,294 $ 5,529 $ 858,688 $ 290,420 $ (8,693) $ 9,405 $ 1,155,349
Comprehensive income — — — 31,410 — 396 31,806
Stock based compensation expense — — 2,503 — — — 2,503
Common stock transactions related to stock based employee benefit plans 94 10 (18) — (1,487) — (1,495)
Common stock issued for stock options 48 5 1,425 — — — 1,430
Dividends on common stock ($0.13 per share) — — — (7,246) — — (7,246)
Three months ended June 30, 2021 142 15 3,910 24,164 (1,487) 396 26,998
Balance at June 30, 2021 55,436 $ 5,544 $ 862,598 $ 314,584 $ (10,180) $ 9,801 $ 1,182,347



	Common Stock			Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)
(In thousands)	Shares	Amount										Total
Balance at March 31, 2023	84,609	8,461		1,803,898		421,271		(13,113)		(169,433)		2,051,084
Comprehensive income (loss)	—	—		—		31,249		—		(17,391)		13,858
Stock based compensation expense	—	—		4,454		—		—		—		4,454
Common stock transactions related to stock based employee benefit plans	377	38		(124)		—		(1,058)		—		(1,144)
Common stock issued for stock options	103	10		1,248		—		—		—		1,258
Repurchase of common stock	(3)	—		(45)		—		—		—		(45)


Dividends on common stock ($0.18 per share)	—	—		—		(15,433)		—		—		(15,433)
Three months ended June 30, 2023	477	48		5,533		15,816		(1,058)		(17,391)		2,948
Balance at June 30, 2023	85,086	$	8,509	$	1,809,431	$	437,087	$	(14,171)	$	(186,824)	$	2,054,032


														Accumulated Other Comprehensive Income (Loss)
		Common Stock			Paid-in Capital			Retained Earnings			Treasury Stock												Common Stock							Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)
(In thousands)	(In thousands)	Shares	Amount													Total		Accumulated Other Comprehensive Income (Loss)	(In thousands)				Shares				Amount		Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)				Total
Balance at December 31, 2021		58,504	$	5,850		$	963,851		$	358,598		$	(10,569)			$	(6,994)
Balance at March 31, 2022																			Balance at March 31, 2022				61,239				6,124						1,062,462						371,192			(10,459)			(73,034)	1,356,285
Comprehensive income (loss)	Comprehensive income (loss)	—	—			—			53,343			—		(116,538)								(63,195)		Comprehensive income (loss)			—			—			—			32,755			—			(50,498)			(17,743)
Stock based compensation expense	Stock based compensation expense	—	—			4,116			—			—		—					4,116			Stock based compensation expense				—			—			2,697			—			—			—			2,697
Common stock transactions related to stock based employee benefit plans	Common stock transactions related to stock based employee benefit plans	176	18			(36)			—			(1,063)		—					(1,081)			Common stock transactions related to stock based employee benefit plans				169			17			(31)			—			(1,173)			—			(1,187)
Common stock issued for stock options	Common stock issued for stock options	180	18			3,424			—			—		—					3,442			Common stock issued for stock options				2			—			39			—			—			—			39
Issuance of common stock, pursuant to acquisition		2,550	255			89,979			—			—		—					90,234
Conversion of options, pursuant to acquisitions		—	—			3,833			—			—		—					3,833
Dividends on common stock ($0.30 per share)		—	—			—			(18,510)			—		—					(18,510)
Six months ended June 30, 2022		2,906	291			101,316			34,833			(1,063)		(116,538)					18,839
Balance at June 30, 2022		61,410	$	6,141		$	1,065,167		$	393,431		$	(11,632)	$	(123,532)				$	1,329,575

Dividends on common stock ($0.17 per share)																					Dividends on common stock ($0.17 per share)				—			—			—			(10,516)			—			—			(10,516)
Three months ended June 30, 2022																					Three months ended June 30, 2022				171			17			2,705			22,239			(1,173)			(50,498)			(26,710)
Balance at June 30, 2022																					Balance at June 30, 2022				61,410			$	6,141		$	1,065,167		$	393,431		$	(11,632)		$	(123,532)		$	1,329,575

Accumulated
Other
Comprehensive
Income (Loss)
Common Stock Paid-in
Capital Retained
Earnings Treasury
Stock
(In thousands) Shares Amount Total
Balance at December 31, 2020 55,243 $ 5,524 $ 856,092 $ 256,701 $ (8,285) $ 20,370 $ 1,130,402
Comprehensive income (loss) — — — 65,129 — (10,569) 54,560
Stock based compensation expense — — 4,262 — — — 4,262
Common stock transactions related to stock based employee benefit plans 114 12 (18) — (1,895) — (1,901)
Common stock issued for stock options 79 8 2,262 — — — 2,270
Dividends on common stock ($0.13 per share) — — — (7,246) — — (7,246)
Six months ended June 30, 2021 193 20 6,506 57,883 (1,895) (10,569) 51,945
Balance at June 30, 2021 55,436 $ 5,544 $ 862,598 $ 314,584 $ (10,180) $ 9,801 $ 1,182,347




	Common Stock			Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)
(In thousands)	Shares	Amount										Total
Balance at December 31, 2022	71,618	$	7,162	1,377,802		423,863		(13,019)		(188,033)		1,607,775
Comprehensive income	—	—		—		43,076		—		1,209		44,285
Stock based compensation expense	—	—		7,096		—		—		—		7,096
Common stock transactions related to stock based employee benefit plans	448	46		(203)		—		(1,152)		—		(1,309)
Common stock issued for stock options	231	22		5,018		—		—		—		5,040
Repurchase of common stock	(3)	—		(45)		—		—		—		(45)
Issuance of common stock, pursuant to acquisition	12,792	1,279		409,459		—		—		—		410,738
Conversion of options, pursuant to acquisition	—	—		10,304		—		—		—		10,304
Dividends on common stock ($0.35 per share)	—	—		—		(29,852)		—		—		(29,852)
Six months ended June 30, 2023	13,468	1,347		431,629		13,224		(1,152)		1,209		446,257
Balance at June 30, 2023	85,086	$	8,509	$	1,809,431	$	437,087	$	(14,171)	$	(186,824)	$	2,054,032

Table of Content s




	Common Stock			Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)
(In thousands)	Shares	Amount										Total
Balance at December 31, 2021	58,504	$	5,850	$	963,851	$	358,598	$	(10,569)	$	(6,994)	1,310,736
Comprehensive income (loss)	—	—		—		53,343		—		(116,538)		(63,195)
Stock based compensation expense	—	—		4,116		—		—		—		4,116
Common stock transactions related to stock based employee benefit plans	176	18		(36)		—		(1,063)		—		(1,081)
Common stock issued for stock options	180	18		3,424		—		—		—		3,442
Issuance of common stock, pursuant to acquisitions	2,550	255		89,979		—		—		—		90,234
Conversion of options, pursuant to acquisitions	—	—		3,833		—		—		—		3,833
Dividends on common stock ($0.30 per share)	—	—		—		(18,510)		—		—		(18,510)
Six months ended June 30, 2022	2,906	291		101,316		34,833		(1,063)		(116,538)		18,839
Balance at June 30, 2022	61,410	$	6,141	$	1,065,167	$	393,431	$	(11,632)	$	(123,532)	$	1,329,575

See notes to unaudited ~~condensed~~ consolidated financial statements.

910

Table of ~~Contents~~Content s

SEACOAST BANKING CORPORATION OF FLORIDA AND SUBSIDIARIES

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Basis of Presentation

Basis of Presentation: The accompanying unaudited ~~condensed~~ consolidated financial statements of Seacoast Banking Corporation of Florida and its subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain prior period amounts have been reclassified to conform to the current period presentation.

Operating results for the three and six months ended June 30, ~~2022,~~2023, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022,~~2023, or any other period. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Use of Estimates: The preparation of these ~~condensed~~ consolidated financial statements requires management to make judgments in the application of certain accounting policies that involve significant estimates and assumptions. The Company has established policies and control procedures that are intended to ensure valuation methods are well controlled and applied consistently from period to period. These estimates and assumptions, which may materially affect the reported amounts of certain assets, liabilities, revenues and expenses, are based on information available as of the date of the financial statements, and changes in this information over time and the use of revised estimates and assumptions could materially affect amounts reported in subsequent financial statements. Specific areas, among others, requiring the application of ~~management��s~~management’s estimates include determination of the allowance for credit losses, acquisition accounting and purchased loans, intangible assets and impairment testing, other fair value measurements and contingent liabilities.

~~Recently Issued~~Adoption of New Accounting ~~Standards, Not Yet Adopted~~Pronouncement

~~In March 2022,~~On January 1, 2023, the Company adopted Financial Accounting Standards Board (“FASB”) ~~issued~~ Accounting Standards Update (“ASU”) 2022-02, ~~Financial Instruments Credit Losses (Topic 326), Troubled~~“Troubled Debt Restructurings and Vintage ~~Disclosures~~Disclosures”. ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings (“TDRs”) in ASC 310-40, Receivables -– Troubled Debt Restructurings by Creditors,, and introduces new disclosures related to modifications with borrowers that are experiencing financial difficulties. ASU 2022-02 also requires the disclosure of current-period gross ~~writeoffs~~write-offs by year of origination for financing receivables held at amortized cost. Upon adoption, the Company eliminated the separate allowance for credit loss estimation process for loans classified as TDRs. The ~~amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, and early~~ adoption ~~is permitted. The~~did not have a material impact to the ~~Company’s~~ consolidated financial ~~statements~~statements. For additional information on the loans modified for borrowers in financial difficulty and for the disclosure of ~~the adoption~~current-period gross write-offs by year of ~~ASU 2022-02 is not expected to be material.~~origination, see “Note 4 – Loans.”

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Note 2 – Earnings per Share

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

For the three and six months ended June 30, ~~2022, 1,505~~2023, options to purchase shares of the Company’s common stock totaling 400,998 and 368,169, respectively, were anti-dilutive. For the three and six months ended June 30, ~~2021, no~~2022, 1,505 options to purchase shares of the Company's common stock were anti-dilutive.


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	2022		2021		2022		2021		(Dollars in thousands, except per share data)	2023		2022		2023		2022
Basic earnings per share	Basic earnings per share									Basic earnings per share
Net income	Net income	$	32,755	$	31,410	$	53,343	$	65,129	Net income	$	31,249	$	32,755	$	43,076	$	53,343
Average common shares outstanding	Average common shares outstanding	61,409		55,421		61,269		55,347		Average common shares outstanding	85,022		61,409		82,600		61,269
Net income per share	Net income per share	$	0.53	$	0.57	$	0.87	$	1.18	Net income per share	$	0.37	$	0.53	$	0.52	$	0.87

Diluted earnings per share	Diluted earnings per share									Diluted earnings per share
Net income	Net income	$	32,755	$	31,410	$	53,343	$	65,129	Net income	$	31,249	$	32,755	$	43,076	$	53,343
Average common shares outstanding	Average common shares outstanding	61,409		55,421		61,269		55,347		Average common shares outstanding	85,022		61,409		82,600		61,269
Add: Dilutive effect of employee restricted stock and stock options	Add: Dilutive effect of employee restricted stock and stock options	514		480		549		480		Add: Dilutive effect of employee restricted stock and stock options	514		514		660		549
Average diluted shares outstanding	Average diluted shares outstanding	61,923		55,901		61,818		55,827		Average diluted shares outstanding	85,536		61,923		83,260		61,818
Net income per share	Net income per share	$	0.53	$	0.56	$	0.86	$	1.17	Net income per share	$	0.37	$	0.53	$	0.52	$	0.86
Net income has not been allocated to unvested restricted stock awards that are participating securities because the amounts that would be allocated are not material to net income per share of common stock. Unvested restricted stock awards that are participating securities represent less than one percent of all of the outstanding shares of common stock for each of the periods presented.

Note 3 – Securities

The amortized cost, gross unrealized gains and losses and fair value of securities available-for-sale and held-to-maturity at June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are summarized as follows:


		June 30, 2022									June 30, 2023
(In thousands)	(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Debt securities available-for-sale
Available-for-Sale Debt Securities										Available-for-Sale Debt Securities
U.S. Treasury securities and obligations of U.S. government agencies	U.S. Treasury securities and obligations of U.S. government agencies	$	5,754	$	7	$	(110)	$	5,651	U.S. Treasury securities and obligations of U.S. government agencies	$	41,283	$	188	$	(497)	$	40,974

Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	1,444,668		437		(143,293)		1,301,812		Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	1,623,932		301		(230,690)		1,393,543

Private mortgage-backed securities and collateralized mortgage obligations	Private mortgage-backed securities and collateralized mortgage obligations	166,176		47		(7,374)		158,849		Private mortgage-backed securities and collateralized mortgage obligations	143,008		15		(13,352)		129,671

Collateralized loan obligations	Collateralized loan obligations	315,165		—		(10,974)		304,191		Collateralized loan obligations	310,516		—		(7,204)		303,312

Obligations of state and political subdivisions	Obligations of state and political subdivisions	31,441		258		(1,411)		30,288		Obligations of state and political subdivisions	21,956		2		(1,506)		20,452

Other debt securities										Other debt securities	27,991		415		(127)		28,279
Totals	Totals	$	1,963,204	$	749	$	(163,162)	$	1,800,791	Totals	$	2,168,686	$	921	$	(253,376)	$	1,916,231

Debt securities held-to-maturity
Held-to-Maturity Debt Securities										Held-to-Maturity Debt Securities
Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	$	794,785	$	113	$	(88,728)	$	706,170	Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	$	707,812	$	—	$	(130,226)	$	577,586

Totals	Totals	$	794,785	$	113	$	(88,728)	$	706,170	Totals	$	707,812	$	—	$	(130,226)	$	577,586

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		December 31, 2021									December 31, 2022
(In thousands)	(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Debt securities available-for-sale
Available-for-Sale Debt Securities										Available-for-Sale Debt Securities
U.S. Treasury securities and obligations of U.S. government agencies	U.S. Treasury securities and obligations of U.S. government agencies	$	6,466	$	316	$	(3)	$	6,779	U.S. Treasury securities and obligations of U.S. government agencies	$	13,813	$	173	$	(339)	$	13,647
Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	1,234,721		8,308		(20,309)		1,222,720		Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	1,561,197		539		(223,083)		1,338,653
Private mortgage-backed securities and collateralized mortgage obligations	Private mortgage-backed securities and collateralized mortgage obligations	88,096		1,091		(420)		88,767		Private mortgage-backed securities and collateralized mortgage obligations	179,148		70		(12,831)		166,387
Collateralized loan obligations	Collateralized loan obligations	292,751		63		(124)		292,690		Collateralized loan obligations	313,155		—		(10,251)		302,904
Obligations of state and political subdivisions	Obligations of state and political subdivisions	31,624		1,740		(1)		33,363		Obligations of state and political subdivisions	29,350		122		(1,731)		27,741
Other debt securities										Other debt securities	22,640		197		(427)		22,410
Totals	Totals	$	1,653,658	$	11,518	$	(20,857)	$	1,644,319	Totals	$	2,119,303	$	1,101	$	(248,662)	$	1,871,742

Debt securities held-to-maturity
Mortgage-backed securities of U.S. government-sponsored entities		$	638,640	$	3,828	$	(15,070)	$	627,398
Held-to-Maturity Debt Securities										Held-to-Maturity Debt Securities
Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities										Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	$	747,408	$	64	$	(129,731)	$	617,741

Totals	Totals	$	638,640	$	3,828	$	(15,070)	$	627,398	Totals	$	747,408	$	64	$	(129,731)	$	617,741

During the three months ended March 31, 2023, debt securities with a fair value of $22.1 million obtained in the acquisition of Professional Holding Corp. (“Professional”) were sold. No gain or loss was recognized on the sale. There were $8.4 million in other sales of securities during the three months ended March 31, 2023, with gross gains of $24 thousand and gross losses of $19 thousand. There were no sales of securities during the three months ended June 30, 2023. During the three months ended March 31, 2022, securities with a fair value of $26.0 million obtained in the acquisition of Business Bank of Florida Corp. were immediately sold. No gain or loss was recognized on the sale. There were no other sales of securities during the three and six months ended June 30, 2022. ~~Proceeds from the sales~~Included in “Securities gains (losses), net” are decreases of ~~securities~~$0.2 million and $0.1 million for the three and six months ended June 30, ~~2021 were $56.2 million, resulting in gross gains of $0.2 million~~2023, respectively, and ~~gross losses of $0.3 million. Also included in “Securities losses, net” are~~ decreases of $0.3 million and $0.8 million for the three and six months ended June 30, 2022, respectively, ~~and an increase of $18 thousand and a decrease of $0.1 million for the three and six months ended June 30, 2021, respectively,~~ in the value of ~~an investment~~investments in ~~shares of a~~ mutual ~~fund~~funds that ~~invests~~invest in CRA-qualified debt securities.

During the three months ended March 31, 2021, the Company reclassified debt securities with an amortized cost of $210.8 million from available-for-sale to held-to-maturity, as it has the ability and intent to hold these securities to maturity. These securities had net unrealized gains of $0.8 million at the date of transfer, which will continue to be reported in accumulated other comprehensive income, and will be amortized over the remaining life of the securities as an adjustment of yield. The effect on interest income of the amortization of net unrealized gains is offset by the amortization of the premium on the securities transferred.

At June 30, ~~2022,~~2023, debt securities with a fair value of ~~$414.4 million~~$1.8 billion were pledged primarily as collateral for public deposits and secured borrowings.

The amortized cost and fair value of securities at June 30, ~~2022,~~2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because prepayments of the underlying collateral for these securities may occur, due to the right to call or repay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

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		June 30, 2022									June 30, 2023
		Held-to-Maturity				Available-for-Sale					Held-to-Maturity				Available-for-Sale
(In thousands)	(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in less than one year	Due in less than one year	$	—	$	—	$	2,768	$	2,770	Due in less than one year	$	—	$	—	$	4,903	$	4,811

Due after one year through five years	Due after one year through five years	—		—		14,400		14,600		Due after one year through five years	—		—		11,125		11,002

Due after five years through ten years	Due after five years through ten years	—		—		5,679		5,598		Due after five years through ten years	—		—		14,256		14,129

Due after ten years	Due after ten years	—		—		14,348		12,971		Due after ten years	—		—		32,955		31,484
											—		—		63,239		61,426
		—		—		37,195		35,939

Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	794,785		706,170		1,444,668		1,301,812		Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	707,812		577,586		1,623,932		1,393,543

Private mortgage-backed securities and collateralized mortgage obligations	Private mortgage-backed securities and collateralized mortgage obligations	—		—		166,176		158,849		Private mortgage-backed securities and collateralized mortgage obligations	—		—		143,008		129,671

Collateralized loan obligations	Collateralized loan obligations	—		—		315,165		304,191		Collateralized loan obligations	—		—		310,516		303,312

Other debt securities										Other debt securities	—		—		27,991		28,279
Totals	Totals	$	794,785	$	706,170	$	1,963,204	$	1,800,791	Totals	$	707,812	$	577,586	$	2,168,686	$	1,916,231

The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flows analyses, or using observable market data. The tables below indicate the fair value of available-for-sale debt securities with unrealized losses for which no allowance for credit losses has been recorded.

June 30, 2022
Less Than 12 Months 12 Months or Longer Total
(In thousands) Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses
U.S. Treasury securities and obligations of U.S. government agencies $ 4,510 $ (109) $ 206 $ (1) $ 4,716 $ (110)
Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 1,077,271 (109,953) 191,277 (33,340) 1,268,548 (143,293)
Private mortgage-backed securities and collateralized mortgage obligations 145,025 (7,194) 3,828 (180) 148,853 (7,374)
Collateralized loan obligations 251,412 (9,307) 52,780 (1,667) 304,192 (10,974)
Obligations of state and political subdivisions 17,982 (1,411) — — 17,982 (1,411)
Totals $ 1,496,200 $ (127,974) $ 248,091 $ (35,188) $ 1,744,291 $ (163,162)


		December 31, 2021													June 30, 2023
		Less Than 12 Months				12 Months or Longer				Total					Less Than 12 Months				12 Months or Longer				Total
(In thousands)	(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. government agencies	U.S. Treasury securities and obligations of U.S. government agencies	$	97	$	(1)	$	245	$	(2)	$	342	$	(3)	U.S. Treasury securities and obligations of U.S. government agencies	$	32,164	$	(481)	$	439	$	(16)	$	32,603	$	(497)
Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	955,881		(19,575)		11,953		(734)		967,834		(20,309)		Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	368,235		(24,697)		1,002,455		(205,993)		1,370,690		(230,690)
Private mortgage-backed securities and collateralized mortgage obligations	Private mortgage-backed securities and collateralized mortgage obligations	33,640		(173)		9,628		(247)		43,268		(420)		Private mortgage-backed securities and collateralized mortgage obligations	22,704		(788)		106,569		(12,564)		129,273		(13,352)
Collateralized loan obligations	Collateralized loan obligations	123,202		(81)		9,461		(43)		132,663		(124)		Collateralized loan obligations	58,568		(1,742)		244,744		(5,462)		303,312		(7,204)
Obligations of state and political subdivisions	Obligations of state and political subdivisions	499		(1)		—		—		499		(1)		Obligations of state and political subdivisions	8,575		(112)		8,607		(1,394)		17,182		(1,506)
Other debt securities														Other debt securities	5,606		(127)		—		—		5,606		(127)
Totals	Totals	$	1,113,319	$	(19,831)	$	31,287	$	(1,026)	$	1,144,606	$	(20,857)	Totals	$	495,852	$	(27,947)	$	1,362,814	$	(225,429)	$	1,858,666	$	(253,376)

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Table of ~~Contents~~Content s


	December 31, 2022
	Less Than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. government agencies	$	3,788	$	(328)	$	249	$	(11)	$	4,037	$	(339)
Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities	646,651		(54,956)		667,520		(168,127)		1,314,171		(223,083)
Private mortgage-backed securities and collateralized mortgage obligations	130,488		(8,255)		25,234		(4,576)		155,722		(12,831)
Collateralized loan obligations	242,370		(8,343)		60,534		(1,908)		302,904		(10,251)
Obligations of state and political subdivisions	23,804		(1,656)		425		(75)		24,229		(1,731)
Other debt securities	11,459		(427)		—		—		11,459		(427)
Totals	$	1,058,560	$	(73,965)	$	753,962	$	(174,697)	$	1,812,522	$	(248,662)

At June 30, ~~2022,~~2023, the Company had unrealized losses of ~~$143.3~~$230.7 million on mortgage-backed securities and collateralized mortgage obligations issued by government-sponsored entities having a fair value of ~~$1.3~~$1.4 billion. These securities are either explicitly or implicitly guaranteed by the U.S. government and have a long history of no credit losses. The implied government guarantee of principal and interest payments and the high credit rating of the portfolio provide a sufficient basis for the current expectation that there is no risk of loss if default were to occur. Based on the assessment of all relevant factors, the Company believes that the unrealized loss positions on these debt securities are a function of changes in investment spreads and interest rate movements and not changes in credit quality, and expects to recover the entire amortized cost basis of these securities. Therefore, at June 30, ~~2022,~~2023, no allowance for credit losses has been recorded.

At June 30, ~~2022,~~2023, the Company had ~~$11.0~~$13.4 million of unrealized losses on private label residential and commercial mortgage-backed securities and collateralized mortgage obligations having a fair value of $129.3 million. The securities have weighted average credit support of 22%. Based on the assessment of all relevant factors, the Company believes that the unrealized loss positions on these debt securities are a function of changes in ~~uncapped 3-month LIBOR~~investment spreads and interest rate movements and not changes in credit quality, and expects to recover the entire amortized cost basis of these securities. Therefore, at June 30, 2023, no allowance for credit losses has been recorded.

At June 30, 2023, the Company had $7.2 million of unrealized losses in floating rate collateralized loan obligations (“CLOs”) having a fair value of ~~$304.2~~$303.3 million. CLOs are special purpose vehicles and those in which the Company has invested ~~acquire~~are nearly all first-lien, broadly syndicated corporate loans across a diversified band of industries while providing support to senior tranche investors. As of June 30, ~~2022,~~2023, all positions held by the Company are in AAA and AA tranches, with weighted average credit support of ~~37%~~38% and ~~25%~~26%, respectively. The Company evaluates the securities for potential credit losses by modeling expected loan-level defaults, recoveries, and prepayments for each CLO security. Based on the assessment of all relevant factors, the Company believes that the unrealized loss positions on these debt securities are a function of changes in investment spreads and interest rate movements and not changes in credit quality, and expects to recover the entire amortized cost basis of these securities. Therefore, at June 30, ~~2022,~~2023, no allowance for credit losses has been recorded.

At June 30, ~~2022,~~2023, the Company had ~~$7.4~~$1.5 million of unrealized losses on ~~private label residential and commercial mortgage-backed~~municipal securities ~~and collateralized mortgage obligations~~ having a fair value of ~~$148.9~~$17.2 million. ~~The collateral underlying these mortgage investments is primarily residential real estate. The~~These securities ~~have average credit support~~are highly rated issuances of ~~22%.~~state or local municipalities, all of which are continuing to make timely contractual payments. Based on the assessment of all relevant factors, the Company believes that the unrealized loss positions on these debt securities are a function of changes in investment spreads and interest rate movements and not changes in credit quality, and expects to recover the entire amortized cost basis of these securities. ~~Therefore, at~~As a result, as of June 30, ~~2022,~~2023, no allowance for credit losses has been recorded.

All ~~HTM~~held-to-maturity (“HTM”) debt securities are issued by government-sponsored entities, which are either explicitly or implicitly guaranteed by the U.S. government and have a long history of no credit losses. While the potential for default on these securities may be something greater than zero, the long history with no credit losses, the implied government guarantee of principal and interest payments and the high credit rating of the HTM portfolio provide sufficient basis for the current expectation that there is no risk of loss if default were to occur. As a result, as of June 30, ~~2022,~~2023, no allowance for credit losses has been recorded. The Company has the intent and ability to hold these securities until maturity.

Table of Content s

Included in Other Assets at June 30, ~~2022~~2023 is ~~$38.1~~$69.0 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. The Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of these cost method investment securities. Accrued interest receivable on ~~AFS~~available-for-sale (“AFS”) and HTM debt securities of ~~$4.4~~$8.0 million and $1.2 million, respectively, at June 30, 2023, and $7.0 million and $1.3 million, respectively, at ~~June 30, 2022, and $3.4 million and $1.0 million, respectively, at~~ December 31, ~~2021,~~2022, is included in Other Assets. Also included in Other Assets ~~is an $8.6 million investment~~are investments in a CRA-qualified mutual ~~fund~~funds carried at fair ~~value.~~value of $13.5 million and $8.2 million at June 30, 2023 and December 31, 2022, respectively.

The Company holds 11,330 shares of Visa Class B stock, which, following resolution of Visa litigation, will be converted to Visa Class A shares. Under the current conversion ratio that became effective June 29, ~~2022,~~2023, the Company would receive ~~1.6059~~1.5902 shares of Class A stock for each share of Class B stock for a total of ~~18,194~~18,016 shares of Visa Class A stock. The ownership of Visa stock is related to prior ownership in Visa's network while Visa operated as a cooperative, and is recorded on the Company's financial records at a zero basis.

Note 4 – Loans

Loans held for investment are categorized into the following segments:

•Construction and land development: Loans are extended to both commercial and consumer customers which are collateralized by and for the purpose of funding land development and construction projects, including 1-4 family residential construction, multi-family property and non-farm residential property where the primary source of repayment is from proceeds of the sale, refinancing or permanent financing of the property.

•Commercial real estate - ~~owner-occupied:~~owner occupied: Loans are extended to commercial customers for the purpose of acquiring 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.

~~Table of Contents~~

•Commercial real estate - ~~non owner-occupied:~~non-owner occupied: Loans are extended to commercial customers for the purpose of acquiring commercial property where occupancy by the borrower is not their primary intent. These loans are viewed primarily as cash flow loans, collateralized by the subject property, and the repayment of these loans is largely dependent on rental income from the successful operation of the property.

•Residential real estate: Loans are extended to consumer customers and collateralized primarily by 1-4 family residential properties and include fixed and variable rate mortgages, home equity mortgages, and home equity lines of credit. Loans are primarily written based on conventional loan agency guidelines, including loans that exceed agency value limitations. Sources of repayment ~~may be from~~are largely dependent on the occupant of the residential ~~property or from cash flows on rental income from the successful operation of the~~ property.

•Commercial and financial: Loans are extended to commercial customers. The purpose of the loans can be working capital, physical asset expansion, asset acquisition or other business purposes. Loans may be collateralized by assets owned by the borrower or the borrower's business. Commercial loans are based primarily on the historical and projected cash flow of the borrower's business and secondarily on the capacity of credit enhancements, guarantees and underlying collateral provided by the borrower.

•Consumer: Loans are extended to consumer customers. The segment includes both installment loans and lines of credit which may be collateralized or non-collateralized.

•Paycheck Protection Program (“PPP”): Loans originated under a temporary program established by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and extended by the Economic Aid Act. Under the termsTable of ~~the program, balances may be forgiven if the borrower uses the funds in a manner consistent with the program guidelines, and repayment is guaranteed by the U.S. government.~~Content s

The following tables present net loan balances by segment as of:


		June 30, 2022									June 30, 2023
(In thousands)	(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total		(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total
Construction and land development	Construction and land development	$	320,596	$	29,391	$	38	$	350,025	Construction and land development	$	424,964	$	347,876	$	21,531	$	794,371
Commercial real estate - owner-occupied		979,173		255,850		19,320		1,254,343
Commercial real estate - non owner-occupied		1,457,626		438,184		76,730		1,972,540
Commercial real estate - owner occupied										Commercial real estate - owner occupied	1,026,700		594,211		48,458		1,669,369
Commercial real estate - non-owner occupied										Commercial real estate - non-owner occupied	1,818,307		1,381,801		170,103		3,370,211
Residential real estate	Residential real estate	1,442,435		198,901		6,129		1,647,465		Residential real estate	1,674,505		691,863		29,984		2,396,352
Commercial and financial	Commercial and financial	1,018,258		92,610		13,903		1,124,771		Commercial and financial	1,152,360		376,571		81,964		1,610,895
Consumer	Consumer	171,315		3,886		—		175,201		Consumer	166,250		103,667		2,165		272,082
Paycheck Protection Program		10,518		6,685		—		17,203
PPP Loans										PPP Loans	958		3,681		—		4,639
Totals	Totals	$	5,399,921	$	1,025,507	$	116,120	$	6,541,548	Totals	$	6,264,044	$	3,499,670	$	354,205	$	10,117,919


		December 31, 2021									December 31, 2022
(In thousands)	(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total		(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total
Construction and land development	Construction and land development	$	199,341	$	31,438	$	45	$	230,824	Construction and land development	$	364,900	$	201,333	$	21,100	$	587,332
Commercial real estate - owner occupied	Commercial real estate - owner occupied	983,517		186,812		27,445		1,197,774		Commercial real estate - owner occupied	995,154		451,202		31,946		1,478,302
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	1,278,180		382,554		75,705		1,736,439		Commercial real estate - non-owner occupied	1,695,411		767,138		127,225		2,589,774
Residential real estate	Residential real estate	1,261,306		156,957		7,091		1,425,354		Residential real estate	1,558,643		271,378		19,482		1,849,503
Commercial and financial	Commercial and financial	968,318		84,395		16,643		1,069,356		Commercial and financial	1,151,273		182,124		15,238		1,348,636
Consumer	Consumer	169,507		4,658		10		174,175		Consumer	177,338		89,458		19,791		286,587
Paycheck Protection Program		69,503		21,604		—		91,107
PPP Loans										PPP Loans	1,474		3,116		—		4,590
Totals	Totals	$	4,929,672	$	868,418	$	126,939	$	5,925,029	Totals	$	5,944,193	$	1,965,749	$	234,782	$	8,144,724

The amortized cost basis of loans at June 30, ~~2022~~2023 included net deferred costs of ~~$30.8 million on non-PPP portfolio loans and net deferred fees of $0.3 million on PPP loans.~~$37.6 million. At December 31, ~~2021,~~2022, the amortized cost basis included net deferred costs of ~~$31.0 million on non-PPP portfolio loans and net deferred fees of $2.4 million on PPP loans.~~$35.1 million. At June 30, ~~2022,~~2023, the remaining fair value adjustments on acquired loans were ~~$21.4~~$201.8 million, or ~~1.8%~~5.0% of the outstanding acquired loan balances, compared to

~~Table of Contents~~

~~$23.1~~ $97.7 million, or ~~2.3%~~4.3% of the acquired loan balances at December 31, ~~2021.~~2022. The discount is accreted into interest income over the remaining lives of the related loans on a level yield basis.

Accrued interest receivable is included within Other Assets and was ~~$15.7~~$36.2 million and ~~$14.7~~$28.2 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Table of Content s

The following tables present the status of net loan balances as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.


		June 30, 2022													June 30, 2023
(In thousands)	(In thousands)	Current		Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing Greater Than 90 Days		Nonaccrual		Total		(In thousands)	Current		Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing Greater Than 90 Days		Nonaccrual		Total
Portfolio Loans	Portfolio Loans													Portfolio Loans
Construction and land development	Construction and land development	$	320,588	$	—	$	—	$	—	$	8	$	320,596	Construction and land development	$	424,834	$	124	$	—	$	—	$	6	$	424,964
Commercial real estate - owner-occupied		977,270		360		544		—		999		979,173
Commercial real estate - non owner-occupied		1,455,266		—		—		—		2,360		1,457,626
Commercial real estate - owner occupied														Commercial real estate - owner occupied	1,025,697		—		—		—		1,003		1,026,700
Commercial real estate - non-owner occupied														Commercial real estate - non-owner occupied	$	1,814,323	$	354	$	—	$	—	$	3,630	$	1,818,307
Residential real estate	Residential real estate	1,431,258		3,147		13		—		8,017		1,442,435		Residential real estate	1,660,568		7,108		451		1		6,377		1,674,505
Commercial and financial	Commercial and financial	1,013,540		1,074		13		—		3,631		1,018,258		Commercial and financial	1,144,831		1,351		235		131		5,812		1,152,360
Consumer	Consumer	170,262		851		39		—		163		171,315		Consumer	163,848		1,568		224		291		319		166,250
Paycheck Protection Program1		10,442		—		—		76		—		10,518
PPP Loans														PPP Loans	904		—		—		54		—		958
Total Portfolio Loans	Total Portfolio Loans	$	5,378,626	$	5,432	$	609	$	76	$	15,178	$	5,399,921	Total Portfolio Loans	$	6,235,005	$	10,505	$	910	$	477	$	17,147	$	6,264,044

Acquired Non-PCD Loans	Acquired Non-PCD Loans													Acquired Non-PCD Loans
Construction and land development	Construction and land development	$	29,391	$	—	$	—	$	—	$	—	$	29,391	Construction and land development	$	347,590	$	90	$	—	$	162	$	34	$	347,876
Commercial real estate - owner-occupied		255,103		—		747		—		—		255,850
Commercial real estate - non owner-occupied		437,140		—		—		—		1,044		438,184
Commercial real estate - owner occupied														Commercial real estate - owner occupied	593,508		398		—		—		305		594,211
Commercial real estate - non-owner occupied														Commercial real estate - non-owner occupied	1,379,727		67		—		—		2,007		1,381,801
Residential real estate	Residential real estate	197,974		403		—		—		524		198,901		Residential real estate	686,338		3,493		315		—		1,717		691,863
Commercial and financial	Commercial and financial	91,918		310		—		—		382		92,610		Commercial and financial	375,198		46		69		—		1,258		376,571
Consumer	Consumer	3,655		—		—		—		231		3,886		Consumer	93,926		5,825		2,057		803		1,056		103,667
Paycheck Protection Program1		6,658		—		—		27		—		6,685
PPP Loans														PPP Loans	3,625		35		—		21		—		3,681
Total Acquired Non-PCD Loans	Total Acquired Non-PCD Loans	$	1,021,839	$	713	$	747	$	27	$	2,181	$	1,025,507	Total Acquired Non-PCD Loans	$	3,479,912	$	9,954	$	2,441	$	986	$	6,377	$	3,499,670

PCD Loans	PCD Loans													PCD Loans
Construction and land development	Construction and land development	$	35	$	—	$	—	$	—	$	3	$	38	Construction and land development	$	21,325	$	—	$	—	$	—	$	206	$	21,531
Commercial real estate - owner-occupied		18,748		—		—		—		572		19,320
Commercial real estate - non owner-occupied		73,544		—		—		—		3,186		76,730
Commercial real estate - owner occupied														Commercial real estate - owner occupied	43,870		—		—		—		4,588		48,458
Commercial real estate - non-owner occupied														Commercial real estate - non-owner occupied	166,846		—		224		—		3,033		170,103
Residential real estate	Residential real estate	5,426		—		—		—		703		6,129		Residential real estate	28,504		193		730		—		557		29,984
Commercial and financial	Commercial and financial	9,284		—		—		—		4,619		13,903		Commercial and financial	65,559		6		—		—		16,399		81,964
Consumer	Consumer	—		—		—		—		—		—		Consumer	2,057		32		57		—		19		2,165
Total PCD Loans	Total PCD Loans	$	107,037	$	—	$	—	$	—	$	9,083	$	116,120	Total PCD Loans	$	328,161	$	231	$	1,011	$	—	$	24,802	$	354,205

Total Loans	Total Loans	$	6,507,502	$	6,145	$	1,356	$	103	$	26,442	$	6,541,548	Total Loans	$	10,043,078	$	20,690	$	4,362	$	1,463	$	48,326	$	10,117,919

1Paycheck Protection Program loans are not reflected as past due when forgiveness applications are being processed by the SBA. Repayment of principal and interest is fully guaranteed by the U.S. government.

1618

Table of ~~Contents~~Content s


		December 31, 2021													December 31, 2022
(In thousands)	(In thousands)	Current		Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing Greater Than 90 Days		Nonaccrual		Total		(In thousands)	Current		Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing Greater Than 90 Days		Nonaccrual		Total
Portfolio Loans	Portfolio Loans													Portfolio Loans
Construction and land development	Construction and land development	$	199,087	$	—	$	—	$	—	$	254	$	199,341	Construction and land development	$	364,841	$	—	$	—	$	—	$	59	$	364,900
Commercial real estate - owner occupied	Commercial real estate - owner occupied	982,804		—		—		—		713		983,517		Commercial real estate - owner occupied	993,690		—		67		440		957		995,154
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	1,276,582		—		—		—		1,598		1,278,180		Commercial real estate - non-owner occupied	1,695,381		—		—		—		30		1,695,411
Residential real estate	Residential real estate	1,248,160		3,457		143		—		9,546		1,261,306		Residential real estate	1,550,040		1,172		147		—		7,284		1,558,643
Commercial and financial	Commercial and financial	963,828		851		41		—		3,598		968,318		Commercial and financial	1,142,536		1,032		476		—		7,229		1,151,273
Consumer	Consumer	168,791		565		23		15		113		169,507		Consumer	176,444		550		252		1		91		177,338
Paycheck Protection Program1		69,434		—		—		69		—		69,503
PPP Loans														PPP Loans	1,099		33		—		342		—		1,474
Total Portfolio Loans	Total Portfolio Loans	$	4,908,686	$	4,873	$	207	$	84	$	15,822	$	4,929,672	Total Portfolio Loans	$	5,924,031	$	2,787	$	942	$	783	$	15,650	$	5,944,193

Acquired Non-PCD Loans	Acquired Non-PCD Loans													Acquired Non-PCD Loans
Construction and land development	Construction and land development	$	31,438	$	—	$	—	$	—	$	—	$	31,438	Construction and land development	$	201,263	$	—	$	—	$	—	$	70	$	201,333
Commercial real estate - owner occupied	Commercial real estate - owner occupied	186,652		—		160		—		—		186,812		Commercial real estate - owner occupied	450,109		796		297		—		—		451,202
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	381,510		—		—		—		1,044		382,554		Commercial real estate - non-owner occupied	765,633		162		—		—		1,343		767,138
Residential real estate	Residential real estate	154,981		182		—		—		1,794		156,957		Residential real estate	270,215		577		—		—		586		271,378
Commercial and financial	Commercial and financial	84,180		—		40		—		175		84,395		Commercial and financial	180,837		790		87		—		410		182,124
Consumer	Consumer	4,082		135		—		—		441		4,658		Consumer	87,317		779		616		525		221		89,458
Paycheck Protection Program1		21,567		—		—		37		—		21,604
PPP Loans														PPP Loans	3,116		—		—		—		—		3,116
Total Acquired Non-PCD Loans	Total Acquired Non-PCD Loans	$	864,410	$	317	$	200	$	37	$	3,454	$	868,418	Total Acquired Non-PCD Loans	$	1,958,490	$	3,104	$	1,000	$	525	$	2,630	$	1,965,749

PCD Loans	PCD Loans													PCD Loans
Construction and land development	Construction and land development	$	40	$	—	$	—	$	—	$	5	$	45	Construction and land development	$	20,680	$	—	$	—	$	—	$	420	$	21,100
Commercial real estate - owner occupied	Commercial real estate - owner occupied	24,192		—		—		—		3,253		27,445		Commercial real estate - owner occupied	30,517		23		23		—		1,383		31,946
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	72,442		—		—		—		3,263		75,705		Commercial real estate - non-owner occupied	124,115		—		—		—		3,110		127,225
Residential real estate	Residential real estate	5,386		—		—		—		1,705		7,091		Residential real estate	17,885		10		—		—		1,587		19,482
Commercial and financial	Commercial and financial	13,547		—		—		—		3,096		16,643		Commercial and financial	11,201		4		—		—		4,033		15,238
Consumer	Consumer	10		—		—		—		—		10		Consumer	17,884		1,001		336		540		30		19,791
Total PCD Loans	Total PCD Loans	$	115,617	$	—	$	—	$	—	$	11,322	$	126,939	Total PCD Loans	$	222,282	$	1,038	$	359	$	540	$	10,563	$	234,782

Total Loans	Total Loans	$	5,888,713	$	5,190	$	407	$	121	$	30,598	$	5,925,029	Total Loans	$	8,104,803	$	6,929	$	2,301	$	1,848	$	28,843	$	8,144,724

1Paycheck Protection Program loans are not reflected as past due when forgiveness applications are being processed by the SBA. Repayment of principal and interest is fully guaranteed by the U.S. government.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest subsequently received on such loans is accounted for under the cost-recovery method, whereby interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, and future payments are reasonably assured. The Company recognized $0.3 million and $0.4 million in interest income on nonaccrual loans during the three months ended June 30, 2023 and 2022, respectively. The Company recognized $0.4 million and $1.2 million in interest income on nonaccrual loans during each of the ~~three months ended June 30, 2022 and 2021. The Company recognized $1.2 million and $0.6 million in interest income on nonaccrual loans during the~~ six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively.

~~Table of Contents~~

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

June 30, 2022
(In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans Allowance for Credit Losses
Construction and land development $ 11 $ — $ 11 $ —
Commercial real estate - owner-occupied 999 572 1,571 48
Commercial real estate - non owner-occupied 6,590 — 6,590 —
Residential real estate 9,149 95 9,244 34
Commercial and financial 5,599 3,033 8,632 1,881
Consumer 49 345 394 345
Totals $ 22,397 $ 4,045 $ 26,442 $ 2,308

Table of Content s

December 31, 2021
(In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans Allowance for Credit Losses
Construction and land development $ 37 $ 222 $ 259 $ 92
Commercial real estate - owner-occupied 2,976 990 3,966 419
Commercial real estate - non owner-occupied 4,490 1,415 5,905 27
Residential real estate 12,358 687 13,045 357
Commercial and financial 2,676 4,193 6,869 2,384
Consumer 29 525 554 525
Totals $ 22,566 $ 8,032 $ 30,598 $ 3,804


	June 30, 2023
(In thousands)	Nonaccrual Loans With No Related Allowance		Nonaccrual Loans With an Allowance		Total Nonaccrual Loans		Allowance for Credit Losses
Construction and land development	$	40	$	206	$	246	$	107
Commercial real estate - owner occupied	5,383		513		5,896		15
Commercial real estate - non-owner occupied	7,484		1,186		8,670		318
Residential real estate	7,550		1,101		8,651		22
Commercial and financial	6,832		16,637		23,469		14,449
Consumer	144		1,250		1,394		1,222
Totals	$	27,433	$	20,893	$	48,326	$	16,133


	December 31, 2022
(In thousands)	Nonaccrual Loans With No Related Allowance		Nonaccrual Loans With an Allowance		Total Nonaccrual Loans		Allowance for Credit Losses
Construction and land development	$	615	$	—	$	615	$	—
Commercial real estate - owner occupied	957		1,641		2,597		41
Commercial real estate - non-owner occupied	3,347		837		4,184		230
Residential real estate	8,072		1,036		9,109		58
Commercial and financial	4,724		6,891		11,615		2,319
Consumer	40		683		723		257
Totals	$	17,755	$	11,088	$	28,843	$	2,905

Collateral-Dependent Loans

Loans are considered collateral-dependent when the repayment, based on the Company's assessment as of the reporting date, is expected to be provided substantially through the operation or sale of the underlying collateral and there are no other available and reliable sources of repayment. The following table presents collateral-dependent loans as of:


(In thousands)	(In thousands)	June 30, 2022		December 31, 2021		(In thousands)	June 30, 2023		December 31, 2022
Construction and land development	Construction and land development	$	16	$	271	Construction and land development	$	430	$	59
Commercial real estate - owner-occupied		2,069		4,706
Commercial real estate - non owner-occupied		6,349		4,923
Commercial real estate - owner occupied						Commercial real estate - owner occupied	6,261		2,733
Commercial real estate - non-owner occupied						Commercial real estate - non-owner occupied	6,283		1,698
Residential real estate	Residential real estate	12,971		16,334		Residential real estate	11,895		11,333
Commercial and financial	Commercial and financial	6,137		8,741		Commercial and financial	40,087		10,448
Consumer	Consumer	548		741		Consumer	2,598		426
Totals	Totals	$	28,090	$	35,716	Totals	$	67,554	$	26,697

Loans by Risk Rating

The Company utilizes an internal asset classification system as a means of identifying problem and potential problem loans. The following classifications are used to categorize loans under the internal classification system:

•Pass: Loans that are not problem loans or potential problem loans are considered to be pass-rated.

•Special Mention: Loans that do not currently expose the Company to sufficient risk to warrant classification in the Substandard or Doubtful categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention.

~~Table of Contents~~

•Substandard: Loans with the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Table of Content s

•Substandard Impaired: Loans typically placed on nonaccrual and considered to be ~~collateral-dependent or accruing TDRs.~~collateral-dependent.

•Doubtful: Loans that have all the weaknesses inherent in those classified Substandard with the added characteristic that the weakness present makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful are likely to be charged off.

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


		June 30, 2022																	June 30, 2023
(In thousands)	(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving		Total		(In thousands)	2023		2022		2021		2020		2019		Prior		Revolving		Total
Construction and Land Development	Construction and Land Development																	Construction and Land Development
Risk Ratings:	Risk Ratings:																	Risk Ratings:
Pass	Pass	$	112,623	$	124,511	$	19,219	$	29,937	$	7,222	$	13,488	$	43,009	$	350,009	Pass	$	30,200	$	265,371	$	170,788	$	36,370	$	25,881	$	27,596	$	226,567	$	782,773
Special Mention	Special Mention	—		—		—		—		—		—		—		—		Special Mention	—		1,250		—		—		—		396		—		1,646
Substandard	Substandard	—		—		—		—		—		—		—		—		Substandard	—		—		9,685		—		—		—		—		9,685
Substandard Impaired	Substandard Impaired	—		—		—		—		—		16		—		16		Substandard Impaired	—		—		—		—		—		61		206		267
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Total	Total	$	112,623	$	124,511	$	19,219	$	29,937	$	7,222	$	13,504	$	43,009	$	350,025	Total	$	30,200	$	266,621	$	180,473	$	36,370	$	25,881	$	28,053	$	226,773	$	794,371
Commercial real estate - owner-occupied
Gross Charge Offs																		Gross Charge Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate - owner occupied																		Commercial real estate - owner occupied
Risk Ratings:	Risk Ratings:																	Risk Ratings:
Pass	Pass	$	108,673	$	198,439	$	152,729	$	180,828	$	121,286	$	458,968	$	13,388	$	1,234,311	Pass	$	57,149	$	273,495	$	298,639	$	175,708	$	191,891	$	608,264	$	29,902	$	1,635,048
Special Mention	Special Mention	—		—		5,280		5,275		636		314		—		11,505		Special Mention	—		—		2,168		—		4,866		6,674		101		13,809
Substandard	Substandard	—		—		447		2,665		—		2,701		—		5,813		Substandard	—		688		—		7,075		2,584		7,357		—		17,704
Substandard Impaired	Substandard Impaired	—		—		—		317		309		2,088		—		2,714		Substandard Impaired	—		—		—		—		317		2,491		—		2,808
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Total	Total	$	108,673	$	198,439	$	158,456	$	189,085	$	122,231	$	464,071	$	13,388	$	1,254,343	Total	$	57,149	$	274,183	$	300,807	$	182,783	$	199,658	$	624,786	$	30,003	$	1,669,369
Commercial real estate - non owner-occupied
Gross Charge Offs																		Gross Charge Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate - non-owner occupied																		Commercial real estate - non-owner occupied
Risk Ratings:	Risk Ratings:																	Risk Ratings:
Pass	Pass	$	288,039	$	407,054	$	207,900	$	286,427	$	192,275	$	538,503	$	7,498	$	1,927,696	Pass	$	150,604	$	835,973	$	649,707	$	299,717	$	411,735	$	914,410	$	46,412	$	3,308,558
Special Mention	Special Mention	—		—		—		830		—		3,797		—		4,627		Special Mention	—		161		1,089		7,957		12,324		13,924		—		35,455
Substandard	Substandard	—		—		4,731		—		14,282		13,873		—		32,886		Substandard	—		—		190		6,085		2,982		8,270		248		17,775
Substandard Impaired	Substandard Impaired	—		—		1,044		4,175		34		2,078		—		7,331		Substandard Impaired	—		—		—		1,068		1,849		5,506		—		8,423
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Total	Total	$	288,039	$	407,054	$	213,675	$	291,432	$	206,591	$	558,251	$	7,498	$	1,972,540	Total	$	150,604	$	836,134	$	650,986	$	314,827	$	428,890	$	942,110	$	46,660	$	3,370,211
Gross Charge Offs																		Gross Charge Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	109	$	109
Residential real estate	Residential real estate																	Residential real estate
Risk Ratings:	Risk Ratings:																	Risk Ratings:
Pass	Pass	$	91,195	$	542,597	$	116,702	$	83,670	$	103,890	$	291,042	$	403,630	$	1,632,726	Pass	$	120,812	$	424,322	$	641,362	$	167,176	$	99,298	$	445,280	$	479,136	$	2,377,386
Special Mention	Special Mention	—		—		—		66		—		868		546		1,480		Special Mention	—		—		—		—		82		1,057		5,574		6,713
Substandard	Substandard	—		—		—		—		13		275		—		288		Substandard	—		—		—		—		—		31		357		388
Substandard Impaired		—		—		140		133		90		10,397		2,211		12,971
Doubtful		—		—		—		—		—		—		—		—
Total		$	91,195	$	542,597	$	116,842	$	83,869	$	103,993	$	302,582	$	406,387	$	1,647,465

1921

Table of ~~Contents~~Content s

June 30, 2022
(In thousands) 2022 2021 2020 2019 2018 Prior Revolving Total
Commercial and financial
Risk Ratings:
Pass $ 138,675 $ 306,952 $ 159,376 $ 79,518 $ 57,045 $ 69,304 $ 279,113 $ 1,089,983
Special Mention 1,263 480 5,202 479 309 371 444 8,548
Substandard — 478 5,891 5,888 2,253 2,484 277 17,271
Substandard Impaired — — 216 547 5,227 2,926 53 8,969
Doubtful — — — — — — — —
Total $ 139,938 $ 307,910 $ 170,685 $ 86,432 $ 64,834 $ 75,085 $ 279,887 $ 1,124,771
Consumer
Risk Ratings:
Pass $ 25,561 $ 43,537 $ 26,957 $ 20,625 $ 13,667 $ 20,177 $ 21,157 $ 171,681
Special Mention — — 24 296 228 272 1,954 2,774
Substandard — — — 12 19 8 159 198
Substandard Impaired — 8 26 101 54 144 215 548
Doubtful — — — — — — — —
Total $ 25,561 $ 43,545 $ 27,007 $ 21,034 $ 13,968 $ 20,601 $ 23,485 $ 175,201
Paycheck Protection Program
Risk Ratings:
Pass $ — $ 14,764 $ 2,439 $ — $ — $ — $ — $ 17,203
Total $ — $ 14,764 $ 2,439 $ — $ — $ — $ — $ 17,203
Consolidated
Risk Ratings:
Pass $ 764,766 $ 1,637,854 $ 685,322 $ 681,005 $ 495,385 $ 1,391,482 $ 767,795 $ 6,423,609
Special Mention 1,263 480 10,506 6,946 1,173 5,622 2,944 28,934
Substandard — 478 11,069 8,565 16,567 19,341 436 56,456
Substandard Impaired — 8 1,426 5,273 5,714 17,649 2,479 32,549
Doubtful — — — — — — — —
Total $ 766,029 $ 1,638,820 $ 708,323 $ 701,789 $ 518,839 $ 1,434,094 $ 773,654 $ 6,541,548


		December 31, 2021																	June 30, 2023
(In thousands)	(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving		Total		(In thousands)	2023		2022		2021		2020		2019		Prior		Revolving		Total
Construction and Land Development
Substandard Impaired																		Substandard Impaired	—		—		846		173		461		9,308		1,077		11,865
Doubtful																		Doubtful	—		—		—		—		—		—		—		—
Total																		Total	$	120,812	$	424,322	$	642,208	$	167,349	$	99,841	$	455,676	$	486,144	$	2,396,352
Gross Charge Offs																		Gross Charge Offs	$	—	$	—	$	—	$	—	$	—	$	159	$	109	$	268
Commercial and financial																		Commercial and financial
Risk Ratings:	Risk Ratings:																	Risk Ratings:
Pass	Pass	$	94,318	$	23,860	$	38,058	$	25,507	$	3,995	$	15,466	$	29,349	$	230,553	Pass	$	176,563	$	391,471	$	376,754	$	147,594	$	82,400	$	103,176	$	254,426	$	1,532,384
Special Mention	Special Mention	—		—		—		—		—		—		—		—		Special Mention	134		5,738		6,217		1,063		494		3,563		4,479		21,688
Substandard	Substandard	—		—		—		—		—		—		—		—		Substandard	—		1,571		16,343		5,142		5,433		4,744		2,011		35,244
Substandard Impaired	Substandard Impaired	—		—		—		222		—		49		—		271		Substandard Impaired	—		4		2,533		252		800		17,898		92		21,579
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Total	Total	$	94,318	$	23,860	$	38,058	$	25,729	$	3,995	$	15,515	$	29,349	$	230,824	Total	$	176,697	$	398,784	$	401,847	$	154,051	$	89,127	$	129,381	$	261,008	$	1,610,895
Commercial real estate - owner-occupied
Gross Charge Offs																		Gross Charge Offs	$	—	$	115	$	109	$	1,484	$	265	$	1,196	$	200	$	3,369
Consumer																		Consumer
Risk Ratings:	Risk Ratings:																	Risk Ratings:
Pass	Pass	$	205,404	$	154,432	$	179,786	$	132,353	$	125,763	$	363,986	$	10,005	$	1,171,729	Pass	$	14,874	$	81,377	$	55,690	$	22,334	$	24,501	$	23,240	$	45,045	$	267,061
Special Mention	Special Mention	—		6,527		5,370		649		218		3,250		—		16,014		Special Mention	—		1,097		870		77		220		—		85		2,349
Substandard	Substandard	—		—		—		—		3,290		1,610		—		4,900		Substandard	—		—		—		—		—		—		74		74
Substandard Impaired	Substandard Impaired	—		—		2,742		310		596		1,483		—		5,131		Substandard Impaired	—		577		1,094		62		70		533		262		2,598
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Total	Total	$	205,404	$	160,959	$	187,898	$	133,312	$	129,867	$	370,329	$	10,005	$	1,197,774	Total	$	14,874	$	83,051	$	57,654	$	22,473	$	24,791	$	23,773	$	45,466	$	272,082
Gross Charge Offs																		Gross Charge Offs	$	—	$	557	$	1,575	$	277	$	51	$	22	$	117	$	2,599
Paycheck Protection Program																		Paycheck Protection Program
Risk Ratings:																		Risk Ratings:
Pass																		Pass	$	—	$	—	$	2,211	$	2,428	$	—	$	—	$	—	$	4,639
Substandard																		Substandard	—		—		—		—		—		—		—		—
Substandard Impaired																		Substandard Impaired	—		—		—		—		—		—		—		—
Total																		Total	$	—	$	—	$	2,211	$	2,428	$	—	$	—	$	—	$	4,639
Gross Charge Offs																		Gross Charge Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consolidated																		Consolidated
Risk Ratings:																		Risk Ratings:
Pass																		Pass	$	550,202	$	2,272,009	$	2,195,151	$	851,327	$	835,706	$	2,121,966	$	1,081,488	$	9,907,849
Special Mention																		Special Mention	134		8,246		10,344		9,097		17,986		25,614		10,239		81,660
Substandard																		Substandard	—		2,259		26,218		18,302		10,999		20,402		2,690		80,870
Substandard Impaired																		Substandard Impaired	—		581		4,473		1,555		3,497		35,797		1,637		47,540
Doubtful																		Doubtful	—		—		—		—		—		—		—		—
Total																		Total	$	550,336	$	2,283,095	$	2,236,186	$	880,281	$	868,188	$	2,203,779	$	1,096,054	$	10,117,919
Gross Charge Offs																		Gross Charge Offs	$	—	$	672	$	1,684	$	1,761	$	316	$	1,377	$	535	$	6,345

2022

Table of ~~Contents~~Content s

December 31, 2021
(In thousands) 2021 2020 2019 2018 2017 Prior Revolving Total
Commercial real estate - non owner-occupied
Risk Ratings:
Pass $ 395,308 $ 207,824 $ 298,021 $ 186,339 $ 110,990 $ 460,435 $ 6,477 $ 1,665,394
Special Mention — — 844 — 289 13,850 — 14,983
Substandard — 4,776 3,009 23,206 1,900 17,266 — 50,157
Substandard Impaired — 1,044 1,849 — 326 2,686 — 5,905
Doubtful — — — — — — — —
Total $ 395,308 $ 213,644 $ 303,723 $ 209,545 $ 113,505 $ 494,237 $ 6,477 $ 1,736,439
Residential real estate
Risk Ratings:
Pass $ 394,547 $ 114,364 $ 90,566 $ 119,836 $ 118,556 $ 213,950 $ 354,439 $ 1,406,258
Special Mention — — — 70 — 1,243 532 1,845
Substandard — 340 — — 58 422 86 906
Substandard Impaired — 149 724 39 4,415 8,507 2,511 16,345
Doubtful — — — — — — — —
Total $ 394,547 $ 114,853 $ 91,290 $ 119,945 $ 123,029 $ 224,122 $ 357,568 $ 1,425,354
Commercial and financial
Risk Ratings:
Pass $ 340,826 $ 180,677 $ 97,072 $ 68,232 $ 39,331 $ 56,053 $ 246,568 $ 1,028,759
Special Mention 530 15,587 — 237 251 84 876 17,565
Substandard — 371 2,605 3,594 1,436 3,217 339 11,562
Substandard Impaired — 196 4,561 3,694 1,371 1,520 128 11,470
Doubtful — — — — — — — —
Total $ 341,356 $ 196,831 $ 104,238 $ 75,757 $ 42,389 $ 60,874 $ 247,911 $ 1,069,356
Consumer
Risk Ratings:
Pass $ 45,063 $ 31,342 $ 26,194 $ 17,300 $ 9,979 $ 16,019 $ 25,418 $ 171,315
Special Mention — 24 431 37 167 3 1,199 1,861
Substandard — — 18 — 17 — 223 258
Substandard Impaired — — 92 23 74 118 434 741
Doubtful — — — — — — — —
Total $ 45,063 $ 31,366 $ 26,735 $ 17,360 $ 10,237 $ 16,140 $ 27,274 $ 174,175
Paycheck Protection Program
Risk Ratings:
Pass $ 87,036 $ 4,071 $ — $ — $ — $ — $ — $ 91,107
Total $ 87,036 $ 4,071 $ — $ — $ — $ — $ — $ 91,107
Consolidated
Risk Ratings:
Pass $ 1,562,502 $ 716,570 $ 729,697 $ 549,567 $ 408,614 $ 1,125,909 $ 672,256 $ 5,765,115
Special Mention 530 22,138 6,645 993 925 18,430 2,607 52,268
Substandard — 5,487 5,632 26,800 6,701 22,515 648 67,783
Substandard Impaired — 1,389 9,968 4,288 6,782 14,363 3,073 39,863
Doubtful — — — — — — — —
Total $ 1,563,032 $ 745,584 $ 751,942 $ 581,648 $ 423,022 $ 1,181,217 $ 678,584 $ 5,925,029


	December 31, 2022
(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving		Total
Construction and Land Development
Risk Ratings:
Pass	$	223,204	$	209,738	$	18,239	$	24,600	$	12,783	$	19,022	$	50,960	$	558,546
Special Mention	14,523		452		—		3,153		—		—		15		18,143
Substandard	—		9,227		—		—		959		—		—		10,186
Substandard Impaired	—		52		—		—		—		405		—		457
Doubtful	—		—		—		—		—		—		—		—
Total	$	237,727	$	219,469	$	18,239	$	27,753	$	13,742	$	19,427	$	50,975	$	587,332
Commercial real estate - owner occupied
Risk Ratings:
Pass	$	215,453	$	251,638	$	180,081	$	185,286	$	121,568	$	467,963	$	32,253	$	1,454,242
Special Mention	694		—		2,363		4,403		2,548		2,869		—		12,877
Substandard	—		—		667		2,625		573		4,444		—		8,309
Substandard Impaired	—		—		—		311		294		2,269		—		2,874
Doubtful	—		—		—		—		—		—		—		—
Total	$	216,147	$	251,638	$	183,111	$	192,625	$	124,983	$	477,545	$	32,253	$	1,478,302
Commercial real estate - non-owner occupied
Risk Ratings:
Pass	$	593,364	$	530,462	$	231,693	$	331,173	$	228,077	$	575,656	$	35,326	$	2,525,751
Special Mention	—		16,257		735		5,438		—		4,975		—		27,405
Substandard	—		192		19,315		—		5,515		7,412		—		32,434
Substandard Impaired	—		—		1,044		1,849		30		1,261		—		4,184
Doubtful	—		—		—		—		—		—		—		—
Total	$	593,364	$	546,911	$	252,787	$	338,460	$	233,622	$	589,304	$	35,326	$	2,589,774
Residential real estate
Risk Ratings:
Pass	$	270,054	$	552,950	$	121,879	$	77,100	$	97,900	$	292,867	$	423,764	$	1,836,514
Special Mention	—		—		50		—		25		269		884		1,228
Substandard	—		—		—		—		—		343		85		428
Substandard Impaired	—		—		133		32		83		9,515		1,570		11,333
Doubtful	—		—		—		—		—		—		—		—
Total	$	270,054	$	552,950	$	122,062	$	77,132	$	98,008	$	302,994	$	426,303	$	1,849,503
Commercial and financial
Risk Ratings:
Pass	$	359,833	$	320,307	$	140,450	$	77,562	$	57,924	$	58,648	$	292,818	$	1,307,542
Special Mention	1,244		423		106		474		195		259		2,998		5,699
Substandard	—		67		942		6,304		1,603		1,683		13,114		23,713
Substandard Impaired	5		58		5,109		147		3,642		2,545		176		11,682
Doubtful	—		—		—		—		—		—		—		—
Total	$	361,082	$	320,855	$	146,607	$	84,487	$	63,364	$	63,135	$	309,106	$	1,348,636
Consumer
Risk Ratings:
Pass	$	93,012	$	77,889	$	27,982	$	28,772	$	11,690	$	16,480	$	29,725	$	285,550
Special Mention	—		—		—		250		2		134		30		416
Substandard	—		—		11		—		—		191		—		202
Substandard Impaired	—		—		18		55		36		103		207		419
Doubtful	—		—		—		—		—		—		—		—
Total	$	93,012	$	77,889	$	28,011	$	29,077	$	11,728	$	16,908	$	29,962	$	286,587
Paycheck Protection Program
Risk Ratings:
Pass	$	—	$	2,708	$	1,882	$	—	$	—	$	—	$	—	$	4,590

Table of Content s


	December 31, 2022
(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving		Total
Substandard	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Substandard Impaired	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total	$	—	$	2,708	$	1,882	$	—	$	—	$	—	$	—	$	4,590
Consolidated
Risk Ratings:
Pass	$	1,754,920	$	1,945,692	$	720,324	$	724,493	$	529,942	$	1,430,636	$	864,846	$	7,972,735
Special Mention	16,461		17,132		3,254		13,718		2,770		8,506		3,927		65,768
Substandard	—		9,486		20,935		8,929		8,650		14,073		13,199		75,272
Substandard Impaired	5		110		6,304		2,394		4,085		16,098		1,953		30,949
Doubtful	—		—		—		—		—		—		—		—
Total	$	1,771,386	$	1,972,420	$	750,817	$	749,534	$	545,447	$	1,469,313	$	883,925	$	8,144,724

Troubled Borrower Modifications

~~Troubled Debt Restructured Loans~~

~~The Company’s TDR concessions granted~~On January 1, 2023, the Company adopted ASU 2022-02 which includes disclosure requirements related to certain modifications of loans to borrowers ~~generally do not include forgiveness~~experiencing financial difficulty, which the Company refers to as troubled borrower modifications (“TBMs”). TBMs are typically in the form of ~~principal balances, but may include~~an interest rate ~~reductions,~~reduction, an extension of the amortization period and/or converting the loan to interest only for a limited period of time. ~~Loan modifications are not reported in calendar years after modification if the loans were modified at an interest rate equal~~In addition to the ~~yields~~change in payment terms, the Company seeks to obtain additional collateral and/or guarantors to provide additional support for the loan. The Company does not typically provide forgiveness of ~~new loan originations with comparable risk and the loans are performing based on the terms of the restructuring agreements.~~principal as a modification.

~~Table of Contents~~

~~The following table presents loans that were modified in a troubled debt restructuring during the three and sixmonths ended June 30, 2022 and June 30, 2021:~~

Three Months Ended June 30,
2022 2021
(In thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment
Construction and land development — $ — $ — — $ — $ —
Commercial real estate - owner-occupied — — — — — —
Commercial real estate - non owner-occupied — — — — — —
Residential real estate — — — 2 52 52
Commercial and financial 1 21 21 1 142 142
Consumer — — — — — —
Totals 1 $ 21 $ 21 3 $ 194 $ 194

Six Months Ended June 30,
2022 2021
(In thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment
Construction and land development — $ — $ — — $ — $ —
Commercial real estate - owner-occupied — — — — — —
Commercial real estate - non owner-occupied — — — — — —
Residential real estate 3 785 785 3 79 79
Commercial and financial 2 54 54 1 142 142
Consumer 4 23 23 — — —
Totals 9 $ 862 $ 862 4 $ 221 $ 221

~~The TDRs described above resulted in a specific allowance for credit losses of $0.1 million and $0.2 million as~~As of June 30, ~~2022~~2023, the Company had five loans classified as TBMs totaling $0.9 million, which is considered immaterial. To the extent there are additional modifications in subsequent periods, the Company will disclose additional information about the nature of the modifications, the financial effect of the modifications and ~~June 30, 2021, respectively. During~~payment defaults of TBMs in the ~~six~~12 months ~~ended June 30, 2022, there was 1~~prior to default, totaling $2 thousand on a loan that had been modified to a TDR within the preceding twelve months. During the six months ended June 30, 2021, there were 2 defaults on loans totaling $0.1 million that had been modified to a TDR within the preceding twelve months. The Company considers a loan to have defaulted when it becomes 90 days or more delinquent under the modified terms, has been transferred to nonaccrual status, is charged off or has been transferred toamong any other real estate owned. For loans measured based on the present value of expected future cash flows, $15 thousand and $6 thousand for the three months ended June 30, 2022, and 2021, respectively, and $20 thousand and $11 thousand for the six months ended June 30, 2022, and 2021, respectively, was included in interest income and represents the change in present value attributable to the passage of time.relevant disclosures.

2224

Table of ~~Contents~~Content s

Note 5 – Allowance for Credit Losses

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


		Three Months Ended June 30, 2022						Three Months Ended June 30, 2023
(In thousands)	(In thousands)	Beginning Balance		Provision for Credit Losses		Charge- Offs			Recoveries		TDR Allowance Adjustments		Ending Balance		(In thousands)	Beginning Balance		Initial Allowance on PCD Loans Acquired During the Period 1		Provision for Credit Losses		Charge- Offs		Recoveries		Ending Balance
Construction and land development	Construction and land development	$	2,268	$	230	$	—		$	54	$	—	$	2,552	Construction and land development	$	6,540	$	—	$	414	$	—	$	6	$	6,960
Commercial real estate - owner-occupied	Commercial real estate - owner-occupied	9,294		(1,918)		—			—		—		7,376		Commercial real estate - owner-occupied	6,292		—		125		—		1		6,418
Commercial real estate - non owner-occupied		43,922		2,528		—			9		—		46,459
Commercial real estate - non-owner occupied															Commercial real estate - non-owner occupied	53,575		—		423		—		105		54,103
Residential real estate	Residential real estate	14,075		648		—			112		(14)		14,821		Residential real estate	39,894		—		(3,248)		(109)		173		36,710
Commercial and financial	Commercial and financial	17,727		(500)		(253)			171		(1)		17,144		Commercial and financial	31,593		5,544		2,202		(727)		1,660		40,272
Consumer	Consumer	2,552		(166)		(199)			230		—		2,417		Consumer	17,746		—		(680)		(1,904)		90		15,252
Paycheck Protection Program		—		—		—			—		—		—

Totals	Totals	$	89,838	$	822	$	(452)		$	576	$	(15)	$	90,769	Totals	$	155,640	$	5,544	$	(764)	$	(2,740)	$	2,035	$	159,715
1 Amount represents a measurement period adjustment of a PCD loan acquired through the acquisition of Professional, see Note 11 - Business Combinations															1 Amount represents a measurement period adjustment of a PCD loan acquired through the acquisition of Professional, see Note 11 - Business Combinations


	Three Months Ended June 30, 2022
(In thousands)	Beginning Balance		Provision for Credit Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	2,268		230		—		54		—		2,552
Commercial real estate - owner occupied	9,294		(1,918)		—		—		—		7,376
Commercial real estate - non-owner occupied	43,922		2,528		—		9		—		46,459
Residential real estate	14,075		648				112		(14)		14,821
Commercial and financial	17,727		(500)		(253)		171		(1)		17,144
Consumer	2,552		(166)		(199)		230		—		2,417


Totals	$	89,838	$	822	$	(452)	$	576	$	(15)	$	90,769


	Six Months Ended June 30, 2023
(In thousands)	Beginning Balance		Initial Allowance on PCD Loans Acquired During the Period		Provision for Credit Losses		Charge- Offs		Recoveries		Ending Balance
Construction and land development	$	6,464	$	5	$	483	$	—	$	8	$	6,960
Commercial real estate - owner occupied	6,051		139		226		—		2		6,418
Commercial real estate - non-owner occupied	43,258		647		10,138		(109)		169		54,103
Residential real estate	29,605		400		6,650		(268)		323		36,710
Commercial and financial	15,648		17,527		8,616		(3,369)		1,850		40,272
Consumer	12,869		161		4,721		(2,599)		100		15,252
Totals	$	113,895	$	18,879	$	30,834	$	(6,345)	$	2,452	$	159,715

Three Months Ended June 30, 2021
(In thousands) Beginning
Balance Provision
for Credit
Losses Charge-
Offs Recoveries TDR
Allowance
Adjustments Ending
Balance
Construction and land development $ 4,428 $ (469) $ — $ 96 $ (2) $ 4,053
Commercial real estate - owner occupied 9,792 (1,116) — — — 8,676
Commercial real estate - non-owner occupied 36,229 (1,423) — 1 — 34,807
Residential real estate 14,353 (2,407) (21) 621 (3) 12,543
Commercial and financial 18,916 399 (1,564) 265 — 18,016
Consumer 2,925 161 (199) 146 (1) 3,032
Paycheck Protection Program — — — — — —
Totals $ 86,643 $ (4,855) $ (1,784) $ 1,129 $ (6) $ 81,127

Six Months Ended June 30, 2022
(In thousands) Beginning
Balance Initial Allowance on PCD Loans Acquired During the Period Provision
for Credit
Losses Charge-
Offs Recoveries TDR
Allowance
Adjustments Ending
Balance
Construction and land development $ 2,751 $ — $ (263) $ — $ 64 $ — $ 2,552
Commercial real estate - owner-occupied 8,579 — (1,203) — — — 7,376
Commercial real estate - non owner-occupied 36,617 31 9,802 — 9 — 46,459
Residential real estate 12,811 17 1,708 (1) 303 (17) 14,821
Commercial and financial 19,744 3 (2,128) (822) 348 (1) 17,144
Consumer 2,813 — (538) (294) 438 (2) 2,417
Paycheck Protection Program — — — — — —
Totals $ 83,315 $ 51 $ 7,378 $ (1,117) $ 1,162 $ (20) $ 90,769

2325

Table of ~~Contents~~Content s


		Six Months Ended June 30, 2021										Six Months Ended June 30, 2022
(In thousands)	(In thousands)	Beginning Balance		Provision for Credit Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments			Ending Balance		(In thousands)	Beginning Balance		Allowance on PCD Loans Acquired During the Period		Provision for Credit Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	Construction and land development	$	4,920	$	(979)	$	—	$	114	$	(2)		$	4,053	Construction and land development	$	2,751	$	—	$	(263)	$	—	$	64	$	—	$	2,552
Commercial real estate - owner occupied	Commercial real estate - owner occupied	9,868		(1,192)		—		—		—			8,676		Commercial real estate - owner occupied	8,579		—		(1,203)		—		—		—		7,376
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	38,266		(3,461)		—		2		—			34,807		Commercial real estate - non-owner occupied	36,617		31		9,802		—		9		—		46,459
Residential real estate	Residential real estate	17,500		(5,779)		(21)		850		(7)			12,543		Residential real estate	12,811		17		1,708		(1)		303		(17)		14,821
Commercial and financial	Commercial and financial	18,690		1,174		(2,320)		472		—			18,016		Commercial and financial	19,744		3		(2,128)		(822)		348		(1)		17,144
Consumer	Consumer	3,489		(333)		(384)		262		(2)			3,032		Consumer	2,813		—		(538)		(294)		438		(2)		2,417
Paycheck Protection Program		—		—		—		—		—			—
Totals	Totals	$	92,733	$	(10,570)	$	(2,725)	$	1,700	$	(11)		$	81,127	Totals	$	83,315	$	51	$	7,378	$	(1,117)	$	1,162	$	(20)	$	90,769

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 to project losses over a three-year forecast period.~~forecasts. Forecast data is sourced ~~primarily~~ from Moody’s Analytics (“Moody’s”), a firm widely recognized for its research, analysis, and economic forecasts. ~~For portfolio~~The forecasts of future economic conditions are over a period that has been deemed reasonable and supportable, and in segments ~~with a weighted average life~~where it can no longer ~~than three years,~~develop reasonable and supportable forecasts, the Company reverts to longer-term historical loss experience to estimate losses over the remaining life of the ~~loans within each segment.~~

Historical credit losses provide the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, loan to value ratios, borrower credit characteristics, loan seasoning or term as well as for changes in current and forecasted environmental conditions, such as changes in unemployment rates, property values, occupancy rates, and other macroeconomic metrics.loans.

As of June 30, 2023 and December 31, 2022, the Company utilized a blend of Moody’s most recent “U.S. Macroeconomic Outlook Baseline” ~~scenario~~and “Alternative Scenario 3 Downside 90th Percentile” scenarios and considered the uncertainty associated with the assumptions in ~~the Baseline scenario,~~both scenarios, including continued actions taken by the Federal Reserve with regard to monetary policy and interest rates and the potential impact of those actions, the ongoing Russia-Ukraine conflict and the magnitude of the resulting market disruption, ~~and~~ the potential impact of persistent high inflation on economic ~~growth.~~growth and expectations around a recession occurring over the next 12 to 24 months. Outcomes in any or all of these factors could differ from the ~~Baseline scenario,~~scenarios identified above, and the Company incorporated qualitative considerations reflecting the risk of uncertain economic conditions, and for additional dimensions of risk not captured in the quantitative model.

The following section discusses changes in the level of ~~reserves~~the allowance for credit losses for the three months ended June 30, ~~2022.~~2023.

In the Construction and Land Development segment, the increase in ~~reserves reflects~~the allowance is attributed to higher loan ~~balances, partially offset by continuing low historical loss rates for this segment.~~balances. In this segment, the primary source of repayment is typically from proceeds of the sale, refinancing, or permanent financing of the underlying property; therefore, industry and collateral type and estimated collateral values are among the relevant factors in assessing expected losses.

In the Commercial Real Estate - Owner-Occupied segment, the ~~decrease~~increase in the allowance reflects ~~lower~~higher loan ~~balances, changes in the proportion of loan types in this category, and lower specific reserves.~~balances. Risk characteristics include but are not limited to, collateral type, note structure and loan ~~seasoning, and note structure.~~seasoning.

In the Commercial Real Estate - Non Owner-Occupied segment, the increase in ~~reserves reflects higher~~the allowance is attributed to changes in economic forecast variables for commercial real estate, partially offset by lower loan ~~balances and the impact of considerations of the increasing risk of economic recession on loans in this category.~~balances. Repayment is often dependent upon rental income from the successful operation of the underlying property. Loan performance may be adversely affected by general economic conditions or conditions specific to the real estate market, including property types. Collateral type, note structure and loan seasoning ~~and note structure~~ are among the risk characteristics analyzed for this segment.

The Residential Real Estate segment includes first mortgages secured by residential property, and home equity lines of credit. The ~~increase~~decrease in ~~reserves reflects~~ the ~~impact of~~allowance is due to continued resilience in economic indicators relevant to the Florida housing market. partially offset by higher loan balances. Risk characteristics considered for this segment include, but are not limited to, ~~collateral type, note structure,~~borrower FICO score, lien position, loan to value ratios and loan seasoning.

In the Commercial and Financial segment, borrowers are primarily small to medium sized professional firms and other businesses, and loans are generally supported by projected cash flows of the business, collateralized by business assets, and/or guaranteed by the business owners. The ~~decrease~~increase in reserves is primarily attributed to ~~lower loan balances and lower specific reserves.~~

~~Table of Contents~~

higher reserves on individually evaluated loans. Industry, collateral type, estimated collateral values and loan seasoning are among the relevant factors in assessing expected losses.

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Consumer loans include installment and revolving lines, loans for automobiles, boats, and other personal or family purposes. Risk characteristics considered for this segment include, but are not limited to, collateral type, loan to value ratios, loan seasoning and FICO score. The ~~decline~~decrease in the ~~reserve reflects continuing low historical loss rates and an increasing proportion of seasoned loans in this segment.~~

~~Balances outstanding under the Paycheck Protection Program are guaranteed by the U.S. government and have not been assigned a reserve.~~allowance is primarily due to lower loan balances.

The allowance for credit losses is composed of specific allowances for loans individually evaluated and general allowances for loans grouped into loan pools based on similar characteristics, which are collectively evaluated. The Company’s loan portfolio and related allowance at June 30, ~~2022~~2023 and December 31, ~~2021 is~~2022 are shown in the following tables:


		June 30, 2022													June 30, 2023
		Individually Evaluated				Collectively Evaluated				Total					Individually Evaluated				Collectively Evaluated				Total
(In thousands)	(In thousands)	Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		(In thousands)	Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance
Construction and land development	Construction and land development	$	16	$	—	$	350,009	$	2,552	$	350,025	$	2,552	Construction and land development	$	430	$	107	$	793,941	$	6,853	$	794,371	$	6,960
Commercial real estate - owner occupied	Commercial real estate - owner occupied	2,714		48		1,251,629		7,328		1,254,343		7,376		Commercial real estate - owner occupied	6,261		15		1,663,108		6,403		1,669,369		6,418
Commercial real estate - non owner-occupied		7,331		741		1,965,209		45,718		1,972,540		46,459
Commercial real estate - non-owner occupied														Commercial real estate - non-owner occupied	8,670		318		3,361,541		53,785		3,370,211		54,103
Residential real estate	Residential real estate	12,971		297		1,634,494		14,524		1,647,465		14,821		Residential real estate	11,775		22		2,384,577		36,688		2,396,352		36,710
Commercial and financial	Commercial and financial	8,969		2,185		1,115,802		14,959		1,124,771		17,144		Commercial and financial	40,162		20,009		1,575,372		20,263		1,615,534		40,272
Consumer	Consumer	548		474		174,653		1,943		175,201		2,417		Consumer	2,271		2,081		269,811		13,171		272,082		15,252
Paycheck Protection Program		—		—		17,203		—		17,203		—
Totals	Totals	$	32,549	$	3,745	$	6,508,999	$	87,024	$	6,541,548	$	90,769	Totals	$	69,569	$	22,552	$	10,048,350	$	137,163	$	10,117,919	$	159,715


		December 31, 2021													December 31, 2022
		Individually Evaluated				Collectively Evaluated				Total					Individually Evaluated				Collectively Evaluated				Total
(In thousands)	(In thousands)	Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		(In thousands)	Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance
Construction and land development	Construction and land development	$	271	$	92	$	230,553	$	2,659	$	230,824	$	2,751	Construction and land development	$	59	$	—	$	587,273	$	6,464	$	587,332	$	6,464
Commercial real estate - owner occupied	Commercial real estate - owner occupied	5,131		419		1,192,643		8,160		1,197,774		8,579		Commercial real estate - owner occupied	3,346		41		1,474,956		6,010		1,478,302		6,051
Commercial real estate - non owner-occupied		5,905		27		1,730,534		36,590		1,736,439		36,617
Commercial real estate - non-owner occupied														Commercial real estate - non-owner occupied	4,183		230		2,585,591		43,028		2,589,774		43,258
Residential real estate	Residential real estate	16,345		646		1,409,009		12,165		1,425,354		12,811		Residential real estate	11,333		275		1,838,170		29,330		1,849,503		29,605
Commercial and financial	Commercial and financial	11,470		2,885		1,057,886		16,859		1,069,356		19,744		Commercial and financial	12,167		2,639		1,341,059		13,009		1,353,226		15,648
Consumer	Consumer	741		685		173,434		2,128		174,175		2,813		Consumer	426		362		286,161		12,507		286,587		12,869
Paycheck Protection Program		—		—		91,107		—		91,107		—
Totals	Totals	$	39,863	$	4,754	$	5,885,166	$	78,561	$	5,925,029	$	83,315	Totals	$	31,514	$	3,547	$	8,113,210	$	110,348	$	8,144,724	$	113,895

~~Table of Contents~~

Note 6 – Derivatives

Back-to-Back Swaps

The Company offers interest rate swaps when requested by customers to allow them to hedge the risk of rising interest rates on their variable rate loans. Upon entering into these swaps, the Company enters into offsetting positions with counterparties in order to minimize the interest rate risk. These back-to-back swaps qualify as freestanding financial derivatives with the fair values reported in ~~other assets~~Other Assets and ~~other liabilities.~~Other Liabilities. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under the arrangements for financial statement presentation purposes. Gains and losses on these back-to-back swaps, which offset, are recorded through noninterest income. No net gains or losses have been recognized to date on these instruments. As of June 30, 2023, the interest rate swaps had an aggregate notional value of $457.2 million, with a fair value of $29.0 million recorded in Other Assets and Other Liabilities. As of December 31, 2022, the interest rate swaps had an aggregate notional value of ~~$253.5~~$312.8 million, with a fair value of ~~$9.3~~$23.1 million recorded in ~~other assets~~Other Assets and ~~other liabilities. As of December 31, 2021, the interest rate swaps had an aggregate notional value of $175.4 million, with a fair value of $8.0 million recorded in other assets and other liabilities.~~Other Liabilities. The weighted average maturity was 6.7 years at both June 30, ~~2022~~2023 and ~~6.7 years~~ at December 31, ~~2021.~~2022.

Interest Rate Floors Designated as Cash Flow Hedges

The Company has entered into interest rate floor contracts to mitigate exposure to the variability of future cash flows due to changes in interest rates on certain segments of its variable-rate loans. During 2020, the Company entered into 2two interest rate floor contracts, each with a notional amount of $150.0 million, maturing in October 2023 and November ~~2023.~~2023, respectively. The Company considers these derivatives to be highly effective at achieving offsetting changes in cash flows attributable to

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changes in interest rates and has designated them as cash flow hedges. Therefore, changes in the fair value of these derivative instruments are recognized in other comprehensive income. Amortization of the premium paid on cash flow hedges is recognized in earnings over the term of the hedge in the same caption as the hedged item. As of June 30, 2023 and December 31, 2022, the interest rate floors had a nominal fair value. For the three and six months ended June 30, 2023, the Company recognized nominal amounts through other comprehensive income, and reclassified $0.2 million and $0.3 million, respectively, out of accumulated other comprehensive income and into interest income. For the three and six months ended June 30, 2022, the Company recognized a loss through other comprehensive income of $0.1 million and $0.2 million, respectively, and reclassified $0.1 million and $0.2 million, respectively, out of accumulated other comprehensive income and into interest income. ~~As of June 30, 2022 and December 31, 2021, the interest rate floors had a fair value of $41 thousand and $290 thousand, respectively, recorded in other assets in the consolidated balance sheet. Over~~During the next twelve months, the Company expects to reclassify ~~$0.5~~$0.3 million from accumulated other comprehensive income into interest income related to these agreements.

(In thousands) Notional Amount Fair Value Balance Sheet Category
At June 30, 2022
Back-to-back swaps $ 253,524 $ 9,320 Other Assets and Other Liabilities
Interest rate floors 300,000 41 Other Assets
At December 31, 2021
Back-to-back swaps $ 175,392 $ 8,022 Other Assets and Other Liabilities
Interest rate floors 300,000 290 Other Assets
Interest Rate Swaps Designated as Fair Value Hedges

During the three months ended June 30, 2023, the Company entered into two interest rate swap contracts to hedge the risk of changes in fair value of the AFS portfolio due to changes in the Secured Overnight Financing Rate (“SOFR”) interest rate. Each fair value hedge utilizes the portfolio layer method hedge designation type for a notional amount of $200 million, maturing April 2025. The Company considers these derivatives to be highly effective at offsetting changes in interest rates and will assess the effectiveness on a monthly basis. Therefore, changes in interest rates affecting the fair value of these derivative contracts are recognized in other comprehensive income. These derivative instruments are primarily for risk management purposes. As of June 30, 2023, the interest rate swaps had a notional value of $400 million with a fair value of $6.2 million. For the three months ended June 30, 2023, the Company recognized gains through other comprehensive income of $6.3 million, and reclassified $0.1 million out of accumulated other comprehensive income and into interest income.


(In thousands)	Notional Amount		Fair Value		Balance Sheet Category
At June 30, 2023
Back-to-back swaps	$	457,193	$	29,007	Other Assets and Other Liabilities
Interest rate floors	300,000		—		Other Assets
Fair value hedges	400,000		6,232		Other Assets

At December 31, 2022
Back-to-back swaps	$	312,808	$	23,140	Other Assets and Other Liabilities
Interest rate floors	300,000		2		Other Assets

The following table presents amounts recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges.


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

(In thousands)	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Available-for-sale securities 1	$	609,295	$	—	$	6,338	$	—
1 At June 30, 2023, and December 31, 2022, the amortized cost basis and unallocated basis adjustments used in hedging relationships was $718.2 million and $0, respectively. Refer to Note 3 for a reconciliation of the amortized cost and fair value of available-for-sale securities.

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Note 7 – Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase are accounted for as secured borrowings. For securities sold under agreements to repurchase, the Company is required to pledge collateral with value sufficient to fully collateralize borrowings. Company securities pledged were as follows by collateral type and maturity as of:

(In thousands)

June 30, 2022

December 31, 2021

(In thousands)

June 30, 2023

December 31, 2022

Fair value of pledged securities - overnight and continuous:

Mortgage-backed securities and collateralized mortgage obligations of U.S. government sponsored entities

139,805

134,577

Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities

351,890

184,967

~~Table of Contents~~

Note 8 – Equity Capital

The Company is ~~well capitalized~~well-capitalized and at June 30, ~~2022,~~2023, the Company and the Company’s principal banking subsidiary, Seacoast Bank, exceeded the common equity Tier 1 (CET1) capital ratio regulatory threshold of 6.5% for well-capitalized institutions under the Basel III standardized transition approach, as well as risk-based and leverage ratio requirements for ~~well capitalized~~well-capitalized banks under the regulatory framework for prompt corrective action.

Note 9 – Contingent Liabilities

The Company and its subsidiaries, because of the nature of their business, are at all times subject to numerous legal actions, threatened or filed. Management presently believes that none of the legal proceedings to which it is a party are likely to have a materially adverse effect on the Company’s consolidated financial condition, operating results or cash flows.

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Note 10 – Fair Value

Under ASC Topic 820, fair value measurements for items measured at fair value on a recurring and nonrecurring basis at June 30, ~~2022~~2023 and December 31, ~~2021~~2022 included:


(In thousands)	(In thousands)	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(In thousands)		Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2022
At June 30, 2023										At June 30, 2023
Financial Assets	Financial Assets									Financial Assets
Available-for-sale debt securities1	Available-for-sale debt securities1	$	1,800,791	$	189	$	1,800,602	$	—	Available-for-sale debt securities1		$	1,916,231	$	187	$	1,916,044	$	—
Derivative financial instruments2	Derivative financial instruments2	9,361		—		9,361		—		Derivative financial instruments2		35,240		—		35,240		—
Loans held for sale2	Loans held for sale2	14,205		—		14,205		—		Loans held for sale2		5,967		—		5,967		—
Loans3	Loans3	5,300		—		1,343		3,957		Loans3		20,391		—		1,105		19,286
Other real estate owned4	Other real estate owned4	2,419		—		2,419		—		Other real estate owned4		7,526		—		7,526		—
Equity securities5	Equity securities5	8,564		8,564		—		—		Equity securities5		13,507		13,507		—		—
Financial Liabilities	Financial Liabilities									Financial Liabilities
Derivative financial instruments2	Derivative financial instruments2	$	9,320	$	—	$	9,320	$	—	Derivative financial instruments2		$	29,007	$	—	$	29,007	$	—

At December 31, 2021
At December 31, 2022										At December 31, 2022	At
Financial Assets	Financial Assets									Financial Assets
Available-for-sale debt securities1	Available-for-sale debt securities1	$	1,644,319	$	197	$	1,644,122	$	—	Available-for-sale debt securities1		$	1,871,742	$	186	$	1,871,556	$	—
Derivative financial instruments2	Derivative financial instruments2	8,312		—		8,312		—		Derivative financial instruments2		23,142		—		23,142		—
Loans held for sale2	Loans held for sale2	31,791		—		31,791		—		Loans held for sale2		3,151		—		3,151		—
Loans3	Loans3	8,443		—		1,558		6,885		Loans3		8,513		—		1,183		7,330
Other real estate owned4	Other real estate owned4	13,618		—		—		13,618		Other real estate owned4		2,301		—		2,301		—
Equity securities5	Equity securities5	9,316		9,316		—		—		Equity securities5		8,220		8,220		—		—
Financial Liabilities	Financial Liabilities									Financial Liabilities
Derivative financial instruments2	Derivative financial instruments2	$	8,022	$	—	$	8,022	$	—	Derivative financial instruments2		$	23,142	$	—	$	23,142	$	—
1See “Note 3 – Securities” for further detail of fair value of individual investment categories.
1See “Note 3 – Securities” for further detail of fair value of individual investment categories.										1See “Note 3 – Securities” for further detail of fair value of individual investment categories.
2Recurring fair value basis determined using observable market data.	2Recurring fair value basis determined using observable market data.									2Recurring fair value basis determined using observable market data.
3See “Note 4 – Loans.” Nonrecurring fair value adjustments to collateral-dependent loans reflect full or partial write-downs that are based on current appraised values of the collateral in accordance with ASC Topic 310.
3See “Note 4 – Loans.” Nonrecurring fair value adjustments to collateral-dependent loans reflect full or partial write-downs that are based on current appraised values of the collateral in accordance with ASC Topic 310.										3See “Note 4 – Loans.” Nonrecurring fair value adjustments to collateral-dependent loans reflect full or partial write-downs that are based on current appraised values of the collateral in accordance with ASC Topic 310.
4Fair value is measured on a nonrecurring basis in accordance with ASC Topic 360.	4Fair value is measured on a nonrecurring basis in accordance with ASC Topic 360.									4Fair value is measured on a nonrecurring basis in accordance with ASC Topic 360.
5An investment in shares of a mutual fund that invests primarily in CRA-qualified debt securities, reported at fair value in Other Assets. Recurring fair value basis is determined using market quotations.
5Investment in shares of mutual funds that invest primarily in CRA-qualified debt securities, reported at fair value in Other Assets. Recurring fair value basis is determined using market quotations.										5Investment in shares of mutual funds that invest primarily in CRA-qualified debt securities, reported at fair value in Other Assets. Recurring fair value basis is determined using market quotations.

Available-for-sale debt securities: Level 1 securities consist of U.S. Treasury securities. Other securities are reported at fair value utilizing Level 2 inputs. The estimated fair value of a security is determined 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 Company reviews the prices supplied by independent pricing services, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. The fair value of collateralized loan obligations is determined from broker quotes. From time to time, the Company will validate, on a sample basis, prices supplied by the independent pricing service by comparison to prices obtained from other brokers and third-party sources or derived using internal models.

Derivative financial instruments: The Company offers interest rate swaps to certain loan customers to allow them to hedge the risk of rising interest rates on their variable rate loans. The Company originates a variable rate loan and enters into a variable-to-fixed interest rate swap with the customer. The Company also enters into an offsetting swap with a correspondent bank. These back-to-back agreements are intended to offset each other and allow the Company to originate a variable rate loan, while

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providing a contract for fixed interest payments for the customer. The fair value of these derivatives is based on a discounted cash flow approach. Due to the observable nature of the inputs used in deriving the fair value of these derivative contracts, the valuation of interest rate swaps is classified as Level 2. Other derivatives ~~consist of interest rate floors designated as cash flow hedges.~~are also classified within Level 2. The fair values of these instruments are 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 creditworthiness of the counterparties. ~~Interest rate floors designated as cash flow hedges are classified within Level 2.~~

Loans held for sale: Fair values are based upon estimated values to be received from independent third party purchasers. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Fair market value changes occur due to changes in interest rates, the borrower’s credit, the secondary loan market and the market for a borrower’s debt. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. None of the loans were 90 days or more past due or on nonaccrual as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

The aggregate fair value and contractual balance of loans held for sale as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 is as follows:


(In thousands)	(In thousands)	June 30, 2022		December 31, 2021		(In thousands)	June 30, 2023		December 31, 2022
Aggregate fair value	Aggregate fair value	$	14,205	$	31,791	Aggregate fair value	$	5,967	$	3,151
Contractual balance	Contractual balance	13,746		30,963		Contractual balance	5,757		3,071
Excess	Excess	459		828		Excess	210		80

Loans: Loans ~~measured~~carried at fair value consist of collateral-dependent real estate loans. Fair value is based on recent real estate appraisals ~~less estimated costs of sale. These~~and evaluations may use either a single valuation approach or a combination of approaches, such as comparative sales, cost and/or income approach. A significant unobservable input in the income approach is the estimated capitalization rate for a given piece of collateral. At June 30, ~~2022~~2023, capitalization rates utilized to determine fair value of the underlying collateral averaged approximately ~~6.9%~~6.7%. Adjustments to comparable sales may be made by an appraiser to reflect local market conditions or other economic factors and may result in changes in the fair value of an asset over time. AsIf such adjustments are made, the fair value of these loans is considered ~~level~~Level 3 in the fair value hierarchy. Collateral-dependent loans measured at fair value totaled ~~$9.0~~$43.3 million with a specific reserve of ~~$3.7~~$23.0 million at June 30, ~~2022,~~2023, compared to ~~$13.1~~$10.2 million with a specific reserve of ~~$4.7~~$2.9 million at December 31, ~~2021.~~2022.

For loans classified as Level 3, changes included loan additions of $18.9 million offset by $6.9 million in paydowns and charge-offs for the six months ended June 30, 2023.

Other real estate owned: When appraisals are used to determine fair value and the appraisals are based on a market approach, the fair value of other real estate owned (“OREO”) is classified as a Level 2 input. When the fair value of OREO is based on appraisals which require significant adjustments to market-based valuation inputs or apply an income approach based on unobservable cash flows, the fair value of OREO is classified as Level 3.

Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company’s monthly and/or quarterly valuation process. During the three and six months ended June 30, ~~2022, an updated appraisal was obtained on a former branch property, and the value was transferred from Level 3 to Level 2. There~~2023, there were no ~~transfers during the six months ended June 30, 2021.~~such transfers.

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The carrying amount and fair value of the Company’s other financial instruments that were not disclosed previously in the balance sheet and for which carrying amount is not fair value as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 is as follows:


(In thousands)	(In thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(In thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2022
June 30, 2023										June 30, 2023
Financial Assets	Financial Assets									Financial Assets
Debt securities held-to-maturity1	Debt securities held-to-maturity1	$	794,785	$	—	$	706,170	$	—	Debt securities held-to-maturity1	$	707,812	$	—	$	577,586	$	—
Time deposits with other banks	Time deposits with other banks	4,730		—		4,598		—		Time deposits with other banks	2,987		—		2,741		—
Loans, net	Loans, net	6,445,479		—		—		6,511,612		Loans, net	9,937,813		—		—		9,756,252
Financial Liabilities	Financial Liabilities									Financial Liabilities
Deposit liabilities	Deposit liabilities	9,188,953		—		—		9,182,221		Deposit liabilities	12,283,267		—		—		12,270,266
Federal Home Loan Bank (“FHLB”) borrowings										Federal Home Loan Bank (“FHLB”) borrowings	160,000		—		—		160,163
Subordinated debt, net										Subordinated debt, net	105,970		—		98,048		—

Subordinated debt		71,786		—		69,484		—
December 31, 2022										December 31, 2022

December 31, 2021
Financial Assets
Debt securities held-to-maturity1	Debt securities held-to-maturity1	$	638,640	$	—	$	627,398	$	—	Debt securities held-to-maturity1	$	747,408	$	—	$	617,741	$	—

Time deposits with other banks										Time deposits with other banks	3,236		—		2,989		—
Loans, net	Loans, net	5,833,271		—		—		5,907,447		Loans, net	8,022,316		—		—		7,845,375
Financial Liabilities	Financial Liabilities									Financial Liabilities
Deposit liabilities	Deposit liabilities	8,067,589		—		—		8,067,995		Deposit liabilities	9,981,595		—		—		9,976,125

Federal Home Loan Bank (“FHLB”) borrowings										Federal Home Loan Bank (“FHLB”) borrowings	150,000		—		—		149,450
Subordinated debt	Subordinated debt	71,646		—		69,348		—		Subordinated debt	84,533		—		82,226		—
1See “Note 3 – Securities” for further detail of individual investment categories.
1See “Note 3 – Securities” for further detail of recurring fair value basis of individual investment categories.										1See “Note 3 – Securities” for further detail of recurring fair value basis of individual investment categories.

The short maturity of Seacoast’s assets and liabilities results in having a significant number of financial instruments whose fair value equals or closely approximates carrying value. Such financial instruments are reported in the following balance sheet captions: cash and due from banks, interest bearing deposits with other banks, short-term FHLB borrowings and securities sold under agreements to ~~repurchase, maturing within 30 days.~~repurchase.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value at June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

Held-to-maturity debt securities: These debt securities are reported at fair value utilizing ~~level~~Level 2 inputs. The estimated fair value of a security is determined 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 Company reviews the prices supplied by independent pricing services, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. From time to time, the Company will validate, on a sample basis, prices supplied by the independent pricing service by comparison to prices obtained from other brokers and third-party sources or derived using internal models.

Loans: Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, such as commercial or mortgage. Each loan category is further segmented into fixed and adjustable-rate interest terms as well as performing and nonperforming categories. The fair value of loans is calculated by discounting scheduled cash flows through the estimated life including prepayment considerations, using estimated market discount rates that reflect the risks inherent in the loan. The fair value approach considers market-driven variables including credit related factors and reflects an “exit price” as defined in ASC Topic 820.

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Deposit liabilities: The fair value of demand deposits, savings accounts and money market deposits is the amount payable at the reporting date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for funding of similar remaining maturities.

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Note 11 – Business Combinations

Acquisition of ~~Business Bank of Florida,~~Professional Holding Corp.

On January ~~3, 2022,~~31, 2023, the Company completed its acquisition of ~~Business Bank of Florida,~~Professional Holding Corp., (“~~BBFC”~~Professional”). Simultaneously, upon completion of the merger of ~~BBFC~~Professional and the Company, ~~BBFC’s wholly owned subsidiary bank, Florida Business~~Professional Bank was merged with and into Seacoast Bank. Prior to the acquisition, ~~Florida Business~~Professional Bank operated ~~1 branch in Melbourne,~~nine branches across South Florida.

~~As a result of this acquisition, the Company expects to expand its customer base and leverage operating cost through economies of scale, and positively affect~~ The transaction further expands the Company’s ~~operating results.~~

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 acquired 100% of the outstanding common stock of ~~BBFC.~~Professional. Under the terms of the ~~definitive~~merger agreement, Professional shareholders received 0.8909 shares of Seacoast common stock for each share of ~~BBFC~~Professional common stock ~~was converted into~~held immediately prior to the ~~right~~merger, and Professional option holders received options to ~~receive 0.7997 of a share of~~purchase Seacoast common ~~stock.~~stock, with the number of shares underlying each such option and the applicable exercise price adjusted using the same 0.8909 exchange ratio.


(In thousands, except per share data)		January ~~3, 2022~~31, 2023
Number of ~~BBFC~~Professional common shares outstanding	~~1,112~~
14,358
Per share exchange ratio		~~0.7997~~0.8909
Number of shares of SBCF common stock issued		~~889~~12,792
Multiplied by common stock price per share onat January ~~3, 2022~~31, 2023		$	~~35.39~~32.11
Value of SBCF common stock issued		~~31,480~~$	410,738
Cash paid for fractional shares		5
Fair value of Professional options converted		~~497~~10,304
Total purchase price		$	~~31,977~~421,047

The acquisition of ~~BBFC~~Professional was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The Company recognized goodwill of ~~$8.0~~$252.4 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. The fair values initially assigned to assets acquired and liabilities assumed are preliminary and could change for up to one year after the closing date of the acquisition as new information and circumstances relative to closing date fair values becomes known.

As part of the acquisition of Professional, options were granted to replace outstanding Professional options. These options were fully vested upon acquisition. The full value of the replacement options, $10.3 million, was associated with pre-combination service and was therefore included in the calculation of the total purchase consideration.

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	Initially Measured		Measurement		As Adjusted
(In thousands)	January 31, 2023		Period Adjustments		January 31, 2023
Assets:
Cash and cash equivalents	$	141,680	$	—	$	141,680
Investment securities	167,059		—		167,059
Loans	1,991,713		(5,544)		1,986,169
Bank premises and equipment	2,478		—		2,478
Core deposit intangibles	48,885		—		48,885
Goodwill	248,091		4,288		252,379
BOLI	55,071		—		55,071
Other Assets	74,232		1,256		75,488
Total Assets	$	2,729,209	$	—	$	2,729,209

Liabilities:
Deposits	$	2,119,341	$	—	$	2,119,341
Subordinated debt	21,141		—		21,141
Other Liabilities	167,680		—		167,680
Total Liabilities	$	2,308,162	$	—	$	2,308,162

The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date.


	January 31, 2023
(In thousands)	Book Balance		Fair Value
Loans:
Construction and land development	$	156,048	$	151,012
Commercial real estate - owner occupied	293,473		274,068
Commercial real estate - non-owner occupied	752,393		692,746
Residential real estate	509,305		483,611
Commercial and financial	392,396		350,628
Consumer	33,656		32,153
PPP Loans	1,951		1,951
Total acquired loans	$	2,139,222	$	1,986,169

The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination:


(In thousands)	January 31, 2023
Book balance of loans at acquisition	$	155,031
Allowance for credit losses at acquisition	(18,879)
Non-credit related discount	(12,361)
Total PCD loans acquired	$	123,791

The acquisition of Professional resulted in the addition of $45.5 million in allowance for credit losses, including the $18.9 million identified in the table above for PCD loans, and $26.6 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition. Included within the $18.9 million initial PCD allowance is $5.5 million recorded as a measurement period adjustment during the three months ended June 30, 2023, reflecting information obtained by the Company relating to events or circumstances existing at the acquisition date.

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The Company believes the deposits assumed in the acquisition have an intangible value. In determining the valuation amount, deposits were analyzed based on factors such as type of deposit, deposit retention, interest rates and age of deposit relationships.

Acquisition of Apollo Bancshares, Inc.

On October 7, 2022, the Company completed its acquisition of Apollo Bancshares, Inc. (“Apollo”). Simultaneously, upon completion of the merger of Apollo and the Company, Apollo Bank was merged with and into Seacoast Bank. Prior to the acquisition, Apollo Bank operated five branches in Miami-Dade County.

As a result of this acquisition, the Company expects to expand its customer base and leverage operating costs through economies of scale, and positively affect the Company’s operating results.

Apollo shareholders received 1.006529 shares of Seacoast common stock for each share of Apollo common stock, and the minority interest holders in Apollo Bank received 1.195651 shares of Seacoast common stock for each share of Apollo Bank common stock.


(In thousands, except per share data)	October 7, 2022
Number of Apollo common shares outstanding	3,766
Per share exchange ratio	1.0065
Number of shares of SBCF common stock issued	3,791
Number of Apollo Bank minority interest shares outstanding	609
Per share exchange ratio	1.1957
Number of shares of SBCF common stock issued	728
Total number of shares of SBCF common stock issued	4,519
Multiplied by common stock price per share at October 7, 2022	$	30.83
Value of SBCF common stock issued	$	139,307
Cash paid for fractional shares	5
Fair value of Apollo options and warrants converted	6,530
Total purchase price	$	145,842

The acquisition of Apollo was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The Company recognized goodwill of $90.3 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. The fair values initially assigned to assets acquired and liabilities assumed are preliminary and could change for up to one year after the closing date of the acquisition as new information and circumstances relative to closing date fair values becomes known.

As part of the acquisition of Apollo, options and warrants were granted to replace outstanding Apollo awards. These awards were fully vested upon acquisition. The full value of the replacement awards, $6.5 million, was associated with pre-combination service and was therefore included in the calculation of the total purchase consideration.

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	Initially Measured		Measurement		As Adjusted
(In thousands)	October 7, 2022		Period Adjustments		October 7, 2022
Assets:
Cash and cash equivalents	$	41,001	$	—	$	41,001
Investment securities	203,596		—		203,596
Loans	666,522		—		666,522
Bank premises and equipment	7,809		—		7,809
Core deposit intangibles	28,699		—		28,699
Goodwill	90,237		81		90,318
Other Assets	52,724		(81)		52,643
Total Assets	$	1,090,588	$	—	$	1,090,588

Liabilities:
Deposits	$	854,774	$	—	$	854,774
Other Liabilities	89,972		—		89,972
Total Liabilities	$	944,746	$	—	$	944,746

The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date.


	October 7, 2022
(In thousands)	Book Balance		Fair Value
Loans:
Construction and land development	$	74,126	$	70,654
Commercial real estate - owner occupied	131,093		121,600
Commercial real estate - non-owner occupied	374,673		340,561
Residential real estate	76,254		75,957
Commercial and financial	50,125		46,695
Consumer	11,307		11,055
Total acquired loans	$	717,578	$	666,522

The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination:


(In thousands)	October 7, 2022
Book balance of loans at acquisition	$	107,744
Allowance for credit losses at acquisition	(2,658)
Non-credit related discount	(14,191)
Total PCD loans acquired	$	90,895

The acquisition of Apollo resulted in the addition of $7.8 million in allowance for credit losses, including the $2.7 million identified in the table above for PCD loans, and $5.1 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition.

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Acquisition of Drummond Banking Company.

On October 7, 2022, the Company completed its acquisition of Drummond Banking Company (“Drummond”). Simultaneously, upon completion of the merger of Drummond and the Company, Drummond’s wholly owned subsidiary bank, Drummond Community Bank, was merged with and into Seacoast Bank. Prior to the acquisition, Drummond Community Bank operated 18 branches across North Florida.

As a result of this acquisition, the Company expects to expand its customer base and leverage operating cost through economies of scale, and positively affect the Company’s operating results. The Company acquired 100% of the outstanding common stock of Drummond. Under the terms of the definitive agreement, common stock was converted into the right to receive 51.9561 shares of Seacoast common stock.


(In thousands, except per share data)	October 7, 2022
Number of Drummond common shares outstanding	99
Per share exchange ratio	51.9561
Number of shares of SBCF common stock issued	5,136
Multiplied by common stock price per share at October 7, 2022	$	30.83
Total purchase price	$	158,332

The acquisition of Drummond was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The Company recognized goodwill of $103.6 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. The fair values initially assigned to assets acquired and liabilities assumed are preliminary and could change for up to one year after the closing date of the acquisition as new information and circumstances relative to closing date fair values becomes known.


	Initially Measured		Measurement		As Adjusted
(In thousands)	October 7, 2022		Period Adjustments		October 7, 2022
Assets:
Cash and cash equivalents	$	31,805	$	—	$	31,805
Investment securities	327,852		—		327,852
Loans	544,694		—		544,694
Bank premises and equipment	29,370		—		29,370
Core deposit and other intangibles	32,983		—		32,983
Goodwill	103,476		145		103,621
Other Assets	49,812		(145)		49,667
Total Assets	$	1,119,992	$	—	$	1,119,992

Liabilities:
Deposits	$	881,281	$	—	$	881,281
Other Liabilities	80,379		—		80,379
Total Liabilities	$	961,660	$	—	$	961,660

The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date.

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	October 7, 2022
(In thousands)	Book Balance		Fair Value
Loans:
Construction and land development	$	155,041	$	140,401
Commercial real estate - owner occupied	112,768		106,152
Commercial real estate - non-owner occupied	26,520		24,744
Residential real estate	85,767		78,663
Commercial and financial	88,026		82,067
Consumer	118,880		112,667
Total acquired loans	$	587,002	$	544,694

The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination:


(In thousands)	October 7, 2022
Book balance of loans at acquisition	$	58,878
Allowance for credit losses at acquisition	(2,566)
Non-credit related discount	(4,607)
Total PCD loans acquired	$	51,705

The acquisition of Drummond resulted in the addition of $12.5 million in allowance for credit losses, including the $2.6 million identified in the table above for PCD loans, and $9.9 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition.

Acquisition of Business Bank of Florida, Corp.

On January 3, 2022, the Company completed its acquisition of Business Bank of Florida, Corp., (“BBFC”). Simultaneously, upon completion of the merger of BBFC and the Company, BBFC’s wholly owned subsidiary bank, Florida Business Bank, was merged with and into Seacoast Bank. Prior to the acquisition, Florida Business Bank operated one branch in Melbourne, Florida.

As a result of this acquisition, the Company expects to expand its customer base and leverage operating cost through economies of scale, and positively affect the Company’s operating results.

The Company acquired 100% of the outstanding common stock of BBFC. Under the terms of the definitive agreement, each share of BBFC common stock was converted into the right to receive 0.7997 of a share of Seacoast common stock.


(In thousands, except per share data)	January 3, 2022
Number of BBFC common shares outstanding	1,112

Per share exchange ratio	0.7997
Number of shares of SBCF common stock issued	889
Multiplied by common stock price per share on January 3, 2022	$	35.39
Value of SBCF common stock issued	$	31,480

Fair value of BBFC options converted	497
Total purchase price	$	31,977

The acquisition of BBFC was accounted for under the acquisition method in accordance with ASC Topic 805, Business Combinations. The Company recognized goodwill of $8.0 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values.

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As part of the BBFC acquisition, ~~52,432~~ options were granted to replace outstanding BBFC options. These options ~~had a weighted average exercise price of $26.63 and~~ were fully vested upon acquisition. ~~In accordance with ASC Topic 805,~~ ~~Business Combinations, the~~The full value of the replacement ~~awards~~options, $0.5 million, was associated with pre-combination service ~~$0.5 million,~~and was ~~considered~~therefore included in the calculation of the total purchase consideration.


(In thousands)	~~Initially~~ Measured January 3, 2022
Assets:
Cash	$	38,332
Investment securities	26,011
Loans	121,774
Bank premises and equipment	2,102
Core deposit intangibles	2,621
Goodwill	7,962
Total assets	$	198,802
Liabilities:
Deposits	166,326
Other liabilities	499
Total liabilities	$	166,825

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The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date.


	January 3, 2022
(In thousands)	Book Balance		Fair Value
Loans:
Construction and land development	$	8,677	$	8,414
Commercial real estate - owner occupied	45,403		44,564
Commercial real estate - non-owner occupied	53,065		52,034
Residential real estate	5,377		5,421
Commercial and financial	11,335		11,280
Consumer	59		61
Total acquired loans	$	123,916	$	121,774

January 3, 2022
(In thousands) Book Balance Fair Value
Loans:
Construction and land development $ 8,677 $ 8,414
Commercial real estate - owner-occupied 45,403 44,564
Commercial real estate - non owner-occupied 53,065 52,034
Residential real estate 5,377 5,421
Commercial and financial 9,376 9,321
Consumer 59 61
PPP loans 1,959 1,959
Total acquired loans $ 123,916 $ 121,774

The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination:


(In thousands)	~~January 3, 2022~~(In thousands)
Book balance of loans at acquisition	$	714
Allowance for credit losses at acquisition	(15)
Non-credit related discount	(48)
Total PCD loans acquired	$	651

The acquisition of BBFC resulted in the addition of $1.8 million in allowance for credit losses, including the $15 thousand identified in the table above for PCD loans, and $1.8 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition.

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Acquisition of Sabal Palm Bancorp, Inc.

On January 3, 2022, the Company completed its acquisition of Sabal Palm Bancorp, Inc. (“Sabal Palm”). Simultaneously, upon completion of the merger of Sabal Palm and the Company, Sabal Palm’s wholly owned subsidiary bank, Sabal Palm Bank, was merged with and into Seacoast Bank. Prior to the acquisition, Sabal Palm Bank operated 3three branches in the Sarasota area.

As a result of this acquisition, the Company expects to expand its customer base and leverage operating cost through economies of scale, and positively affect the Company’s operating results.

The Company acquired 100% of the outstanding common stock of Sabal Palm. Under the terms of the definitive agreement, each share of Sabal Palm common stock was converted into the right to receive 0.2203 of a share of Seacoast common stock.


(In thousands, except per share data)	January 3, 2022
Number of Sabal Palm common shares outstanding	7,536

Per share exchange ratio	0.2203
Number of shares of SBCF common stock issued	1,660
Multiplied by common stock price per share on January 3, 2022	$	35.39
Value of SBCF common stock issued	$	58,762

Fair value of Sabal Palm options converted	3,336
Total purchase price	$	62,098

The acquisition of Sabal Palm was accounted for under the acquisition method in accordance with ASC Topic 805, Business Combinations. The Company recognized goodwill of $26.5 million for this acquisition that is nondeductible for tax purposes. Determining fair values of assets and liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a

~~Table of Contents~~

complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. The fair values initially assigned to assets acquired and liabilities assumed are preliminary and could change for up to one year after the closing date of the acquisition as new information and circumstances relative to closing date fair values becomes known.

As part of the Sabal Palm acquisition, ~~188,253~~ options were granted to replace outstanding Sabal Palm options. These options ~~had a weighted average exercise price of $17.84 and~~ were fully vested upon acquisition. ~~In accordance with ASC Topic 805,~~ ~~Business Combinations, the~~The full value of the replacement ~~awards~~options, $3.3 million, was associated with pre-combination service ~~$3.3 million,~~and was ~~considered~~therefore included in the calculation of the total purchase consideration.


(In thousands)	~~Initially~~ Measured January 3, 2022
Assets:
Cash	$	170,609
Time deposits with other banks	6,473
Loans	246,152
Bank premises and equipment	1,745
Core deposit intangibles	5,587
Goodwill	26,489
Other assets	5,189
Total assets	$	462,244
Liabilities:
Deposits	395,952
Other liabilities	4,194
Total liabilities	$	400,146

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The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date.


		January 3, 2022					January 3, 2022
(In thousands)	(In thousands)	Book Balance		Fair Value		(In thousands)	Book Balance		Fair Value
Loans:	Loans:					Loans:
Construction and land development	Construction and land development	$	9,256	$	9,009	Construction and land development	$	9,256	$	9,009
Commercial real estate - owner-occupied		57,690		56,591
Commercial real estate - non owner-occupied		89,153		87,280
Commercial real estate - owner occupied						Commercial real estate - owner occupied	57,690		56,591
Commercial real estate - non-owner occupied						Commercial real estate - non-owner occupied	89,153		87,280
Residential real estate	Residential real estate	71,469		72,227		Residential real estate	71,469		72,227
Commercial and financial	Commercial and financial	17,797		17,501		Commercial and financial	21,109		20,813
Consumer	Consumer	233		232		Consumer	233		232
PPP loans		3,312		3,312
Total acquired loans	Total acquired loans	$	248,910	$	246,152	Total acquired loans	$	248,910	$	246,152

The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination:


(In thousands)	January 3, 2022
Book balance of loans at acquisition	$	3,703
Allowance for credit losses at acquisition	(37)
Non-credit related discount	(663)
Total PCD loans acquired	$	3,003

The acquisition of Sabal Palm resulted in the addition of $3.4 million in allowance for credit losses, including the $37 thousand identified in the table above for PCD loans, and $3.4 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition.

Acquisition ~~of Legacy Bank of Florida~~Costs

~~On August 6, 2021,~~Acquisition costs included in the ~~Company completed its acquisition of Legacy Bank of Florida (“Legacy Bank”). Prior to~~Company's income statement for the ~~acquisition, Legacy Bank operated 5 branches~~three months ended June 30, 2023, and 2022 were $15.6 million and $3.0 million, respectively. Acquisition costs included in ~~Broward and Palm Beach counties.~~

~~As a result of this acquisition, the Company expects to expand its customer base and leverage operating cost through economies of scale, and positively affect~~ the Company’s ~~operating results.~~

~~The Company acquired 100% of~~income statement for the outstanding common stock of Legacy Bank. Under the terms of the definitive agreement, each share of Legacy Bank common stock was converted into the right to receive 0.1703 of a share of Seacoast common stock.


~~(In thousands, except per share data)~~	~~August 6, 2021~~
~~Number of Legacy Bank common shares outstanding~~	~~15,778~~

~~Per share exchange ratio~~	~~0.1703~~
~~Number of shares of common stock issued~~	~~2,687~~
~~Multiplied by common stock price per share on August 6, 2021~~	$	~~32.19~~
~~Value of common stock issued~~	~~86,487~~
~~Cash paid for fractional shares~~	7
~~Fair value of options converted~~	~~4,736~~
~~Total purchase price~~	$	~~91,230~~

~~The acquisition of Legacy Bank was accounted for under the acquisition method in accordance with ASC Topic 805,~~ ~~Business Combinations. The Company recognized goodwill of $31.0~~six months ended June 30, 2023, and 2022 were $33.2 million ~~for this acquisition that is nondeductible for tax purposes. Determining fair values of assets~~ and ~~liabilities, especially the loan portfolio, core deposit intangibles, and deferred taxes, is a~~

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As part of the Legacy Bank acquisition, 356,497 options were granted to replace outstanding Legacy Bank options. These options had a weighted average exercise price of $16.70 and were fully vested upon acquisition. In accordance with ASC Topic 805, ~~Business Combinations, the value of the replacement awards associated with pre-combination service, $4.7~~$9.7 million, ~~was considered purchase consideration, and the value of the replacement awards associated with post-combination service, $0.9 million, was recognized as compensation expense in 2021.~~

~~(In thousands)~~

Initially Measured
August 6, 2021

~~Assets:~~

~~Cash~~

~~98,107~~

~~Investment securities~~

~~992~~

~~Loans~~

~~477,215~~

~~Bank premises and equipment~~

~~2,577~~

~~Core deposit intangibles~~

~~3,454~~

~~Goodwill~~

~~30,978~~

~~Other assets~~

~~15,532~~

~~Total assets~~

~~628,855~~

~~Liabilities:~~

~~Deposits~~

~~494,921~~

~~Other liabilities~~

~~42,705~~

~~Total liabilities~~

~~537,626~~

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~~The table below presents information with respect to the fair value and unpaid principal balance of acquired loans at the acquisition date.~~

August 6, 2021
(In thousands) Book Balance Fair Value
Loans:
Construction and land development $ 37,558 $ 36,651
Commercial real estate - owner-occupied 35,765 35,363
Commercial real estate - non owner-occupied 241,322 237,091
Residential real estate 71,118 70,541
Commercial and financial 61,274 58,324
Consumer 647 647
PPP loans 38,598 38,598
Total acquired loans $ 486,282 $ 477,215

~~The table below presents the carrying amount of loans for which, at the date of acquisition, there was evidence of more than insignificant deterioration of credit quality since origination:~~


~~(In thousands)~~	~~August 6, 2021~~
~~Book balance of loans at acquisition~~	$	~~66,371~~
~~Allowance for credit losses at acquisition~~	~~(3,046)~~
~~Non-credit related discount~~	~~(736)~~
~~Total PCD loans acquired~~	$	~~62,589~~

The acquisition of Legacy Bank resulted in the addition of $11.2 million in allowance for credit losses, including the $3.0 million identified in the table above for PCD loans, and $8.2 million for non-PCD loans recorded through the provision for credit losses at the date of acquisition.

Pro-Forma Information

Pro-forma data ~~presents~~as of June 30, 2023 and 2022 present information as if the acquisition of ~~Legacy Bank~~Professional occurred at the beginning of ~~2020,~~2022. The pro-forma information is presented for illustrative purposes only and ~~the acquisitions of BBFC and Sabal Palm occurred at the beginning of 2021, as follows:~~
Three Months Ended June 30, Six Months Ended June 30,
(In thousands, except per share amounts) 2022 2021 2022 2021
Net interest income $ 81,647 $ 78,315 $ 158,169 $ 157,149
Net income 32,755 41,913 58,025 73,205
EPS - basic $ 0.53 $ 0.69 $ 0.95 $ 1.21
EPS - diluted 0.53 0.69 0.94 1.24

~~Proposed Acquisition of Apollo Bancshares, Inc.~~

~~On March 29, 2022, the Company announced its proposed acquisition of Apollo Bancshares, Inc. (“Apollo”). The transaction, which~~ is ~~expected to close early in the fourth quarter of 2022, will expand the Company’s presence in Miami-Dade County, part~~not necessarily indicative of the ~~Miami-Fort Lauderdale-Pompano Beach MSA, Florida’s largest MSA and~~results of operations that would have occurred if the 8th ~~largest in~~transactions had been effected on the nation. Apollo operates 5 branches across Miami-Dade County with deposits of approximately $930.3 million and loans of $736.0 million as of June 30, 2022. Regulatory approvals for the transaction have been received. Completion of the merger remains subject to certain conditions, including the approval of Apollo and Apollo Bank shareholders and the satisfaction of other customary closing conditions.assumed dates.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except per share data)	2023		2022		2023		2022
Net interest income	$	126,963	$	112,275	$	295,883	$	217,872
Net income available to common shareholders	31,249		48,458		68,005		44,139
EPS - basic	0.37		0.65		0.80		0.60
EPS - diluted	0.37		0.65		0.80		0.59

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~~Proposed Acquisition of Drummond Banking Company.~~

On May 4, 2022, the Company announced its proposed acquisition of Drummond Banking Company (“Drummond”). The transaction, which is expected to close early in the fourth quarter of 2022, will expand the Company’s presence in new Florida markets including Ocala and Gainesville. Drummond operates 18 branches across North Florida with deposits of approximately $919.0 million and loans of $570.9 million as of June 30, 2022. Completion of the Drummond merger is subject to certain conditions, including the receipt of regulatory approvals, the approval of Drummond shareholders and the satisfaction of other customary closing conditions.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this discussion and analysis is to aid in understanding significant changes in the financial condition of Seacoast Banking Corporation of Florida and its subsidiaries (“Seacoast” or the “Company”) and their results of operations. Nearly all of the Company’s operations are contained in its banking subsidiary, Seacoast National Bank (“Seacoast Bank” or the “Bank”). Such discussion and analysis should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and the related notes included in this report.

The emphasis of this discussion will be on the three and six months ended June 30, ~~2022~~2023 compared to the three and six months ended June 30, ~~2021~~2022 for the consolidated statements of income. For the consolidated balance sheets, the emphasis of this discussion will be the balances as of June 30, ~~2022~~2023 compared to December 31, ~~2021.~~2022.

This discussion and analysis ~~contains~~contain statements that may be considered “forward-looking statements” as defined in, and subject to the protections of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. See the following section for additional information regarding forward-looking statements.

For purposes of the following discussion, the words “Seacoast” or the “Company” refer to the combined entities of Seacoast Banking Corporation of Florida and its direct and indirect wholly owned subsidiaries.

Special Cautionary Notice Regarding Forward-Looking Statements

Certain statements made or incorporated by reference herein which are not statements of historical fact, including those under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, are “forward-looking statements” within the meaning, and protections, of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements with respect to the Company's beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, and intentions about future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company's control, and which may cause the actual results, performance or achievements of Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) or its wholly-owned banking subsidiary, Seacoast National Bank (“Seacoast Bank”), to be materially different from those set forth in the forward-looking statements.

All statements other than statements of historical fact could be forward-looking statements. You can identify these forward-looking statements through the use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “support,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “further,” “plan,” “point to,” “project,” “could,” “intend,” “target” or other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation:

•~~the effects~~The impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within Seacoast’s primary market areas, including ~~seasonality;~~the effects of inflationary pressures, changes in interest rates, slowdowns in economic growth, and the potential for high unemployment rates, as well as the financial stress on borrowers and changes to customer and client behavior and credit risk as a result of the foregoing;

•Potential impacts of the ~~ongoing~~recent adverse ~~effects of COVID-19 and any variants thereof (economic and otherwise)~~developments in the banking industry highlighted by high-profile bank failures, including impacts on ~~the Company and its customers, counterparties, employees, and third-party service providers,~~customer confidence, deposit outflows, liquidity and the ~~adverse impacts to our business, financial position, results of operations, and prospects;~~regulatory response thereto;

•government or regulatory responses to the COVID-19 pandemic, including the risk of inflation and interest rate increases resulting from monetary and fiscal stimulus response, which may have unanticipated adverse effects on our customers, and our financial condition and results of operations;

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

•~~changes in accounting policies, rules and practices, including the impact of the adoption of the current expected credit losses (“CECL”) methodology;~~

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

•~~interest~~Interest rate risks, sensitivities and the shape of the yield curve; ~~uncertainty related to the impact of LIBOR calculations on securities, loans and debt;~~

~~Table of Contents~~

•changes in borrower credit risks and payment behaviors, customer income, creditworthiness and confidence, spending and savings that may affect customer bankruptcies, defaults, charge-offs and deposit activity;

•~~changes~~Changes in accounting policies, rules and practices;

•Changes in retail distribution strategies, customer preferences and behavior ~~(including~~generally and as a result of economic ~~factors);~~factors, including heightened inflation;

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•~~changes~~Changes in the availability and cost of credit and capital in the financial markets;

•~~changes~~Changes in the prices, values and sales volumes of residential and commercial real estate;

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

•Seacoast's ability to comply with any regulatory requirements;

•~~the~~The effects of problems encountered by other financial institutions that adversely affect Seacoast or the banking industry;

•~~Seacoast's concentration in commercial real estate loans and in real estate collateral in the state of Florida;~~

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

•~~the~~The impact on the valuation of ~~Seacoast's~~Seacoast’s investments due to market volatility or counterparty payment ~~risk;~~risk, as well as the effect of a decline in stock market prices on our fee income from our wealth management business;

•~~statutory~~Statutory and regulatory dividend restrictions;

•increases in regulatory capital requirements for banking organizations generally;

•~~the~~The risks of mergers, acquisitions and divestitures, including ~~Seacoast's~~Seacoast’s ability to continue to identify acquisition targets, ~~and~~ successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies;

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

•~~the Company's~~The Company’s ability to identify and address increased cybersecurity risks, including ~~as a result of employees working remotely;~~those impacting vendors and other third parties;

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

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

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

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

•~~the~~The effects of war or other conflicts, including the impacts related to or resulting from Russia’s military action in Ukraine, acts of terrorism, natural disasters, including hurricanes in the Company's footprint, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions;

•~~unexpected~~Unexpected outcomes of and the costs associated with, existing or new litigation involving the Company;

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

•~~potential~~Potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement ~~actions, including as a result of the Company’s participation in the PPP;~~actions;

•~~the~~The risks that deferred tax assets could be reduced if estimates of future taxable income from the Company’s operations and tax planning strategies are less than currently estimated and sales of capital stock could trigger a reduction in the amount of net operating loss carryforwards that the Company may be able to utilize for income tax purposes;

•~~the~~The effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, non-bank financial technology providers, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in the ~~Company's~~Company’s market areas and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet;

•The failure of assumptions underlying the estimate of reserves for expected credit losses;

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•Risks related to environmental, social and governance ("ESG") matters, the ~~failure~~scope and pace of ~~assumptions underlying the establishment of reserves for possible credit losses;~~which could alter Seacoast's reputation and shareholder, associate, customer and third-party affiliations; and

•~~other~~Other factors and risks described under “Risk Factors” herein and in any of the Company's subsequent reports filed with the SEC and available on its website at www.sec.gov.

All written or oral forward-looking statements that are made or are attributable to Seacoast are expressly qualified in their entirety by this cautionary notice. The Company assumes no obligation to update, revise or correct any forward-looking statements that are made from time to time, either as a result of future developments, new information or otherwise, except as may be required by law.

Business Developments

~~Proposed~~ Acquisition of ~~Apollo Bancshares, Inc.~~

On March 29, 2022, the Company announced its proposed acquisition of Apollo Bancshares, Inc. (“Apollo”). The transaction, which is expected to close early in the fourth quarter of 2022, will expand the Company’s presence in Miami-Dade County, part of the Miami-Fort Lauderdale-Pompano Beach MSA, Florida’s largest MSA and the 8th largest in the nation. Apollo operates five branches across Miami-Dade County with deposits of approximately $930.3 million and loans of $736.0 million as of June 30, 2022. Regulatory approvals for the transaction have been received. Completion of the merger remains subject to certain conditions, including the approval of Apollo and Apollo Bank shareholders and the satisfaction of other customary closing conditions.

~~Proposed Acquisition of Drummond Banking Company~~

~~2022 Acquisitions to Date~~Professional Holding Corp.

On January ~~3, 2022,~~31, 2023, the Company completed the ~~acquisitions~~previously announced acquisition of ~~Sabal Palm Bancorp, Inc. (“Sabal Palm”) in Sarasota, and Business Bank of Florida,~~Professional Holding Corp. (“~~BBFC”~~Professional”), parent company of Professional Bank, adding deposits of approximately $2.1 billion and loans of approximately $2.0 billion. Full integration and system conversion activities, including the consolidation of five branches in ~~Brevard County, which added a combined $367.9 million~~the South Florida market, were completed in ~~loans, $562.3 million~~June 2023. Merger related expense synergies are expected to be fully realized in ~~deposits, and for which~~ the ~~Company recorded a $5.1 million provision for credit losses at acquisition.~~

~~Organic Growth and Expansion~~

~~Seacoast’s balanced growth strategy includes organic growth initiatives across the state. During the first~~second half of 2022, Seacoast expanded its footprint into Naples/Southwest Florida and Jacksonville/Northeast Florida with key additions to its commercial banking leadership and teams. Over the past several quarters, Seacoast has added experienced bankers in the state’s most dynamic and fastest growing markets and expects to continue to invest in well-established seasoned bankers over the remainder of 2022.2023.

Results of Operations

For the second quarter of ~~2022,~~2023, the Company reported net income of ~~$32.8~~$31.2 million, or ~~$0.53~~$0.37 per average diluted share, ~~compared to $20.6~~an increase of $19.4 million, or ~~$0.33 per average diluted share, for~~164%, from the first quarter of ~~2022~~2023 and ~~$31.4~~a decrease of $1.5 million, or ~~$0.56 per average diluted share, for~~5%, compared to the second quarter of ~~2021.~~2022. The second quarter of 2023 included a $0.8 million reversal of provision for credit losses. The prior quarter included $31.6 million of provision for credit losses, including $26.6 million for loans acquired in the Professional acquisition. For the six months ended June 30, ~~2022,~~2023, net income totaled ~~$53.3~~$43.1 million, or ~~$0.86~~$0.52 per average diluted share, a decrease of ~~$11.8~~$10.3 million, or ~~18%~~19%, compared to the six months ended June 30, ~~2021.~~2022. Adjusted net income1 for the second quarter of ~~2022~~2023 totaled ~~$36.3~~$49.2 million, or ~~$0.59~~$0.58 per average diluted share, ~~compared to $27.1~~an increase of $20.0 million, or ~~$0.44 per average diluted share, for~~68%, compared to the first quarter of ~~2022~~2023 and ~~$33.3~~an increase of $12.9 million, or ~~$0.59 per average diluted share, for~~35%, compared to the second quarter of ~~2021.~~2022. For the six months ended June 30, ~~2022,~~2023, adjusted net income1 totaled ~~$63.4~~$78.4 million, or ~~$1.03~~$0.94 per average diluted share, compared to ~~$68.7~~$63.4 million, or ~~$1.23~~$1.03 per average diluted share for the six months ended June 30, ~~2021.~~2022.


	Second		First		Second		Six Months Ended
	Quarter		Quarter		Quarter		June 30,
	2023		2023		2022		2023		2022
Return on average tangible assets	1.06	%	0.52	%	1.29	%	0.80	%	1.07	%
Return on average tangible shareholders' equity	12.08		5.96		13.01		9.14		10.46

Efficiency ratio	67.34		65.43		56.22		66.37		59.17

Adjusted return on average tangible assets1	1.41	%	0.90	%	1.38	%	1.16	%	1.23	%
Adjusted return on average tangible shareholders' equity1	16.08		10.34		13.97		13.32		11.95

Adjusted efficiency ratio1	56.44		53.10		53.15		54.76		53.97
1Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.

Net Interest Income and Margin

Net interest income for the second quarter of 2023 totaled $127.0 million, a decrease of $4.2 million, or 3%, compared to the first quarter of 2023, and an increase of $45.3 million, or 56%, compared to the second quarter of 2022. The decrease from prior quarter reflects a decline of $1.8 million in accretion of purchase discount on acquired loans, and the impact of increasing competition on deposit rates. The increase from prior year is primarily due to higher balances and higher yields on securities and loans, partially offset by the higher cost of deposits. Net interest margin (on a fully tax equivalent basis)1 was 3.86% in the second quarter of 2023, compared to 4.31% in the first quarter of 2023, and 3.38% in the second quarter of 2022. The decrease during the second quarter of 2023 compared to the prior quarter was driven by the continued effect of an inverted yield curve, a

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

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Second First Second Six Months Ended
Quarter Quarter Quarter June 30,
2022 2022 2021 2022 2021
Return on average tangible assets 1.29 % 0.85 % 1.48 % 1.07 % 1.58 %
Return on average tangible shareholders' equity 13.01 8.02 13.88 10.46 14.73
Efficiency ratio 56.22 62.33 54.93 59.17 54.05
Adjusted return on average tangible assets1
1.38 % 1.06 % 1.52 % 1.23 % 1.63 %
Adjusted return on average tangible shareholders' equity1
13.97 10.01 14.27 11.95 15.12
Adjusted efficiency ratio1
53.15 54.86 53.49 53.97 52.72
1Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.

~~Net Interest Income~~decline in accretion on acquired loans and ~~Margin~~

Net interest income for the second quarter of 2022 totaled $81.6 million, increasing $5.1 million, or 7%, compared to the first quarter of 2022, and increasing $15.8 million, or 24%, compared to the second quarter of 2021. For the six months ended June 30, 2022, net interest income totaled $158.2 million, an increase of $25.8 million, or 19%, compared to the six months ended June 30, 2021. The increases reflect higher balances and higher yields on securities and loans, partially offset by declines in interest and fees on Paycheck Protection Program (“PPP”) loans. Net interest margin (on a fully tax equivalent basis)1 was 3.38% in the second quarter of 2022, compared to 3.25% in the first quarter of 2022, and 3.23% in the second quarter of 2021. The increase during the second quarter of 2022 reflects increases in yields on both securities and non-PPP loans.rising deposit costs. Compared to the first quarter of ~~2022,~~2023, securities yields increased ~~by 30~~28 basis points to ~~1.98%~~3.13% and ~~non-PPP~~ loan yields increased by three basis points to ~~4.27%~~5.89% during the second quarter of ~~2022.~~2023. The securities yield benefited 12 basis points from swaps initiated during the quarter. The effect on net interest margin of accretion of purchase discounts on acquired loans were increases of 43 basis points in the second quarter of 2023, 53 basis points in the first quarter of 2023, and 12 basis points in the second quarter of 2022, 15 basis points in the first quarter of 2022, and 14 basis points in the second quarter of 2021. The effect of interest and fees on PPP loans was an increase of two basis points in the second quarter of 2022, an increase of five basis points in the first quarter of 2022, and an increase of six basis points in the second quarter of 2021. The cost of deposits was six basis points in each of the first and second quarters of 2022, and eight basis points in the second quarter of 2021. The Company’s asset sensitive position, with significant core deposit funding and ample liquidity, will provide benefits in a higher rate environment. Higher interest rates through the remainder of 2022 are expected to contribute to increased net interest margin and to benefit net interest income as the Company’s assets are expected to reprice faster and to a greater degree than its liabilities.2022.

For the six months ended June 30, ~~2022,~~2023, net interest margin (on a fully tax equivalent basis)1 was ~~3.32%~~4.09%, compared to ~~3.37%~~3.32% for the six months ended June 30, ~~2021.~~2022. The yield on securities increased from ~~1.64% for the six months ended June 30, 2021 to~~ 1.83% for the six months ended June 30, 2022 ~~reflecting the impact of rising interest rates as the Company makes new purchases in higher yielding securities. The yield on non-PPP loans declined from 4.36%~~to 2.99% for the six months ended June 30, ~~2021 to 4.25%~~2023, reflecting the impact of a higher interest rate environment. The yield on total loans increased from 4.30% for the six months ended June 30, 2022 reflecting the impact of elevated levels of prepayments of higher rate loans since mid-2020, and growth in the portfolio during recent periods of low rates. Offsetting and favorable was the decline in the cost of deposits from 10 basis pointsto 5.88% for the six months ended June 30, ~~2021 to~~2023, reflecting the impact of the higher interest rate environment. Cost of deposits increased from six basis points for the six months ended June 30, ~~2022.~~2022 to 1.09% for the six months ended June 30, 2023. The effect on net interest margin of purchase discounts on acquired loans was an increase of 48 basis points for the six months ended June 30, 2023 compared to an increase of 14 basis points for the six months ended June 30, ~~2022~~2022.

The cost of deposits was 1.38% in the second quarter of 2023, compared to ~~an increase of 15~~77 basis points ~~for~~in the first quarter of 2023, and six basis points in the second quarter of 2022. For the six months ended June 30, ~~2021. The effect~~2023, the cost of ~~interest and fees on PPP loans~~deposits was 1.09%, an increase of ~~three~~103 basis points ~~for~~compared to the six months ended June 30, ~~2022, compared to~~2022. The higher cost of deposits in the first half of 2023 reflects the impact of the Professional acquisition and an ~~increase of eight basis points~~increasingly competitive market for ~~the six months ended June 30, 2021.~~

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

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(In thousands, except ratios)	(In thousands, except ratios)	Net Interest Income1		Net Interest Margin1		Yield on Earning Assets1		Rate on Interest Bearing Liabilities		(In thousands, except ratios)	Net Interest Income1		Net Interest Margin1		Yield on Earning Assets1		Rate on Interest Bearing Liabilities
Second quarter 2023										Second quarter 2023	$	127,153	3.86	%	5.30	%	2.26	%
First quarter 2023										First quarter 2023	131,351		4.31	%	5.19	%	1.43	%
Second quarter 2022	Second quarter 2022	$	81,764	3.38	%	3.46	%	0.14	%	Second quarter 2022	81,764		3.38	%	3.46	%	0.14	%
First quarter 2022		76,639		3.25	%	3.33	%	0.12	%
Second quarter 2021		65,933		3.23	%	3.33	%	0.16	%

Six months ended June 30, 2023										Six months ended June 30, 2023	258,504		4.09	%	5.26	%	1.87	%
Six months ended June 30, 2022	Six months ended June 30, 2022	158,403		3.32	%	3.40	%	0.13	%	Six months ended June 30, 2022	158,403		3.32	%	3.40	%	0.13	%
Six months ended June 30, 2021		132,674		3.37	%	3.49	%	0.19	%
1On tax equivalent basis, a non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP.	1On tax equivalent basis, a non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP.									1On tax equivalent basis, a non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP.

Total average loans increased ~~$141.9 million,~~$0.7 billion, or 2%8%, for the second quarter of ~~2022~~2023 compared to the first quarter of ~~2022,~~2023, and increased ~~$882.5 million,~~$3.6 billion, or ~~16%~~56%, from the second quarter of ~~2021.~~2022. The ~~increase compared to the prior quarter reflects organic loan growth while the~~ increase compared to the prior year quarter includes $3.2 billion in loans ~~acquired from BBFC, Sabal Palm and Legacy Bank.~~added in recent bank acquisitions.

Average loans as a percentage of average earning assets totaled 76% for the second quarter of 2023, 76% for the first quarter of 2023 and 67% for the second quarter of ~~2022, 66% for the first quarter~~2022.

Table of ~~2022 and 68% for the second quarter of 2021.~~Content s

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


		Second		First		Second		Six Months Ended					Second		First		Second		Six Months Ended
		Quarter		Quarter		Quarter		June 30,					Quarter		Quarter		Quarter		June 30,
(In thousands)	(In thousands)	2022		2022		2021		2022		2021		(In thousands)	2023		2023		2022		2023		2022
Commercial pipeline at period end		$	476,693	$	619,547	$	322,014	$	476,693	$	322,014
Commercial loan originations		461,855		372,986		193,028		834,841		397,281
Commercial/commercial real estate loan pipeline at period end												Commercial/commercial real estate loan pipeline at period end	$	217,574	$	297,380	$	476,693	$	217,574	$	476,693
Commercial/commercial real estate loans closed												Commercial/commercial real estate loans closed	317,378		321,665		461,855		639,043		834,841

Residential pipeline - saleable at period end	Residential pipeline - saleable at period end	14,700		25,745		60,585		14,700		60,585		Residential pipeline - saleable at period end	11,492		6,614		14,700		11,492		14,700
Residential loans - sold	Residential loans - sold	42,666		51,222		120,099		93,888		258,436		Residential loans - sold	19,078		13,935		42,666		33,013		93,888

Residential pipeline - portfolio at period end	Residential pipeline - portfolio at period end	53,092		87,950		54,132		53,092		54,132		Residential pipeline - portfolio at period end	27,110		48,371		53,092		27,110		53,092
Residential loans - retained	Residential loans - retained	102,996		175,457		118,126		278,453		164,746		Residential loans - retained	85,294		90,058		102,996		175,352		278,453

Consumer pipeline at period end	Consumer pipeline at period end	75,532		61,613		31,748		75,532		31,748		Consumer pipeline at period end	28,446		38,742		75,532		28,446		75,532
Consumer originations	Consumer originations	126,479		79,010		63,702		205,489		110,447		Consumer originations	97,184		110,602		130,784		207,786		214,008

PPP originations		—		—		23,529		—		256,007

Commercial originations during the second quarter of ~~2022~~2023 were ~~$461.9~~$317.4 million, ~~an increase~~a decrease of ~~$88.9~~$4.3 million, or ~~24%~~1%, compared to the first quarter of ~~2022,~~2023, and ~~an increase~~a decrease of ~~$268.8~~$144.5 million, or ~~139%~~31%, compared to the second quarter of ~~2021.~~2022. For the six months ended June 30, ~~2022,~~2023, commercial originations were ~~$834.8~~$639.0 million compared to ~~$397.3~~$834.8 million for the six months ended June 30, ~~2021, an increase~~2022, a decrease of ~~$437.6~~$195.8 million, or ~~110%~~23%. Commercial ~~originations remained strong~~pipelines were $217.6 million as of June 30, 2023, a decrease of 27% from $297.4 million at March 31, 2023, and ~~reflect the addition~~a decrease of well-established commercial bankers and expansion into new markets across the state. The addition of experienced commercial bankers in recent periods is generating disciplined growth in full relationships, including credit facilities, deposit relationships, and wealth opportunities.

~~The commercial pipeline decreased $142.9 million, or 23%, to~~54% from $476.7 million at June 30, ~~2022, compared to~~2022. The declines were the result of the impact of higher rates and a record $619.5 million at March 31, 2022, and increased $154.7 million, or 48%, compared to June 30, 2021. As rates have increased, the Company has maintained its disciplined lending criteria, requiring lower leveragecontinued selective approach on ~~commercial real estate projects. Despite this, the pipeline remains strong and continues to build.~~new credit facilities given a cautious economic outlook.

Residential loans originated for sale in the secondary market totaled $19.1 million in the second quarter of 2023, compared to $13.9 million in the first quarter of 2023 and $42.7 million in the second quarter of ~~2022, compared to $51.2 million in the first quarter of 2022 and $120.1 million in the second quarter of 2021.~~2022. For the six months ended June 30, ~~2022,~~2023, residential loans originated for sale in the secondary market totaled ~~$93.9~~$33.0 million compared to ~~$258.4~~$93.9 million for the six months ended June 30, ~~2021,~~2022, a decrease of ~~$164.5~~$60.9 million, or ~~64%~~65%. ~~Limited housing inventory and slowing refinance activity~~

~~Table of Contents~~

~~contributed to lower production.~~ Residential saleable pipelines were $11.5 million as of June 30, 2023, compared to $6.6 million as of March 31, 2023 and $14.7 million as of June 30, ~~2022, compared to $25.7 million as of March 31, 2022 and $60.6 million as of June 30, 2021.~~2022.

Residential loan production retained in the portfolio for the second quarter of ~~2022~~2023 was ~~$103.0~~$85.3 million, compared to ~~$175.5~~$90.1 million in the first quarter of ~~2022~~2023 and ~~$118.1~~$103.0 million in the second quarter of 2021. For the six months ended June 30, 2022, residential loan production retained in the portfolio totaled $278.5 million compared to $164.7 million for the six months ended June 30, 2021, an increase of $113.7 million, or 69%. The first quarter of 2022 included the purchase of a $111.3 million wholesale residential home mortgage loan pool, and the second quarter of 2021 included the purchase of a $38.4 million wholesale residential home mortgage loan pool. The Company fully underwrites acquired loans prior to executing transactions.2022. The pipeline of residential loans intended to be retained in the portfolio was $27.1 million as of June 30, 2023, compared to $48.4 million as of March 31, 2023, and $53.1 million as of June 30, ~~2022, compared to $88.0 million as of March 31, 2022, and $54.1 million as of June 30, 2021.~~2022.

Consumer originations totaled ~~$126.5~~$97.2 million during the second quarter of ~~2022,~~2023, compared to ~~$79.0~~$110.6 million in the first quarter of ~~2022~~2023 and ~~$63.7~~$130.8 million in the second quarter of ~~2021.~~2022. For the six months ended June 30, ~~2022,~~2023, consumer originations totaled ~~$205.5~~$207.8 million compared to ~~$110.4~~$214.0 million for the six months ended June 30, ~~2021, an increase~~2022, a decrease of ~~$95.0~~$6.2 million, or ~~86%~~3%. The consumer pipeline was ~~$75.5~~$28.4 million as of June 30, ~~2022,~~2023, compared to ~~$61.6~~$38.7 million as of March 31, ~~2022~~2023 and ~~$31.7~~$75.5 million at June 30, ~~2021. The increases are primarily the result of consumer lending teams that joined the Company in late 2021.~~2022.

Average ~~debt~~investment securities ~~increased $109.9~~decreased $27.1 million, or 5%1%, during the second quarter of ~~2022~~2023 compared to the first quarter of ~~2022,~~2023, and were ~~$885.3~~$148.9 million, or ~~53%~~6%, higher compared to the second quarter of ~~2021. Increases reflect the~~2022. Average investment ~~of excess liquidity, partially offset by paydowns and maturities. Average debt~~ securities were ~~$2.5~~$2.7 billion for the six months ended June 30, ~~2022,~~2023, an increase of ~~$869.8~~$217.1 million, or ~~54%~~9%, compared to the six months ended ~~June 30, 2021.~~2022. Increases in the first half of 2023 include securities added through the Professional acquisition, partially offset by paydowns and maturities.

The cost of average interest-bearing liabilities increased ~~two~~83 basis points in the second quarter of ~~2022~~2023 to ~~14 basis points~~2.26% from ~~12 basis points~~1.43% in the first quarter of ~~2022,~~2023, and ~~decreased~~ from 1614 basis points in the second quarter of ~~2021. For the six months ended June 30, 2022, the cost of average interest-bearing liabilities was 0.13%, a decrease of six basis points compared to the six months ended June 30, 2021.~~2022. The cost of average total deposits (including noninterest bearing demand deposits) was ~~six basis points~~1.38% in ~~both~~ the second quarter of ~~2022 and~~2023, 77 basis points in the first quarter of ~~2022~~2023 and 8six basis points in the second quarter of ~~2021, reflecting continued repricing downward of interest-bearing deposits and time deposits.~~2022. For the six months ended June 30, ~~2022,~~2023, the cost of average total deposits (including noninterest bearing demand deposits) was ~~6 basis points~~1.09% compared to 10six basis points for the six months ended June 30, ~~2021.~~2022.

Table of Content s

During the second quarter of ~~2022,~~2023, average transaction deposits (noninterest and interest bearing demand) increased ~~$349.6~~$173.5 million, or 6%3%, compared to the first quarter of ~~2022~~2023 and increased ~~$1.3~~$1.2 billion, or ~~29%~~20%, compared to the second quarter of ~~2021, reflecting the inflow of new customers, including from bank acquisitions, and higher deposit balances for existing customers.~~2022. For the six months ended June 30, ~~2022,~~2023, average transaction deposits ~~(noninterest and interest bearing demand)~~ increased $1.3 billion or ~~32%~~23%, compared to the six months ended June 30, ~~2021.~~2022. The Company’s deposit mix remains favorable, with ~~95%~~90% of average deposit balances comprised of savings, money market, and demand deposits for the six months ended June 30, ~~2022.~~2023.

Average balances of sweep repurchase agreements with customers increased ~~$2.3~~$71.3 million, or 2%41%, ~~quarter-over~~from the first quarter of 2023 and ~~$5.1~~$124.4 million, or ~~4%, year-over-year. For the six months ended June 30, 2022, the average balance was $119.3 million~~103% compared to ~~an average balance~~the second quarter of ~~$114.2 million for the six months ended June 30, 2021.~~2022. The average rate on customer sweep repurchase accounts was 2.61% for the three months ended June 30, 2023, compared to 2.02% for the three months ended March 31, 2023, and 0.31% for the three months ended June 30, 2022. For the six months ended June 30, 2023, the average balance was $209.4 million compared to an average balance of $119.3 million for the six months ended June 30, 2022. The average rate on customer sweep repurchase accounts was 2.37% for the six months ended June 30, 2023, compared to 0.22% for the six months ended June 30, ~~2022, compared to 0.13% for the six months ended June 30, 2021.~~2022.

Subordinated debt balances averaged ~~$71.7 million in each of the first and second quarters of 2022, and $71.5~~$105.9 million in the second quarter of ~~2021.~~2023, $98.4 million in the first quarter of 2023, and $71.7 million in the second quarter of 2022. The average rate on subordinated debt for the second quarter of ~~2022~~2023 was ~~3.24%~~6.80%, an increase of 7715 basis points compared to the first quarter of ~~2022~~2023 and an increase of ~~87 basis points~~3.56% compared to the second quarter of ~~2021.~~2022. For the six months ended June 30, ~~2022,~~2023, subordinated debt averaged ~~$71.7~~$102.2 million, compared to ~~$71.4~~$71.7 million for the six months ended June 30, ~~2021.~~2022. The average rate on subordinated debt for the six months ended June 30, ~~2022~~2023 was ~~2.85%~~6.73%, an increase of 3.88% compared to ~~2.40% for~~ the six months ended June 30, ~~2021.~~2022. The subordinated debt ~~relates to~~is comprised of trust preferred securities issued by subsidiary trusts of the ~~Company.~~Company, and subordinated notes assumed in bank acquisitions in 2022 and 2023.

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


Average Balances, Interest Income and Expenses, Yields and Rates1	Average Balances, Interest Income and Expenses, Yields and Rates1																			Average Balances, Interest Income and Expenses, Yields and Rates1

		2022												2021							2023												2022
		Second Quarter						First Quarter						Second Quarter							Second Quarter						First Quarter						Second Quarter
		Average				Yield/		Average				Yield/		Average				Yield/			Average				Yield/		Average				Yield/		Average				Yield/
(In thousands, except ratios)	(In thousands, except ratios)	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate		(In thousands, except ratios)	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
Assets	Assets																			Assets
Earning assets:	Earning assets:																			Earning assets:
Securities:	Securities:																			Securities:
Taxable	Taxable	$	2,517,879	$	12,387	1.97	%	$	2,406,399	$	10,041	1.67	%	$	1,629,410	$	6,559	1.61	%	Taxable	$	2,673,633	$	20,898	3.13	%	$	2,700,122	$	19,244	2.85	%	$	2,517,879	$	12,387	1.97	%
Nontaxable	Nontaxable	22,443		175		3.12		24,042		177		2.94		25,581		186		2.90		Nontaxable	15,621		120		3.08		16,271		131		3.22		22,443		175		3.12
Total Securities	Total Securities	2,540,322		12,562		1.98		2,430,441		10,218		1.68		1,654,991		6,745		1.63		Total Securities	2,689,254		21,018		3.13		2,716,393		19,375		2.85		2,540,322		12,562		1.98

Federal funds sold	Federal funds sold	644,144		1,281		0.80		738,588		350		0.19		816,455		226		0.11		Federal funds sold	327,433		4,313		5.28		106,778		1,294		4.91		644,144		1,281		0.80
Other investments		46,257		636		5.51		44,999		583		5.25		108,868		483		1.78
Interest bearing deposits with other banks and other investments																				Interest bearing deposits with other banks and other investments	90,783		710		3.14		178,463		2,180		4.95		46,257		636		5.51

Loans excluding PPP loans	Loans excluding PPP loans	6,454,444		68,647		4.27		6,276,964		65,675		4.24		5,092,897		55,313		4.36		Loans excluding PPP loans	10,096,394		148,420		5.90		9,363,873		135,329		5.86		6,454,444		68,647		4.27
PPP Loans	PPP Loans	26,322		741		11.29		61,923		1,523		9.98		505,339		5,127		4.07		PPP Loans	4,834		12		1.00		5,328		12		0.91		26,322		741		11.29
Total Loans	Total Loans	6,480,766		69,388		4.29		6,338,887		67,198		4.30		5,598,236		60,440		4.33		Total Loans	10,101,228		148,432		5.89		9,369,201		135,341		5.86		6,480,766		69,388		4.29

Total Earning Assets	Total Earning Assets	9,711,489		83,867		3.46		9,552,915		78,349		3.33		8,178,550		67,894		3.33		Total Earning Assets	13,208,698		174,473		5.30		12,370,835		158,190		5.19		9,711,489		83,867		3.46

Allowance for loan losses		(90,242)						(87,467)						(86,042)
Allowance for credit losses																				Allowance for credit losses	(156,207)						(139,989)						(90,242)
Cash and due from banks	Cash and due from banks	389,695						365,835						327,171						Cash and due from banks	165,625						156,235						389,695
Premises and equipment	Premises and equipment	74,614						75,876						70,033						Premises and equipment	117,726						116,083						74,614
Intangible assets	Intangible assets	307,411						304,321						235,964						Intangible assets	842,988						750,694						307,411
Bank owned life insurance	Bank owned life insurance	206,839						205,500						133,484						Bank owned life insurance	293,251						274,517						206,839
Other assets		240,712						211,536						166,686
Other assets including deferred tax assets																				Other assets including deferred tax assets	415,208						419,601						240,712
Total Assets	Total Assets	$	10,840,518					$	10,628,516					$	9,025,846					Total Assets	$	14,887,289					$	13,947,976					$	10,840,518

Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity																			Liabilities and Shareholders' Equity
Interest-bearing liabilities:	Interest-bearing liabilities:																			Interest-bearing liabilities:
Interest-bearing demand	Interest-bearing demand	$	2,262,408	$	293	0.05	%	$	2,097,383	$	190	0.04	%	$	1,692,178	$	235	0.06	%	Interest-bearing demand	$	2,666,314	$	7,560	1.14	%	$	2,452,113	$	3,207	0.53	%	$	2,262,408	$	293	0.05	%
Savings	Savings	962,264		64		0.03		925,348		65		0.03		790,734		118		0.06		Savings	906,936		427		0.19		1,053,220		400		0.15		962,264		64		0.03
Money market	Money market	1,938,421		637		0.13		1,976,660		512		0.11		1,736,481		627		0.14		Money market	2,806,672		19,196		2.74		2,713,224		12,426		1.86		1,938,421		637		0.13
Time deposits	Time deposits	496,186		436		0.35		560,681		468		0.34		533,350		524		0.39		Time deposits	1,425,344		14,477		4.07		812,422		5,552		2.77		496,186		436		0.35
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	120,437		94		0.31		118,146		39		0.13		115,512		35		0.12		Securities sold under agreements to repurchase	244,824		1,593		2.61		173,498		864		2.02		120,437		94		0.31

Other borrowings		71,740		579		3.24		71,670		436		2.47		71,460		422		2.37
Federal Home Loan Bank borrowings																				Federal Home Loan Bank borrowings	251,596		2,272		3.62		282,444		2,776		3.99		—		—		—
Subordinated debt																				Subordinated debt	105,861		1,795		6.80		98,425		1,614		6.65		71,740		579		3.24
Total Interest-Bearing Liabilities	Total Interest-Bearing Liabilities	5,851,456		2,103		0.14		5,749,888		1,710		0.12		4,939,715		1,961		0.16		Total Interest-Bearing Liabilities	8,407,547		47,320		2.26		7,585,346		26,839		1.43		5,851,456		2,103		0.14
Noninterest demand	Noninterest demand	3,520,700						3,336,121						2,799,643						Noninterest demand	4,294,251						4,334,969						3,520,700
Other liabilities	Other liabilities	117,794						141,972						116,093						Other liabilities	114,962						130,616						117,794
Total Liabilities	Total Liabilities	9,489,950						9,227,981						7,855,451						Total Liabilities	12,816,760						12,050,931						9,489,950

Shareholders' equity	Shareholders' equity	1,350,568						1,400,535						1,170,395						Shareholders' equity	2,070,529						1,897,045						1,350,568

Total Liabilities & Equity	Total Liabilities & Equity	$	10,840,518					$	10,628,516					$	9,025,846					Total Liabilities & Equity	$	14,887,289					$	13,947,976					$	10,840,518

Cost of deposits	Cost of deposits					0.06	%					0.06	%					0.08	%	Cost of deposits					1.38	%					0.77	%					0.06	%
Interest expense as a % of earning assets	Interest expense as a % of earning assets					0.09	%					0.07	%					0.10	%	Interest expense as a % of earning assets					1.44	%					0.88	%					0.09	%
Net interest income as a % of earning assets				$	81,764	3.38	%			$	76,639	3.25	%			$	65,933	3.23	%

1On a fully taxable equivalent basis, a non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP. All yields and rates have been computed on an annual basis using amortized cost. Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.

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Average Balances, Interest Income and Expenses, Yields and Rates1
2022 2021
Year to Date Year to Date
Average Yield/ Average Yield/
(In thousands, except ratios) Balance Interest Rate Balance Interest Rate
Assets
Earning assets:
Securities:
Taxable $ 2,462,447 $ 22,428 1.82 % $ 1,590,152 $ 12,857 1.62 %
Nontaxable 23,238 352 3.03 25,756 373 2.90
Total Securities 2,485,685 22,780 1.83 1,615,908 13,230 1.64
Federal funds sold 691,105 1,631 0.48 556,425 299 0.11
Other investments 45,631 1,219 5.39 96,422 996 2.08
Loans excluding PPP loans 6,366,194 134,322 4.25 5,121,114 110,817 4.36
PPP Loans 44,024 2,264 10.37 557,247 12,013 4.35
Total Loans 6,410,218 136,586 4.30 5,678,361 122,830 4.36
Total Earning Assets 9,632,639 162,216 3.40 7,947,116 137,355 3.49
Allowance for loan losses (88,862) (88,873)
Cash and due from banks 377,831 291,626
Premises and equipment 75,241 72,141
Intangible assets 305,875 236,640
Bank owned life insurance 206,173 132,785
Other assets 226,205 165,658
Total Assets $ 10,735,102 $ 8,757,093
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand $ 2,180,351 $ 483 0.04 % $ 1,646,587 $ 493 0.06 %
Savings 943,908 129 0.03 756,693 255 0.07
Money market 1,957,435 1,149 0.12 1,673,559 1,297 0.16
Time deposits 528,255 904 0.35 621,844 1,711 0.55
Securities sold under agreements to repurchase 119,298 133 0.22 114,181 76 0.13
Other borrowings 71,706 1,015 2.85 71,425 849 2.40
Total Interest-Bearing Liabilities 5,800,953 3,813 0.13 4,884,289 4,681 0.19
Noninterest demand 3,428,921 2,616,856
Other liabilities 129,815 102,450
Total Liabilities 9,359,689 7,603,595
Shareholders' equity 1,375,413 1,153,498
Total Liabilities & Equity $ 10,735,102 $ 8,757,093
Cost of deposits 0.06 % 0.10 %
Interest expense as a % of earning assets 0.08 % 0.12 %
Net interest income as a % of earning assets $ 158,403 3.32 % $ 132,674 3.37 %
1On a fully taxable equivalent basis, a non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP. All yields and rates have been computed on an annual basis using amortized cost. Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.


Net interest income as a % of earning assets	$	127,153	3.86	%	$	131,351	4.31	%	$	81,764	3.38	%

1On a fully taxable equivalent basis, a non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP. All yields and rates have been computed on an annual basis using amortized cost. Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.

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Average Balances, Interest Income and Expenses, Yields and Rates1

	2023						2022
	Year to Date						Year to Date
	Average				Yield/		Average				Yield/
(In thousands, except ratios)	Balance		Interest		Rate		Balance		Interest		Rate
Assets
Earning assets:
Securities:
Taxable	$	2,686,804	$	40,142	2.99	%	$	2,462,447	$	22,428	1.82	%
Nontaxable	15,944		251		3.15		23,238		352		3.03
Total Securities	2,702,748		40,393		2.99		2,485,685		22,780		1.83

Federal funds sold	228,491		5,787		5.11		691,105		1,631		0.48
Interest bearing deposits with other banks and other investments	90,750		2,710		6.02		45,631		1,219		5.39

Loans excluding PPP loans	9,732,156		283,749		5.88		6,366,194		134,322		4.25
PPP Loans	5,080		24		0.95		44,024		2,264		10.37
Total Loans	9,737,236		283,773		5.88		6,410,218		136,586		4.30

Total Earning Assets	12,759,225		332,663		5.26		9,632,639		162,216		3.40

Allowance for credit losses	(148,143)						(88,862)
Cash and due from banks	193,811						377,831
Premises and equipment	116,909						75,241
Intangible assets	797,096						305,875
Bank owned life insurance	283,936						206,173
Other assets including deferred tax assets	417,393						226,205
Total Assets	$	14,420,227					$	10,735,102

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand	$	2,559,805	$	10,767	0.85	%	$	2,180,351	$	483	0.04	%
Savings	979,674		827		0.17		943,908		129		0.03
Money market	2,760,207		31,622		2.31		1,957,435		1,149		0.12
Time deposits	1,120,576		20,029		3.60		528,255		904		0.35
Securities sold under agreements to repurchase	209,358		2,456		2.37		119,298		133		0.22
Federal Home Loan Bank borrowings	266,935		5,048		3.81		—		—		—
Subordinated debt	102,164		3,410		6.73		71,706		1,015		2.85
Total Interest-Bearing Liabilities	7,998,719		74,159		1.87		5,800,953		3,813		0.13
Noninterest demand	4,314,498						3,428,921
Other liabilities	122,746						129,815
Total Liabilities	12,435,963						9,359,689

Shareholders' equity	1,984,264						1,375,413

Total Liabilities & Equity	$	14,420,227					$	10,735,102

Cost of deposits					1.09	%					0.06	%
Interest expense as a % of earning assets					1.17	%					0.08	%
Net interest income as a % of earning assets			$	258,504	4.09	%			$	158,403	3.32	%

1On a fully taxable equivalent basis, a non-GAAP measure - see "Explanation of Certain Unaudited Non-GAAP Financial Measures" for more information and a reconciliation to GAAP. All yields and rates have been computed on an annual basis using amortized cost. Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances.

Table of Content s

Noninterest Income

Noninterest income totaled ~~$17.0~~$21.6 million for the second quarter of ~~2022, an increase~~2023, a decrease of ~~$1.6~~$0.9 million, or ~~10%~~4%, compared to the first quarter of ~~2022~~2023 and an increase of ~~$1.6~~$4.6 million, or ~~11%~~27%, from the second quarter of ~~2021.~~2022. Noninterest income totaled ~~$32.3~~$44.0 million for the six months ended June 30, ~~2022, a decrease~~2023, an increase of ~~$0.7~~$11.7 million, or 2%36%, compared to the six months ended months ended June 30, 2022.

Noninterest income is detailed as follows:


	Second		First		Second		Six Months Ended
	Quarter		Quarter		Quarter		June 30,
(In thousands)	2023		2023		2022		2023		2022
Service charges on deposit accounts	$	4,560	$	4,242	$	3,408	$	8,802	$	6,209
Interchange income	5,066		4,694		4,255		9,760		8,383
Wealth management income	3,318		3,063		2,774		6,381		5,433
Mortgage banking fees	576		426		932		1,002		2,618
Insurance agency income	1,160		1,101		—		2,261		—
SBA gains	249		322		473		571		629
BOLI income	2,068		1,916		1,349		3,984		2,683
Other income	4,755		6,574		4,073		11,329		7,134
	21,752		22,338		17,264		44,090		33,089
Securities (losses) gains, net	(176)		107		(300)		(69)		(752)
Total	$	21,576	$	22,445	$	16,964	$	44,021	$	32,337

Service charges on deposits were $4.6 million in the second quarter of 2023, $4.2 million in the first quarter of 2023 and $3.4 million in the second quarter of 2022. For the six months ended June 30, 2023, service charges on deposits totaled $8.8 million, an increase of $2.6 million, or 42%, compared to the six months ended June 30, ~~2021.~~

~~Noninterest income is detailed as follows:~~

Second First Second Six Months Ended
Quarter Quarter Quarter June 30,
(In thousands) 2022 2022 2021 2022 2021
Service charges on deposit accounts $ 3,408 $ 2,801 $ 2,338 $ 6,209 $ 4,676
Interchange income 4,255 4,128 4,145 8,383 7,965
Wealth management income 2,774 2,659 2,387 5,433 4,710
Mortgage banking fees 932 1,686 2,977 2,618 7,202
Marine finance fees 312 191 177 503 366
SBA gains 473 156 232 629 519
BOLI income 1,349 1,334 872 2,683 1,731
Other income 3,761 2,870 2,249 6,631 5,993
17,264 15,825 15,377 33,089 33,162
Securities losses, net (300) (452) (55) (752) (169)
Total $ 16,964 $ 15,373 $ 15,322 $ 32,337 $ 32,993

Service charges on deposits were $3.4 million in the second quarter of 2022, $2.8 million in the first quarter of 2022 and $2.3 million in the second quarter of 2021. For the six months ended June 30, 2022, service charges on deposits totaled $6.2 million, an increase of $1.5 million, or 33%, compared to the six months ended June 30, 2021.2022. Increases in fees primarily reflect ~~growth in~~the benefit of an expanded deposit base, including from acquisitions, and the continued benefit of the expansion of treasury management services to commercial ~~deposit relationships and changes in monthly maintenance and ATM fees.~~customers. Overdraft-related fees for both consumer and commercial accounts represent ~~38%~~35% of total service charges on deposits for the six months ended June 30, ~~2022,~~2023, and ~~39%~~38% for the six months ended June 30, ~~2021.~~2022.

Interchange income increased to $5.1 million for the second quarter of 2023, compared to $4.7 million for the first quarter of 2023, and $4.3 million for the second quarter of ~~2022, compared to $4.1 million for the first quarter of 2022, and $4.1 million for the second quarter of 2021.~~2022. For the six months ended June 30, ~~2022,~~2023, interchange income totaled ~~$8.4~~$9.8 million, an increase of ~~$0.4~~$1.4 million, or 5%16%, compared to the six months ended June 30, ~~2021.~~2022. Beginning in the third quarter of 2023, the Company’s interchange income will be reduced by the requirements of the Durbin amendment, which became effective for the Company on July 1, 2023.

Wealth management income, including trust fees and brokerage commissions and fees, was ~~$2.8~~$3.3 million in the second quarter of ~~2022, increasing $0.1~~2023, compared to $3.1 million ~~or 4%, from~~for the first quarter of ~~2022~~2023 and ~~increasing $0.4~~$2.8 million ~~or 16%, compared to~~for the second quarter of ~~2021.~~2022. Assets under management increased by $60.0 million in the second quarter of 2023, bringing total assets under management to $1.6 billion. For the six months ended June 30, ~~2022,~~2023, wealth management income totaled ~~$5.4~~$6.4 million, an increase of ~~$0.7~~$0.9 million, or ~~15%~~17%, compared to the six months ended June 30, ~~2021, as the~~2022. The wealth management team continues to ~~deliver strong returns through the addition of new~~demonstrate notable success in building relationships.

Mortgage banking fees ~~decreased by $0.8 million, or 45%, to $0.9~~totaled $0.6 million in the second quarter of ~~2022~~2023, compared to $0.4 million the first quarter of ~~2022,~~2023, and ~~decreased $2.0~~$0.9 million or 69%, compared to the second quarter of 2021, reflecting lower saleable production due to the impact of rising interest rates and limited housing inventory. For the six months ended June 30, 2022, mortgage banking fees totaled $2.6 million, a decrease of $4.6 million, or 64%, compared to the six months ended June 30, 2021.

~~SBA gains were $0.5 million~~ in ~~the second quarter of 2022, compared to $0.2 million in the first quarter of 2022, and $0.2 million in the second quarter of 2021. The increase reflects improved saleable loan production for~~ the second quarter of 2022. For the six months ended June 30, ~~2022, SBA gains~~2023, mortgage banking fees totaled ~~$0.6~~$1.0 million, ~~an increase~~a decrease of ~~$0.1~~$1.6 million, or ~~21%~~62%, compared to the six months ended June 30, ~~2021.~~2022, reflecting lower saleable production due to significantly higher interest rates and limited housing inventory.

Insurance agency income increased $0.1 million, or 5%, compared to the first quarter of 2023 and totaled $1.2 million. 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.

SBA gains were $0.2 million in the second quarter of 2023, compared to $0.3 million in the first quarter of 2023, and $0.5 million in the second quarter of 2022. For the six months ended June 30, 2023, SBA gains totaled $0.6 million, a decrease of $0.1 million, or 9%, compared to the six months ended June 30, 2022.

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Bank owned life insurance (“BOLI”) income was ~~$1.3~~$2.1 million for the second quarter of ~~2022, flat~~2023, an increase of $0.2 million, or 8%, compared to the first quarter of ~~2022~~2023 and an increase of ~~55%~~$0.7 million, or 53%, compared to the second quarter of ~~2021.~~2022. The ~~increase year-over-year is~~increases are attributed to additions of ~~$69.1~~$53.1 million in BOLI in the fourth quarter of 2022 and $55.1 million in the first quarter of 2023 from ~~acquisitions and purchases during 2021.~~bank acquisitions. BOLI income totaled $4.0 million for the six months ended June 30, 2023 and $2.7 million for the six months ended June 30, ~~2022 and $1.7 million for the six months ended June 30, 2021.~~

~~Table of Contents~~

2022.

Other income was ~~$3.8~~$4.8 million in the second quarter of ~~2022, an increase~~2023, a decrease of ~~$0.9~~$1.8 million quarter-over-quarter and an increase of ~~$1.5~~$0.7 million ~~year-over-year, reflecting higher loan-swap related income.~~year-over-year. The decrease from prior quarter is primarily the result of BOLI death benefits of $2.1 million recognized in the prior quarter. For the six months ended June 30, ~~2022,~~2023, other income totaled ~~$6.6~~$11.3 million, an increase of ~~$0.6~~$4.2 million, or ~~11%~~59%, compared to the six months ended June 30, ~~2021.~~2022.

~~The Company recognized $0.3 million in securities~~Securities losses in the second quarter of ~~2022~~2023 totaled $0.2 million, resulting from mark to market adjustments on the Company’s CRA qualified mutual funds.

Noninterest Expenses

Noninterest expense for the second quarter of 2023 totaled $107.9 million, an increase of $0.4 million, or 0.4%, compared to ~~$0.5~~the first quarter of 2023, and an increase of $51.7 million, or 92%, from the second quarter of 2022. For the six months ended June 30, 2023, noninterest expense totaled $215.3 million, an increase of $100.3 million, or 87%, compared to the six months ended June 30, 2022. Noninterest expenses are detailed as follows:


	Second		First		Second		Six Months Ended
	Quarter		Quarter		Quarter		June 30,
(In thousands)	2023		2023		2022		2023		2022

Salaries and wages	$	45,155	$	47,616	$	28,056	$	92,771	$	56,275
Employee benefits	7,472		8,562		4,151		16,034		9,652
Outsourced data processing costs	20,222		14,553		6,043		34,775		12,199
Telephone/data lines	1,518		1,081		908		2,599		1,641
Occupancy	7,065		6,938		4,050		14,003		8,036
Furniture and equipment	2,345		2,267		1,588		4,612		3,014
Marketing	2,047		2,238		1,882		4,285		3,053
Legal and professional fees	4,062		7,479		2,946		11,541		7,735
FDIC assessments	2,116		1,443		699		3,559		1,488
Amortization of intangibles	7,654		6,727		1,446		14,381		2,892
Foreclosed property expense and net (gain) loss on sale	(57)		195		(968)		138		(1,132)
Provision for credit losses on unfunded commitments	—		1,239		—		1,239		142
Other	8,266		7,137		5,347		15,403		10,070
Total	$	107,865	$	107,475	$	56,148	$	215,340	$	115,065

Salaries and wages totaled $45.2 million for the second quarter of 2023, $47.6 million for the first quarter of 2023, and $28.1 million for the second quarter of 2022. The second quarter of 2023 reflects $1.6 million in merger-related expenses compared to $4.2 million in the first quarter of 2023. For the six months ended June 30, 2023, salaries and wages totaled $92.8 million, an increase of $36.5 million, or 65%, compared to the six months ended June 30, 2022. Excluding merger-related expenses, increases in 2023 are the result of the overall growth in the organization.

In the third quarter of 2023, the Company is continuing its focus on efficiency and streamlining operations, and in late July 2023, executed a reduction in the Company’s workforce by approximately 5%. The Company will incur severance charges in a range of approximately $2.0 to $3.0 million in the third quarter of 2023. The resulting lower compensation expense in the third quarter of 2023 will largely be offset by investments in marketing to drive low-cost deposit growth, and lower expense deferral associated with slowing loan originations. The Company expects the full benefit of the reduction in workforce to materialize in the fourth quarter of 2023.

During the second quarter of 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, were $7.5 million, a decrease of $1.1

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million, or 13%, compared to the first quarter of 2023, and an increase of $3.3 million, or 80%, compared to the second quarter of 2022. The decrease from the first quarter of 2023 reflects higher seasonal payroll taxes impacting the first quarter of 2023. For the six months ended June 30, 2023, employee benefit costs totaled $16.0 million, an increase of $6.4 million, or 66%, compared to the six months ended June 30, 2022.

The Company utilizes third parties for its core data processing systems. Ongoing data processing costs are directly related to the number of transactions processed and the negotiated rates associated with those transactions. Outsourced data processing costs totaled $20.2 million, $14.6 million, and $6.0 million for the second quarter of 2023, first quarter of 2023, and second quarter of 2022, respectively. For the six months ended June 30, 2023 and ~~$0.1~~June 30, 2022, outsourced data processing costs totaled $34.8 million and $12.2 million, respectively. Higher expenses in the second quarter of 2023 included $10.9 million in direct acquisition-related costs, including termination penalties on acquired technology contracts upon system conversion, compared to $6.6 million in the first quarter of 2023, and $0.4 million in the second quarter of ~~2021.~~2022.

~~Noninterest Expenses~~Telephone and data line expenditures, including electronic communications with customers and between branch and customer support locations and personnel, as well as with third-party data processors, were $1.5 million, $1.1 million, and $0.9 million for the second quarter of 2023, first quarter of 2023, and second quarter of 2022, respectively. For the six months ended June 30, 2023, telephone and data line expenditures totaled $2.6 million, an increase of $1.0 million, or 58%, compared to the six months ended June 30, 2022. The increases during 2023 reflect the expansion of the branch footprint.

Total occupancy, furniture and equipment expenses were $9.4 million in the second quarter of 2023, $9.2 million in the first quarter of 2023, and $5.6 million in the second quarter of 2022. For the six months ended June 30, 2023, total occupancy, furniture and equipment expenses totaled $18.6 million, an increase of $7.6 million, or 68%, compared to the six months ended June 30, 2022. Year over year increases reflect the expansion of the Company’s footprint across Florida.

Marketing expenses totaled $2.0 million in the second quarter of 2023, $2.2 million in the first quarter of 2023, and $1.9 million in the second quarter of 2022. For the six months ended June 30, 2023, marketing expenses totaled $4.3 million, an increase of $1.2 million, or 40%, compared to the six months ended June 30, 2022.

Legal and professional fees for the second quarter of 2023 were $4.1 million, a decrease of $3.4 million, or 46%, compared to the first quarter of 2023, and an increase of $1.1 million, or 38%, compared to the second quarter of 2022. Acquisition-related expenses were $1.7 million in the second quarter of 2023, $4.8 million in the first quarter of 2023, and $1.4 million in the second quarter of 2022. For the six months ended June 30, 2023, legal and professional fees totaled $11.5 million, an increase of $3.8 million, or 49%, compared to the six months ended June 30, 2022. Acquisition-related expenses were $6.5 million for the six months ended June 30, 2023 and $4.3 million for the six months ended June 30, 2022.

FDIC assessments were $2.1 million for the second quarter of 2023, $1.4 million in the first quarter of 2023, and $0.7 million in the second quarter of 2022. For the six months ended June 30, 2023, FDIC assessments totaled $3.6 million compared to $1.5 million for the six months ended June 30, 2022. The increases reflect deposit growth from acquisitions in the fourth quarter of 2022 and first quarter of 2023.

Amortization of intangibles increased by $0.9 million compared to the first quarter of 2023 and $6.2 million compared to the second quarter of 2022. For the six months ended June 30, 2023, amortization of intangibles totaled $14.4 million compared to $2.9 million for the six months ended June 30, 2022. The acquisitions in the fourth quarter of 2022 and first quarter of 2023 added $110.6 million in core deposit intangible assets, which are amortized using an accelerated amortization method.

Foreclosed property expense and net gain/loss on sale was net a gain of $0.1 million in the second of 2023, a net loss of $0.2 million in the first quarter of 2023, and a net gain of $1.0 million in the second quarter of 2022.

No adjustments were recorded to the reserve for potential credit losses on unfunded lending commitments in the second quarter of 2023. This compares to $1.2 million in provision recorded during the first quarter of 2023, primarily associated with the acquisition of Professional, and no adjustments recorded for the second quarter of 2022.

Other expenses totaled $8.3 million, $7.1 million and $5.3 million for the second quarter of 2023, the first quarter of 2023 and the second quarter of 2022, respectively. For the six months ended June 30, 2023, other expense totaled $15.4 million, an increase of $5.3 million, or 53%, compared to the six months ended June 30, 2022. Increases reflect 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.

For the second quarter of ~~2022,~~2023, the efficiency ratio, defined as noninterest expense less amortization of intangibles and gains, losses, and expenses on foreclosed properties divided by net operating revenue (net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses), was ~~56.22%~~67.34%, compared to ~~62.33%~~65.43% for the first

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quarter of ~~2022~~2023 and ~~54.93%~~56.22% for the second quarter of ~~2021. The higher efficiency ratio in the first quarter of 2022 primarily reflects the impact of merger-related expenses.~~2022. For the six months ended June 30, ~~2022,~~2023, the efficiency ratio was ~~59.17%~~66.37%, compared to ~~54.05%~~59.17% for the six months ended June 30, ~~2021.~~

2022. The adjusted efficiency ratio12was 56.44% in the second quarter of 2023, compared to 53.10% in the first quarter of 2023 and 53.15% in the second quarter of ~~2022, compared to 54.86% in the~~2022. The increase from first quarter 2023 primarily reflects the impact of ~~2022 and 53.49% in~~higher deposit rates on net interest income during the ~~second quarter of 2021. In the second quarter of 2022, adjusted noninterest expense~~1 ~~as a percent of average tangible assets was 2.00% compared to 1.99% for the first quarter of 2022 and 1.98% for the second quarter of 2021.~~period. For the six months ended June 30, ~~2022~~2023, the adjusted efficiency ratio1 was ~~53.97%~~54.76%, compared to ~~52.72%~~53.97% for the six months ended June 30, ~~2021. The Company expects that the adjusted efficiency ratio~~1 ~~will continue to be in the low 50s for the remainder of~~ 2022.

Second First Second Six Months Ended
Quarter Quarter Quarter June 30,
(In thousands, except ratios) 2022 2022 2021 2022 2021
Noninterest expense, as reported $ 56,148 $ 58,917 $ 45,784 $ 115,065 $ 91,904
Merger-related charges (3,039) (6,692) (509) (9,731) (1,090)
Amortization of intangibles (1,446) (1,446) (1,212) (2,892) (2,423)
Branch reductions and other expense initiatives — (74) (663) (74) (1,112)
Adjusted noninterest expense1
$ 51,663 $ 50,705 $ 43,400 $ 102,368 $ 87,279
Foreclosed property expense and net gain on sale 968 164 90 1,132 155
Provision for credit losses on unfunded commitments — (142) — (142) —
Net adjusted noninterest expense1
$ 52,631 $ 50,727 $ 43,490 $ 103,358 $ 87,434
Efficiency ratio 56.22 % 62.33 % 54.93 % 59.17 % 54.05 %
Adjusted efficiency ratio1,2
53.15 54.86 53.49 53.97 52.72
Adjusted noninterest expense as a percent of average tangible assets1,2
2.00 1.99 1.98 2.00 2.07
1Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.
2Adjusted efficiency ratio is defined as noninterest expense, including adjustments to noninterest expense divided by aggregated tax equivalent net interest income and noninterest income, including adjustments to revenue.

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

~~Table of Contents~~


	Second			First			Second			Six Months Ended
	Quarter			Quarter			Quarter			June 30,
(In thousands, except ratios)	2023			2023			2022			2023			2022
Noninterest expense, as reported	$	107,865		$	107,475		$	56,148		$	215,340		$	115,065

Merger related charges
Salaries and wages	(1,573)			(4,240)			(652)			(5,813)			(3,605)
Outsourced data processing costs	(10,904)			(6,551)			(420)			(17,455)			(1,052)
Legal and professional fees	(1,664)			(4,789)			(1,381)			(6,453)			(4,272)
Other categories	(1,507)			(1,952)			(586)			(3,459)			(802)
Total merger related charges	(15,648)			(17,532)			(3,039)			(33,180)			(9,731)
Amortization of intangibles	(7,654)			(6,727)			(1,446)			(14,381)			(2,892)

Branch reductions and other expense initiatives	(571)			(1,291)			—			(1,862)			(74)
Adjusted noninterest expense1	$	83,992		$	81,925		$	51,663		$	165,917		$	102,368

Foreclosed property expense and net gain (loss) on sale	57			(195)			968			(138)			1,132
Provision for credit losses on unfunded commitments	—			(1,239)			—			(1,239)			(142)

Net adjusted noninterest expense1	$	84,049		$	80,491		$	52,631		$	164,540		$	103,358

Efficiency ratio	67.34		%	65.43		%	56.22		%	66.37		%	59.17		%
Adjusted efficiency ratio1,2	56.44			53.10			53.15			54.76			53.97

1Non-GAAP measure - see “Explanation of Certain Unaudited Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.
2Adjusted efficiency ratio is defined as noninterest expense, including adjustments to noninterest expense divided by aggregated tax equivalent net interest income and noninterest income, including adjustments to revenue.

Noninterest expense for the second quarter of 2022 totaled $56.1 million, a decrease of $2.8 million, or 5%, compared to the first quarter of 2022, and an increase of $10.4 million, or 23%, from the second quarter of 2021. For the six months ended June 30, 2022, noninterest expenses totaled $115.1 million, an increase of $23.2 million, or 25%, compared to the six months ended June 30, 2021. Noninterest expenses are detailed as follows:

Second First Second Six Months Ended
Quarter Quarter Quarter June 30,
(In thousands) 2022 2022 2021 2022 2021
Salaries and wages $ 28,056 $ 28,219 $ 22,966 $ 56,275 $ 44,359
Employee benefits 4,151 5,501 3,953 9,652 8,933
Outsourced data processing costs 6,043 6,156 4,676 12,199 9,144
Telephone/data lines 908 733 838 1,641 1,623
Occupancy 4,050 3,986 3,310 8,036 7,099
Furniture and equipment 1,588 1,426 1,166 3,014 2,420
Marketing 1,882 1,171 1,002 3,053 2,170
Legal and professional fees 2,946 4,789 2,182 7,735 4,764
FDIC assessments 699 789 515 1,488 1,041
Amortization of intangibles 1,446 1,446 1,212 2,892 2,423
Foreclosed property expense and net gain on sale (968) (164) (90) (1,132) (155)
Provision for credit losses on unfunded commitments — 142 — 142 —
Other 5,347 4,723 4,054 10,070 8,083
Total $ 56,148 $ 58,917 $ 45,784 $ 115,065 $ 91,904

Salaries and wages totaled $28.1 million for the second quarter of 2022, $28.2 million for the first quarter of 2022, and $23.0 million for the second quarter of 2021. The second quarter of 2022 reflects higher compensation costs, with ongoing investments in commercial banking talent and production support roles, which was more than offset by higher merger-related expenses in the first quarter of 2022 associated with the BBFC and Sabal Palm acquisitions. For the six months ended June 30, 2022, salaries and wages totaled $56.3 million, an increase of $11.9 million, or 27%, compared to the six months ended June 30, 2021. The increase compared to the prior year period reflects higher salaries from headcount added through acquisitions and investments made to support organic growth.

During the second quarter of 2022, employee benefit costs, which include costs associated with the Company's self-funded health insurance benefits, 401(k) plan, payroll taxes, and unemployment compensation, were $4.2 million, a decrease of $1.4 million, or 25%, compared to the first quarter of 2022, and an increase of $0.2 million, or 5%, compared to the second quarter of 2021. The first quarter of 2022 included higher seasonal payroll taxes and 401(k) contributions. For the six months ended June 30, 2022, employee benefit costs totaled $9.7 million, an increase of $0.7 million, or 8%, compared to the six months ended June 30, 2021 primarily related to growth in the associate base.

The Company utilizes third parties for its core data processing systems. Ongoing data processing costs are directly related to the number of transactions processed and the negotiated rates associated with those transactions. Outsourced data processing costs totaled $6.0 million, $6.2 million, and $4.7 million for the second quarter of 2022, first quarter of 2022, and second quarter of 2021, respectively. For the six months ended June 30, 2022 and June 30, 2021, outsourced data processing costs totaled $12.2 million and $9.1 million, respectively. The increase year-over-year reflects increased cost associated with growth in the company’s footprint as well as ongoing upgrades to the Company’s various technology platforms.

Telephone and data line expenditures, including electronic communications with customers and between branch and customer support locations and personnel, as well as with third-party data processors, were $0.9 million, $0.7 million, and $0.8 million for the second quarter of 2022, first quarter of 2022, and second quarter of 2021, respectively. Telephone and data line expenditures totaled $1.6 million in each of the six months ended June 30, 2022 and 2021.

Total occupancy, furniture and equipment expenses were $5.6 million in the second quarter of 2022, $5.4 million in the first quarter of 2022, and $4.5 million in the second quarter of 2021. Increases compared to the second quarter of 2021 relate to expansion of the branch footprint through acquisitions and through organic growth into new markets including Naples, Sarasota and Jacksonville. For the six months ended June 30, 2022, total occupancy, furniture and equipment expenses totaled $11.1 million, compared to $9.5 million for the six months ended June 30, 2021.

~~Table of Contents~~

Marketing expenses totaled $1.9 million in the second quarter of 2022, $1.2 million in the first quarter of 2022, and $1.0 million in the second quarter of 2021. Increases quarter-over-quarter are primarily the result of marketing campaigns focused on our expansion markets. For the six months ended June 30, 2022, marketing expenses totaled $3.1 million, an increase of $0.9 million, or 41%, compared to the six months ended June 30, 2021.

Legal and professional fees for the second quarter of 2022 were $2.9 million, a decrease of $1.8 million, or 38%, compared to the first quarter of 2022, and an increase of $0.8 million, or 35%, compared to the second quarter of 2021. For the six months ended June 30, 2022, legal and professional fees totaled $7.7 million, an increase of $3.0 million, or 62%, compared to the six months ended June 30, 2021. Acquisition-related expenses were $1.4 million in the second quarter of 2022, $2.9 million in the first quarter of 2022, and $0.5 million in the second quarter of 2021.

FDIC assessments were $0.7 million for the second quarter of 2022, $0.8 million in the first quarter of 2022, and $0.5 million in the second quarter of 2021. For the six months ended June 30, 2022, FDIC assessments totaled $1.5 million compared to $1.0 million for the six months ended June 30, 2021.

~~A provision of $0.1 million was recorded for potential credit losses on unfunded lending commitments in the first quarter of 2022 attributed to the acquisitions of BBFC and Sabal Palm.~~

Other expense totaled $5.3 million, $4.7 million and $4.1 million for the second quarter of 2022, the first quarter of 2022 and the second quarter of 2021, respectively. For the six months ended June 30, 2022, other expense totaled $10.1 million, an increase of $2.0 million, or 25%, compared to the six months ended June 30, 2021, reflecting higher recruiting and production-related costs.

The Company expects to maintain expense discipline while investing for growth. Expenses in the third quarter of 2022 are expected to increase, primarily as a result of continued investments in talent and scaling the business.

Provision for Credit Losses

The provision for credit losses was a net benefit of $0.8 million for the second quarter of ~~2022~~2023, compared to a provision expense of ~~$6.6~~$31.6 million for the first quarter of ~~2022~~2023, and ~~a reversal~~provision expense of ~~provision of $4.9~~$0.8 million for the second quarter of ~~2021.~~2022. The first quarter of ~~2022~~2023 included ~~$5.1~~$26.6 million day one provision recorded in ~~provisioning for loans acquired in~~conjunction with the Sabal Palm and BBFC transactions. The reversal in the second quarter of 2021 lowered the ratio of allowance for credit losses to total loans, reflecting improvement in the economic forecast at that time.Professional acquisition.

Income Taxes

For the second quarter of ~~2022,~~2023, the Company recorded tax expense of ~~$8.9~~$10.2 million, compared to ~~$5.8~~$2.7 million in the first quarter of ~~2022~~2023 and ~~$8.8~~$8.9 million in the second quarter of ~~2021. During~~2022, with an effective tax rate of 24.6%, 18.6% and 21.3%, respectively. The first quarter of 2023 included a discrete benefit of $0.6 million related to the BOLI distribution which, combined with lower overall pre-tax income, resulted in a lower effective tax rate. Tax expense related to stock-based compensation totaled $0.3 million in the second quarter of ~~2022,~~2023, compared to a tax benefit of $0.2 million in the ~~Company received~~first quarter of 2023, and a ~~$1.0 million refund~~tax benefit of ~~Florida corporate income tax paid in prior periods. Tax benefits related to stock-based compensation totaled~~ $0.4 million in the second quarter of ~~2022, $0.5 million in the first quarter of 2022, and $0.6 million in the second quarter of 2021.~~2022. For the six months ended June 30, ~~2022,~~2023, tax expense totaled ~~$14.7~~$12.9 million, a decrease of ~~$4.2~~$1.8 million, or ~~22%~~12%, compared to the six months ended June 30, ~~2021~~2022 due ~~primarily~~ to lower pre-tax income.

Table of Content s

Explanation of Certain Unaudited Non-GAAP Financial Measures

This report contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). The financial highlights provide reconciliations between GAAP and adjusted financial measures including net income, fully taxable equivalent net interest income, noninterest income, noninterest expense, tax adjustments, net interest margin and other financial ratios. Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance and if not provided would be requested by the investor community. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might define or calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.

4955

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Reconciliation of Non-GAAP Measures


		Second			First			Second			Six Months Ended							Second			First			Second			Six Months Ended
		Quarter			Quarter			Quarter			June 30,							Quarter			Quarter			Quarter			June 30,
(In thousands, except per share data)	(In thousands, except per share data)	2022			2022			2021			2022			2021			(In thousands, except per share data)	2023			2023			2022			2023			2022
Net income, as reported:	Net income, as reported:																Net income, as reported:
Net income	Net income	$	32,755		$	20,588		$	31,410		$	53,343		$	65,129		Net income	$	31,249		$	11,827		$	32,755		$	43,076		$	53,343

Noninterest Income	Noninterest Income	$	16,964		$	15,373		$	15,322		$	32,337		$	32,993		Noninterest Income	$	21,576		$	22,445		$	16,964		$	44,021		$	32,337
Securities losses, net		300			452			55			752			169
Securities losses (gains), net																	Securities losses (gains), net	176			(107)			300			69			752

BOLI benefits on death (included in other income)																	BOLI benefits on death (included in other income)	—			(2,117)			—			(2,117)			—
Total adjustments to noninterest income	Total adjustments to noninterest income	300			452			55			752			169			Total adjustments to noninterest income	176			(2,224)			300			(2,048)			752
Total Adjusted Noninterest Income	Total Adjusted Noninterest Income	$	17,264		$	15,825		$	15,377		$	33,089		$	33,162		Total Adjusted Noninterest Income	$	21,752		$	20,221		$	17,264		$	41,973		$	33,089

Noninterest Expense	Noninterest Expense	56,148			$	58,917		$	45,784		$	115,065		$	91,904		Noninterest Expense	$	107,865		$	107,475		$	56,148		$	215,340		$	115,065
Merger-related charges		(3,039)			(6,692)			(509)			(9,731)			(1,090)
Salaries and wages																	Salaries and wages	(1,573)			(4,240)			(652)			(5,813)			(3,605)
Outsourced data processing costs																	Outsourced data processing costs	(10,904)			(6,551)			(420)			(17,455)			(1,052)
Legal and professional fees																	Legal and professional fees	(1,664)			(4,789)			(1,381)			(6,453)			(4,272)
Other categories																	Other categories	(1,507)			(1,952)			(586)			(3,459)			(802)
Total merger-related charges																	Total merger-related charges	(15,648)			(17,532)			(3,039)			(33,180)			(9,731)
Amortization of intangibles	Amortization of intangibles	(1,446)			(1,446)			(1,212)			(2,892)			(2,423)			Amortization of intangibles	(7,654)			(6,727)			(1,446)			(14,381)			(2,892)

Branch reductions and other expense initiatives1	Branch reductions and other expense initiatives1	—			(74)			(663)			(74)			(1,112)			Branch reductions and other expense initiatives1	(571)			(1,291)			—			(1,862)			(74)
Total adjustments to noninterest expense	Total adjustments to noninterest expense	(4,485)			(8,212)			(2,384)			(12,697)			(4,625)			Total adjustments to noninterest expense	(23,873)			(25,550)			(4,485)			(49,423)			(12,697)
Total Adjusted Noninterest Expense	Total Adjusted Noninterest Expense	$	51,663		$	50,705		$	43,400		$	102,368		$	87,279		Total Adjusted Noninterest Expense	$	83,992		$	81,925		$	51,663		$	165,917		$	102,368

Income Taxes	Income Taxes	$	8,886		$	5,834		$	8,785		$	14,720		$	18,942		Income Taxes	$	10,189		$	2,697		$	8,886		$	12,886		$	14,720
Tax effect of adjustments	Tax effect of adjustments	1,213			2,196			598			3,409			1,175			Tax effect of adjustments	6,095			5,912			1,213			12,007			3,409

Total adjustments to income taxes		1,213			2,196			598			3,409			1,175

Adjusted income taxes	Adjusted income taxes	10,099			8,030			9,383			18,129			20,117			Adjusted income taxes	16,284			8,609			10,099			24,893			18,129
Adjusted net income	Adjusted net income	$	36,327		$	27,056		$	33,251		$	63,383		$	68,748		Adjusted net income	$	49,203		$	29,241		$	36,327		$	78,444		$	63,383

Earnings per diluted share, as reported	Earnings per diluted share, as reported	$	0.53		$	0.33		$	0.56		$	0.86		$	1.17		Earnings per diluted share, as reported	$	0.37		$	0.15		$	0.53		$	0.52		$	0.86
Adjusted diluted earnings per share	Adjusted diluted earnings per share	0.59			0.44			0.59			1.03			1.23			Adjusted diluted earnings per share	0.58			0.36			0.59			0.94			1.03
Average diluted shares outstanding	Average diluted shares outstanding	61,923			61,704			55,901			61,818			55,827			Average diluted shares outstanding	85,536			80,717			61,923			83,260			61,818

Adjusted Noninterest Expense	Adjusted Noninterest Expense	$	51,663		$	50,705		$	43,400		$	102,368		$	87,279		Adjusted Noninterest Expense	$	83,992		$	81,925		$	51,663		$	165,917		$	102,368
Foreclosed property expense and net (loss) gain on sale		968			164			90			1,132			155
Foreclosed property expense and net gain (loss) on sale																	Foreclosed property expense and net gain (loss) on sale	57			(195)			968			(138)			1,132
Provision for credit losses on unfunded commitments	Provision for credit losses on unfunded commitments	—			(142)			—			(142)			—			Provision for credit losses on unfunded commitments	—			(1,239)			—			(1,239)			(142)
Net Adjusted Noninterest Expense	Net Adjusted Noninterest Expense	$	52,631		$	50,727		$	43,490		$	103,358		$	87,434		Net Adjusted Noninterest Expense	$	84,049		$	80,491		$	52,631		$	164,540		$	103,358

Revenue	Revenue	$	98,611		$	91,895		$	81,124		$	190,506		$	165,405		Revenue	$	148,539		$	153,597		$	98,611		$	302,136		$	190,506
Total adjustments to revenue	Total adjustments to revenue	300			452			55			752			169			Total adjustments to revenue	176			(2,224)			300			(2,048)			752
Impact of FTE adjustment	Impact of FTE adjustment	117			117			131			234			262			Impact of FTE adjustment	190			199			117			389			234
Adjusted revenue on a fully tax equivalent basis	Adjusted revenue on a fully tax equivalent basis	$	99,028		$	92,464		$	81,310		$	191,492		$	165,836		Adjusted revenue on a fully tax equivalent basis	$	148,905		$	151,572		$	99,028		$	300,477		$	191,492
Adjusted Efficiency Ratio	Adjusted Efficiency Ratio	53.15		%	54.86		%	53.49		%	53.97		%	52.72		%	Adjusted Efficiency Ratio	56.44		%	53.10		%	53.15		%	54.76		%	53.97		%
Net Adjusted Noninterest Expense as a Percent of Average Tangible Assets2		2.00		%	1.99		%	1.98		%	2.00		%	2.07		%

Net Interest Income	Net Interest Income	$	81,647		$	76,522		$	65,802		$	158,169		$	132,412		Net Interest Income	$	126,963		$	131,152		$	81,647		$	258,115		$	158,169
Impact of FTE adjustment	Impact of FTE adjustment	117			117			131			234			262			Impact of FTE adjustment	190			199			117			389			234
Net interest income including FTE adjustment	Net interest income including FTE adjustment	81,764			76,639			65,933			158,403			132,674			Net interest income including FTE adjustment	127,153			131,351			81,764			258,504			158,403
Noninterest income	Noninterest income	16,964			15,373			15,322			32,337			32,993			Noninterest income	21,576			22,445			16,964			44,021			32,337
Noninterest expense	Noninterest expense	56,148			58,917			45,784			115,065			91,904			Noninterest expense	107,865			107,475			56,148			215,340			115,065
Pre-Tax Pre-Provision Earnings		42,580			33,095			35,471			75,675			73,763
Adjustments to noninterest income		300			452			55			752			169
Adjustments to noninterest expense		(3,517)			(8,190)			(2,294)			(11,707)			(4,470)
Adjusted Pre-Tax Pre-Provision Earnings		$	46,397		$	41,737		$	37,820		$	88,134		$	78,402

5056

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		Second			First			Second			Six Months Ended							Second			First			Second			Six Months Ended
		Quarter			Quarter			Quarter			June 30,							Quarter			Quarter			Quarter			June 30,
(In thousands, except per share data)	(In thousands, except per share data)	2022			2022			2021			2022			2021			(In thousands, except per share data)	2023			2023			2022			2023			2022
Pre-Tax Pre-Provision Earnings																	Pre-Tax Pre-Provision Earnings	40,864			46,321			42,580			87,185			75,675
Adjustments to noninterest income																	Adjustments to noninterest income	176			(2,224)			300			(2,048)			752
Adjustments to noninterest expense																	Adjustments to noninterest expense	(23,816)			(26,984)			(3,517)			(50,800)			(11,707)
Adjusted Pre-Tax Pre-Provision Earnings																	Adjusted Pre-Tax Pre-Provision Earnings	$	64,856		$	71,081		$	46,397		$	135,937		$	88,134

Average Assets	Average Assets	$	10,840,518		$	10,628,516		$	9,025,846		$	10,735,102		$	8,757,093		Average Assets	$	14,887,289		$	13,947,976		$	10,840,518		$	14,420,227		$	10,735,102
Less average goodwill and intangible assets	Less average goodwill and intangible assets	(307,411)			(304,321)			(235,964)			(305,875)			(236,640)			Less average goodwill and intangible assets	(842,988)			(750,694)			(307,411)			(797,096)			(305,875)
Average Tangible Assets	Average Tangible Assets	$	10,533,107		$	10,324,195		$	8,789,882		$	10,429,227		$	8,520,453		Average Tangible Assets	$	14,044,301		$	13,197,282		$	10,533,107		$	13,623,131		$	10,429,227

Return on Average Assets (ROA)	Return on Average Assets (ROA)	1.21		%	0.79		%	1.40		%	1.00		%	1.50		%	Return on Average Assets (ROA)	0.84		%	0.34		%	1.21		%	0.60		%	1.00		%
Impact of removing average intangible assets and related amortization	Impact of removing average intangible assets and related amortization	0.08			0.06			0.08			0.07			0.08			Impact of removing average intangible assets and related amortization	0.22			0.18			0.08			0.20			0.07
Return on Average Tangible Assets (ROTA)	Return on Average Tangible Assets (ROTA)	1.29			0.85			1.48			1.07			1.58			Return on Average Tangible Assets (ROTA)	1.06			0.52			1.29			0.80			1.07
Impact of other adjustments for Adjusted Net Income	Impact of other adjustments for Adjusted Net Income	0.09			0.21			0.04			0.16			0.05			Impact of other adjustments for Adjusted Net Income	0.35			0.38			0.09			0.36			0.16
Adjusted Return on Average Tangible Assets	Adjusted Return on Average Tangible Assets	1.38		%	1.06		%	1.52		%	1.23		%	1.63		%	Adjusted Return on Average Tangible Assets	1.41		%	0.90		%	1.38		%	1.16		%	1.23		%

Pre-Tax Pre-Provision return on Average Tangible Assets																	Pre-Tax Pre-Provision return on Average Tangible Assets	1.33		%	1.58		%	1.66		%	1.45		%	1.51		%
Impact of adjustments on Pre-Tax Pre-Provision earnings																	Impact of adjustments on Pre-Tax Pre-Provision earnings	0.52			0.60			0.11			0.56			0.19
Adjusted Pre-Tax Pre-Provision Return on Tangible Assets																	Adjusted Pre-Tax Pre-Provision Return on Tangible Assets	1.85		%	2.18		%	1.77		%	2.01		%	1.70		%

Average Shareholders' Equity	Average Shareholders' Equity	$	1,350,568		$	1,400,535		$	1,170,395		$	1,375,413		$	1,153,498		Average Shareholders' Equity	$	2,070,529		$	1,897,045		$	1,350,568		$	1,984,264		$	1,375,413
Less average goodwill and intangible assets	Less average goodwill and intangible assets	(307,411)			(304,321)			(235,964)			(305,875)			(236,640)			Less average goodwill and intangible assets	(842,988)			(750,694)			(307,411)			(797,096)			(305,875)
Average Tangible Equity	Average Tangible Equity	$	1,043,157		$	1,096,214		$	934,431		$	1,069,538		$	916,858		Average Tangible Equity	$	1,227,541		$	1,146,351		$	1,043,157		$	1,187,168		$	1,069,538

Return on Average Shareholders' Equity	Return on Average Shareholders' Equity	9.73		%	5.96		%	10.76		%	7.82		%	11.39		%	Return on Average Shareholders' Equity	6.05		%	2.53		%	9.73		%	4.38		%	7.82		%
Impact of removing average intangible assets and related amortization	Impact of removing average intangible assets and related amortization	3.28			2.06			3.12			2.64			3.34			Impact of removing average intangible assets and related amortization	6.03			3.43			3.28			4.76			2.64
Return on Average Tangible Common Equity (ROTCE)	Return on Average Tangible Common Equity (ROTCE)	13.01			8.02			13.88			10.46			14.73			Return on Average Tangible Common Equity (ROTCE)	12.08			5.96			13.01			9.14			10.46
Impact of other adjustments for Adjusted Net Income	Impact of other adjustments for Adjusted Net Income	0.96			1.99			0.39			1.49			0.39			Impact of other adjustments for Adjusted Net Income	4.00			4.38			0.96			4.18			1.49
Adjusted Return on Average Tangible Common Equity	Adjusted Return on Average Tangible Common Equity	13.97		%	10.01		%	14.27		%	11.95		%	15.12		%	Adjusted Return on Average Tangible Common Equity	16.08		%	10.34		%	13.97		%	13.32		%	11.95		%

Loan Interest Income2	Loan Interest Income2	$	69,388		$	67,198		$	60,440		$	136,586		$	122,830		Loan Interest Income2	$	148,432		$	135,341		$	69,388		$	283,773		$	136,586
Accretion on acquired loans	Accretion on acquired loans	(2,720)			(3,717)			(2,886)			(6,437)			(5,754)			Accretion on acquired loans	(14,191)			(15,942)			(2,720)			(30,133)			(6,437)
Interest and fees on PPP loans		(741)			(1,523)			(5,127)			(2,264)			(12,013)
Loan interest income excluding PPP and accretion on acquired loans2		$	65,927		$	61,958		$	52,427		$	127,885		$	105,063
Loan interest income excluding accretion on acquired loans2																	Loan interest income excluding accretion on acquired loans2	$	134,241		$	119,399		$	66,668		$	253,640		$	130,149

Yield on Loans2	Yield on Loans2	4.29		%	4.30		%	4.33		%	4.30		%	4.36		%	Yield on Loans2	5.89		%	5.86		%	4.29		%	5.88		%	4.30		%

Impact of accretion on acquired loans	Impact of accretion on acquired loans	(0.16)			(0.24)			(0.21)			(0.21)			(0.20)			Impact of accretion on acquired loans	(0.56)			(0.69)			(0.16)			(0.63)			(0.21)
Impact of PPP loans		(0.03)			(0.06)			0.01			(0.04)			(0.02)
Yield on loans excluding PPP and accretion on acquired loans2		4.10		%	4.00		%	4.13		%	4.05		%	4.14		%
Yield on loans excluding accretion on acquired loans2																	Yield on loans excluding accretion on acquired loans2	5.33		%	5.17		%	4.13		%	5.25		%	4.09		%

Net Interest Income2	Net Interest Income2	$	81,764		$	76,639		$	65,933		$	158,403		$	132,674		Net Interest Income2	$	127,153		$	131,351		$	81,764		$	258,504		$	158,403
Accretion on acquired loans	Accretion on acquired loans	(2,720)			(3,717)			(2,886)			(6,437)			(5,754)			Accretion on acquired loans	(14,191)			(15,942)			(2,720)			(30,133)			(6,437)
Interest and fees on PPP loans		(741)			(1,523)			(5,127)			(2,264)			(12,013)
Net interest income excluding PPP and accretion on acquired loans2		$	78,303		$	71,399		$	57,920		$	149,702		$	114,907

Net Interest Margin2		3.38		%	3.25		%	3.23		%	3.32		%	3.37		%
Impact of accretion on acquired loans		(0.12)			(0.15)			(0.14)			(0.14)			(0.15)
Impact of PPP loans		(0.02)			(0.05)			(0.06)			(0.03)			(0.08)
Net interest margin excluding PPP and accretion on acquired loans2		3.24		%	3.05		%	3.03		%	3.15		%	3.14		%

Loan Interest Income2		$	69,388		$	67,198		$	60,440		$	136,586		$	122,830
Tax equivalent adjustment to loans		(81)			(80)			(92)			(161)			(184)
Loan interest income excluding tax equivalent adjustment		$	69,307		$	67,118		$	60,348		$	136,425		$	122,646
Net interest income excluding accretion on acquired loans2																	Net interest income excluding accretion on acquired loans2	$	112,962		$	115,409		$	79,044		$	228,371		$	151,966

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		Second		First		Second		Six Months Ended					Second			First			Second			Six Months Ended
		Quarter		Quarter		Quarter		June 30,					Quarter			Quarter			Quarter			June 30,
(In thousands, except per share data)	(In thousands, except per share data)	2022		2022		2021		2022		2021		(In thousands, except per share data)	2023			2023			2022			2023			2022

Net Interest Margin2												Net Interest Margin2	3.86		%	4.31		%	3.38		%	4.09		%	3.32		%
Impact of accretion on acquired loans												Impact of accretion on acquired loans	(0.43)			(0.53)			(0.12)			(0.48)			(0.14)
Net interest margin excluding accretion on acquired loans2												Net interest margin excluding accretion on acquired loans2	3.43		%	3.78		%	3.26		%	3.61		%	3.18		%

Loan Interest Income2												Loan Interest Income2	$	148,432		$	135,341		$	69,388		$	283,773		$	136,586
Tax equivalent adjustment to loans												Tax equivalent adjustment to loans	(167)			(173)			(81)			(340)			(161)
Loan interest income excluding tax equivalent adjustment												Loan interest income excluding tax equivalent adjustment	$	148,265		$	135,168		$	69,307		$	283,433		$	136,425

Securities Interest Income2	Securities Interest Income2	$	12,562	$	10,218	$	6,745	$	22,780	$	13,230	Securities Interest Income2	$	21,018		$	19,375		$	12,562		$	40,393		$	22,780
Tax equivalent adjustment to securities	Tax equivalent adjustment to securities	(36)		(37)		(39)		(73)		(78)		Tax equivalent adjustment to securities	(23)			(26)			(36)			(49)			(73)
Securities interest income excluding tax equivalent adjustment	Securities interest income excluding tax equivalent adjustment	$	12,526	$	10,181	$	6,706	$	22,707	$	13,152	Securities interest income excluding tax equivalent adjustment	$	20,995		$	19,349		$	12,526		$	40,344		$	22,707

Net Interest Income2	Net Interest Income2	$	81,764	$	76,639	$	65,933	$	158,403	$	132,674	Net Interest Income2	$	127,153		$	131,351		$	81,764		$	258,504		$	158,403
Tax equivalent adjustments to loans	Tax equivalent adjustments to loans	(81)		(80)		(92)		(161)		(184)		Tax equivalent adjustments to loans	(167)			(173)			(81)			(340)			(161)
Tax equivalent adjustments to securities	Tax equivalent adjustments to securities	(36)		(37)		(39)		(73)		(78)		Tax equivalent adjustments to securities	(23)			(26)			(36)			(49)			(73)
Net interest income excluding tax equivalent adjustments	Net interest income excluding tax equivalent adjustments	$	81,647	$	76,522	$	65,802	$	158,169	$	132,412	Net interest income excluding tax equivalent adjustments	$	126,963		$	131,152		$	81,647		$	258,115		$	158,169
1Includes 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.	1Includes 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.											1Includes 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.
2On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.	2On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.											2On a fully taxable equivalent basis. All yields and rates have been computed using amortized cost.

Financial Condition

Total assets ~~increased $1.1 billion at~~as of June 30, ~~2022,~~2023 were $15.0 billion, an increase of $2.9 billion, or ~~12%~~24%, from December 31, ~~2021, reflecting organic growth,~~2022. The increase primarily reflects the ~~acquisitions~~acquisition of ~~BBFC and Sabal Palm,~~Professional on January 31, 2023, which ~~combined~~ added ~~$661.0 million~~$2.7 billion in ~~assets, as well as higher cash and securities balances due to higher customer deposit balances.~~assets.

Securities

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

At June 30, ~~2022,~~2023, the Company had ~~$1.8~~$1.9 billion in securities available-for-sale and ~~$794.8~~$707.8 million in securities held-to-maturity. The Company's total debt securities portfolio increased ~~$312.6~~$4.9 million ~~or 14%,~~ from December 31, ~~2021.~~2022.

During the six months ended June 30, ~~2022,~~2023, there were ~~$680.3~~$22.4 million of debt ~~security purchases~~securities purchased, $167.1 million acquired through the acquisition of Professional and ~~$213.9~~$149.6 million in paydowns and maturities over the same period. ~~The Company obtained securities in the first quarter of 2022 as part~~$22.1 million of the ~~acquisition of BBFC which had a fair value of $26.0 million and~~securities acquired from Professional were immediately sold with no gain or loss recognized. For the six months ended June 30, 2021, there were $669.2 million of debt security purchases and $361.9 million in paydowns and maturities over the same period. For the six months ended June 30, 2021, the Company had $56.2 million in proceeds from the sales of securities with a net loss of $0.1 million.

Debt securities generally return principal and interest monthly. The modified duration of the available-for-sale portfolio at June 30, ~~2022~~2023 was ~~3.3,~~4.1, compared to ~~3.1~~3.7 at December 31, ~~2021.~~2022.

At June 30, ~~2022,~~2023, available-for-sale securities had gross unrealized losses of ~~$163.2~~$253.4 million and gross unrealized gains of ~~$0.7~~$0.9 million, compared to gross unrealized losses of ~~$20.9~~$248.7 million and gross unrealized gains of ~~$11.5~~$1.1 million at December 31, ~~2021.~~2022. The ~~decline in value was~~changes were the result of ~~rising~~changes in benchmark interest rates and ~~changes in interest rate~~product spreads during the period. The Company assesses securities in an unrealized loss position on a quarterly basis. As of June 30, ~~2022,~~2023, the Company expected to recover the entire amortized cost basis of these securities, and therefore, no allowance for credit losses was recorded.

The credit quality of the Company’s securities holdings is primarily investment grade. U.S. Treasury and U.S. government agencies and obligations of U.S. government sponsored entities totaled $2.1 billion, or ~~81%~~82%, of the total portfolio.

Table of Content s

The portfolio includes ~~$166.2~~$143.0 million, with a fair value of ~~$158.8~~$129.7 million, in private label residential and commercial mortgage-backed securities and collateralized mortgage obligations. Included are ~~$146.5~~$130.8 million, with a fair value of ~~$139.6~~$118.5 million, in private label mortgage-backed residential securities with weighted average credit support of 22%. The collateral underlying these mortgage investments includes both fixed-rate and adjustable-rate mortgage loans. Non-guaranteed agency commercial securities totaled ~~$19.7~~$12.2 million, with a fair value of ~~$19.3~~$11.2 million. These securities have weighted average credit support of ~~21%~~22%. The collateral underlying these mortgages is primarily pooled multifamily loans.

~~Table of Contents~~

The Company also has invested ~~$315.2~~$310.5 million in ~~uncapped 3-month LIBOR~~ floating rate collateralized loan obligations. Collateralized loan obligations are special purpose vehicles that purchase first lien broadly syndicated corporate loans while providing support to senior tranche investors. As of June 30, ~~2022,~~2023, all of the Company’s collateralized loan obligations were in AAA/AA tranches with average credit support of 32%. The Company utilizes credit models with assumptions of loan level defaults, recoveries, and prepayments to evaluate each security for potential credit losses. The result of this analysis did not indicate expected credit losses.

Held-to-maturity securities consist solely of mortgage-backed securities and collateralized mortgage obligations guaranteed by ~~government agencies.~~U.S. government-sponsored entities, each of which is expected to recover any price depreciation over its holding period as the debt securities move to maturity. The Company has significant liquidity and available borrowing capacity through other sources if needed, and has the intent and ability to hold these investments to maturity.

At June 30, ~~2022,~~2023, 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 June 30, ~~2022,~~2023, no allowance for credit losses has been recorded.

Loan Portfolio

Loans, net of unearned income and excluding the allowance for credit losses, were ~~$6.5~~$10.1 billion at June 30, ~~2022,~~2023, a ~~$616.5 million~~$2.0 billion increase from December 31, ~~2021. Changes~~2022. The increase during the first half of ~~2022~~2023 included ~~$367.9 million~~$2.0 billion added through ~~bank acquisitions, and~~ the purchase of a $111.3 million residential loan pool in the first quarter of 2022. Removing the impacts of loans added through acquisitions and the purchased pool, loans grew 7% on an annualized basis in each of the first and second quarters of 2022. The Company expects loan growth to continue, with an annualized growth rate, excluding bank acquisitions, in the high single digits for the remainder of 2022.

For the six months ended June 30, 2022, the Company originated $834.8 million in commercial and commercial real estate loans, compared to $397.3 million for the six months ended June 30, 2021, an increase of $437.6 million, or 110%. The late-stage loan pipeline for commercial and commercial real estate loans totaled $476.7 million at June 30, 2022. The addition of well-established commercial bankers and expansion into new markets across the state has generated disciplined loan growth.

The Company originated $278.5 million in residential loans retained in the portfolio during the six months ended June 30, 2022, compared to $164.7 million during the six months ended June 30, 2021, an increase of $113.7 million, or 69%. Residential loans retained in the portfolio includes the $111.3 million purchased residential loan pool consisting of 30-year fixed rate jumbo residential loans purchased in the first quarter of 2022 and the $38.4 million purchased residential loan pool consisting of 30-year fixed rate jumbo residential loans purchased in the second quarter of 2021. Saleable production decreased for the six months ended June 30, 2022, to $93.9 million compared to $258.4 million during the six months ended June 30, 2021, reflecting the impact of increasing interest rates and limited housing inventory.

Consumer originations totaled $205.5 million for the six months ended June 30, 2022, an increase of $95.0 million, or 86%, compared to the six months ended June 30, 2021. The increase is primarily the result of consumer lending teams that joined in late 2021.Professional acquisition.

The Company remains committed to sound risk management procedures. Portfolio diversification in terms of asset mix, industry, and loan type has been an important element of the Company's lending strategy. The average loan size is only $278 thousand, and the average commercial loan size is only $685 thousand at June 30, 2023, 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”).

~~Table of Contents~~

The following ~~tables detail~~table details loan portfolio composition at June 30, ~~2022~~2023 and December 31, ~~2021~~2022 for portfolio loans, purchased credit deteriorated (“PCD”) and loans purchased which are not considered purchased credit deteriorated (“Non-PCD”) as defined in Note 4-Loans.


		June 30, 2022									June 30, 2023
(In thousands)	(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total		(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total
Construction and land development	Construction and land development	$	320,596	$	29,391	$	38	$	350,025	Construction and land development	$	424,964	$	347,876	$	21,531	$	794,371
Commercial real estate - owner-occupied		979,173		255,850		19,320		1,254,343
Commercial real estate - non owner-occupied		1,457,626		438,184		76,730		1,972,540
Commercial real estate - owner occupied										Commercial real estate - owner occupied	1,026,700		594,211		48,458		1,669,369
Commercial real estate - non-owner occupied										Commercial real estate - non-owner occupied	1,818,307		1,381,801		170,103		3,370,211
Residential real estate	Residential real estate	1,442,435		198,901		6,129		1,647,465		Residential real estate	1,674,505		691,863		29,984		2,396,352
Commercial and financial	Commercial and financial	1,018,258		92,610		13,903		1,124,771		Commercial and financial	1,152,360		376,571		81,964		1,610,895
Consumer	Consumer	171,315		3,886		—		175,201		Consumer	166,250		103,667		2,165		272,082
Paycheck Protection Program		10,518		6,685		—		17,203
PPP Loans										PPP Loans	958		3,681		—		4,639
Totals	Totals	$	5,399,921	$	1,025,507	$	116,120	$	6,541,548	Totals	$	6,264,044	$	3,499,670	$	354,205	$	10,117,919

December 31, 2021
(In thousands) Portfolio Loans Acquired Non-PCD Loans PCD Loans Total
Construction and land development $ 199,341 $ 31,438 $ 45 $ 230,824
Commercial real estate - owner-occupied 983,517 186,812 27,445 1,197,774
Commercial real estate - non owner-occupied 1,278,180 382,554 75,705 1,736,439
Residential real estate 1,261,306 156,957 7,091 1,425,354
Commercial and financial 968,318 84,395 16,643 1,069,356
Consumer 169,507 4,658 10 174,175
Paycheck Protection Program 69,503 21,604 — 91,107
Totals $ 4,929,672 $ 868,418 $ 126,939 $ 5,925,029

Table of Content s


	December 31, 2022
(In thousands)	Portfolio Loans		Acquired Non-PCD Loans		PCD Loans		Total
Construction and land development	$	364,900	$	201,333	$	21,100	$	587,332
Commercial real estate - owner occupied	995,154		451,202		31,946		1,478,302
Commercial real estate - non-owner occupied	1,695,411		767,138		127,225		2,589,774
Residential real estate	1,558,643		271,378		19,482		1,849,503
Commercial and financial	1,151,273		182,124		15,238		1,348,636
Consumer	177,338		89,458		19,791		286,587
PPP Loans	1,474		3,116		—		4,590
Totals	$	5,944,193	$	1,965,749	$	234,782	$	8,144,724

The amortized cost basis of loans ~~at June 30, 2022~~ included net deferred costs of ~~$30.8~~$37.6 million ~~on non-PPP portfolio loans~~at June 30, 2023 and ~~net deferred fees of $0.3~~$35.1 million ~~on PPP loans. At~~at December 31, ~~2021, the amortized cost basis included net deferred costs of $31.0 million on non-PPP portfolio loans and net deferred fees of $2.4 million on PPP loans.~~2022. At June 30, ~~2022,~~2023, the remaining fair value adjustments on acquired loans ~~was a net discount of $21.4~~were $201.8 million, or ~~1.8%~~5.0%, of the outstanding acquired loan ~~balances. At December 31, 2021, the remaining fair value adjustments for acquired loans was a net discount of $23.1~~balances, compared to $97.7 million, or ~~2.3%~~4.3%, of the acquired loan ~~balances.~~balances at December 31, 2022. The discount is accreted into interest income over the remaining lives of the related loans on a level yield basis.

The following table details commercial real estate - non-owner occupied loans.


	June 30, 2023
(In thousands)	Amortized Cost Basis		% of Total Loans
Commercial real estate - non-owner occupied
Retail	$	1,104,772	10.92	%
Office	625,562		6.18
Multifamily 5+	512,762		5.07
Hotel/Motel	424,472		4.20
Industrial/Warehouse	369,124		3.65
Other	333,519		3.30
Total commercial real estate - non-owner occupied	$	3,370,211	33.32	%

Commercial real estate (“CRE”) non-owner occupied loans ~~inclusive of owner-occupied CRE,~~ increased by ~~$292.7~~$780.4 million ~~or 10%,~~ in the six months ended June 30, ~~2022,~~2023, totaling ~~$3.2~~$3.4 billion at June 30, ~~2022~~2023 compared to ~~$2.9~~$2.6 billion at December 31, ~~2021.~~ 2022. Non-owner occupied CRE loans are collateralized by properties where the source of repayment is typically from the sale or lease of the property. Within the non-owner occupied CRE portfolio, the largest segment is Retail properties, which totaled approximately $1.1 billion at June 30, 2023. This segment targets grocery or credit tenant-anchored shopping plazas, single credit tenant retail buildings, smaller outparcels, and other small retail units. Loans in this segment have a weighted average loan to value of 52% and an average loan size of $2.1 million. The second-largest segment in the non-owner occupied CRE portfolio is Office properties, which totaled approximately $625.6 million at June 30, 2023. This segment targets low to mid-rise suburban offices and is broadly diversified across many types of professional services. There is limited exposure to central business districts. Loans in this segment have a weighted average loan to value of 55% and an average loan size of $1.7 million.

Owner-occupied CRE loans ~~represent $1.3~~increased by $191.1 million in the six months ended June 30, 2023 to $1.7 billion. Owner-occupied CRE is used by the owner, where the primary source of repayment is the cash flow from business operations housed within the property.

Commercial and financial loans are extended to commercial customers for working capital, physical asset expansion, asset acquisition or other business purposes. Balances increased from December 31, 2022 by $262.3 million, or 19%, totaling $1.6 billion ~~or 39%,~~at June 30, 2023, largely attributed to the Professional acquisition.

Table of ~~the commercial real estate portfolio.~~Content s

Residential ~~real estate~~mortgage loans increased ~~$222.1~~$546.8 million ~~or 16%,~~ to ~~$1.6~~$2.4 billion as of June 30, 2022, compared to December 31, 2021. Substantially all residential mortgage originations have been underwritten to conventional loan agency standards, including loans having balances that exceed agency value limitations. At2023. Included in the balance as of June 30, ~~2022, approximately $314.4~~2023, were $1.1 billion of fixed rate mortgages, $817.2 million ~~or 19%,~~ of ~~the Company’s residential mortgage balances were~~ adjustable ~~1-4 family mortgage loans, which includes hybrid adjustable-rate~~rate mortgages ~~compared to $278.9~~and $481.2 million ~~or 20%, at December 31, 2021. Fixed-rate mortgages totaled approximately $952.0 million, or 56%, at June 30, 2022, compared to $773.7 million, or 54%, at December 31, 2021. Home~~in primarily floating rate home equity lines of credit (“HELOCs”), ~~primarily floating rates, totaled $381.1~~compared to $964.3 million, ~~at June 30, 2022~~$402.3 million and ~~$336.6~~$482.9 million, respectively, at December 31, ~~2021.~~2022. The increases from December 31, 2022 include approximately $483.6 million acquired through the Professional acquisition. Borrowers in the residential real estate portfolio have an average credit score of ~~750. Specifically for HELOCs, borrowers~~754.

Substantially all residential originations have ~~an average credit score of 763.~~been underwritten to conventional loan agency standards, including loan balances that exceed agency value limitations. The average LTV of our HELOC portfolio is ~~67%~~62%, with ~~37%~~31% of the ~~portfolio~~loans being in first lien position at June 30, ~~2022,~~2023, compared to an average LTV of 69%, with ~~42%~~31% of the portfolio being in the first lien position at December 31, ~~2021.~~2022.

The Company also provides consumer loans, which include installment loans, auto loans, marine loans, and other consumer loans, which decreased ~~$1.0~~$14.5 million, or 1%5%, to total ~~$175.2~~$272.1 million at June 30, 2023, compared to ~~$174.2~~$286.6 million at December 31, ~~2021. Borrowers in the consumer portfolio have an average credit score of 736.~~

~~Table of Contents~~

2022.

At June 30, ~~2022,~~2023, the Company had unfunded ~~loan~~ commitments to extend credit of ~~$2.2~~$4.2 billion, compared to ~~$2.0~~$2.8 billion at December 31, ~~2021.~~2022.

Loan Concentrations

The Company has developed prudent guardrails to manage loan types that are most impacted by stressed market conditions ~~in order~~ to minimize credit risk concentration to capital. Outstanding balances for commercial and CRE ~~loan relationships~~loans individually greater than ~~$10~~$15 million totaled ~~$1.5 billion~~$628.3 million and represented ~~22%~~6% of the total portfolio at June 30, ~~2022, compared to $1.2 billion, or 20%, at year-end 2021.~~

The Company’s ten largest commercial and commercial real estate funded and unfunded loan relationships at June 30, 2022 aggregated to $378.9 million, of which $228.3 million was funded, compared to $312.0 million at December 31, 2021, of which $157.8 million was funded. The Company had 189 commercial and commercial real estate relationships in excess of $5 million totaling $2.2 billion, of which $1.6 billion was funded at June 30, 2022, compared to 174 relationships totaling $1.9 billion at December 31, 2021, of which $1.4 billion was funded.2023.

Concentrations in total construction and land development loans and total CRE loans are maintained well below regulatory limits. Construction and land development and CRE loan concentrations as a percentage of subsidiary bank total risk based capital were ~~29%~~52% and ~~192%~~256%, respectively, at June 30, ~~2022,~~2023, compared to ~~21%~~45% and ~~177%~~230%, respectively, at December 31, ~~2021.~~2022. The increase was primarily the result of the acquisition of Professional Bank. Regulatory guidance suggests limits of 100% and 300%, respectively. On a consolidated basis, construction and land development and commercial real estate loans represent ~~27%~~48% and ~~176%~~241%, respectively, of total consolidated risk based capital. To determine these ratios, the Company defines CRE in accordance with the guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) issued by the federal bank regulatory agencies in 2006 (and reinforced in 2015), which defines CRE loans as exposures secured by land development and construction, including 1-4 family residential construction, multi-family property, and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property (i.e., loans for which 50 percent or more of the source of repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. Loans to real estate investment trusts (“REITs”) and unsecured loans to developers that closely correlate to the inherent risks in CRE markets would also be considered CRE loans under the Guidance. Loans on owner-occupied CRE are generally excluded.

At June 30, 2022, the Company had $1.6 billion in loans secured by residential real estate and $3.2 billion in loans secured by commercial real estate, representing 25% and 49% of total loans outstanding, respectively. In addition, the Company is subject to a geographic concentration of credit because it primarily operates in Florida.

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

Nonperforming assets (“NPAs”) at June 30, ~~2022~~2023 totaled ~~$28.9~~$55.9 million, and were comprised of ~~$26.4~~$48.3 million of nonaccrual loans, and ~~$2.4~~$7.5 million of other real estate owned (“OREO”). Compared to December 31, ~~2021,~~2022, nonaccrual loans ~~decreased $4.2~~increased $19.5 million, primarily the result of ~~paydowns.~~the acquisition of Professional. The ~~decrease~~$5.2 million increase in OREO is the result of ~~$11.2 million reflects $12.8 million~~closures of three branch properties in ~~sales and $0.1 million~~the first quarter of ~~write-downs, offset by $1.0 million added upon closure of a branch property, $0.1 million in acquired OREO, and $0.6 million in capital expenditures.~~2023. Overall, NPAs ~~decreased $15.4~~increased $24.7 million ~~or 35%,~~ from ~~$44.2~~$31.1 million as of December 31, ~~2021.~~2022. At June 30, ~~2022,~~2023, approximately ~~66%~~49% of nonaccrual loans were secured with real estate. See the tables below for details about nonaccrual loans. At June 30, ~~2022,~~2023, nonaccrual loans reflected cumulative write downs of approximately ~~$4.8~~$18.7 million, including reserves on individually evaluated loans.

Nonperforming loans to total loans outstanding at June 30, ~~2022 decreased~~2023 increased to ~~0.40%~~0.48% from ~~0.52%~~0.35% at December 31, ~~2021.~~2022. Nonperforming assets to total assets at June 30, ~~2022 decreased~~2023 increased to ~~0.27%~~0.37% from ~~0.46%~~0.26% at December 31, ~~2021.~~

~~The Company’s asset mitigation staff handles all foreclosure actions together with outside legal counsel.~~

The Company pursues loan restructurings in select cases where it expects to realize better values than may be expected through traditional collection activities. The Company has worked with retail mortgage customers, when possible, to achieve lower payment structures in an effort to avoid foreclosure. Troubled debt restructurings (“TDRs”) have been a part of the Company’s loss mitigation activities and can include rate reductions, payment extensions and principal deferrals. Company policy requires TDRs that are classified as nonaccrual loans after restructuring remain on nonaccrual until performance can be verified, which usually requires six months of performance under the restructured loan terms. Accruing TDRs totaled $4.0 million at June 30, 2022, compared to $3.9 million at December 31, 2021. Accruing TDRs are excluded from the nonperforming asset ratios.2022.

5561

Table of ~~Contents~~Content s

The table below sets forth details related to nonaccrual ~~and accruing restructured~~ loans.


		June 30, 2022									June 30, 2023
		Nonaccrual Loans						Accruing Restructured Loans			Nonaccrual Loans
(In thousands)	(In thousands)	Non-Current		Current		Total				(In thousands)	Non-Current		Current		Total
Construction and land development	Construction and land development	$	—	$	11	$	11	$	5	Construction and land development	$	210	$	36	$	246
Commercial real estate - owner-occupied		131		1,440		1,571		97
Commercial real estate - non owner-occupied		5,253		1,337		6,590		—
Commercial real estate - owner occupied										Commercial real estate - owner occupied	1,274		4,622		5,896
Commercial real estate - non-owner occupied										Commercial real estate - non-owner occupied	3,158		5,512		8,670
Residential real estate	Residential real estate	2,937		6,307		9,244		3,462		Residential real estate	2,271		6,380		8,651
Commercial and financial	Commercial and financial	4,063		4,569		8,632		304		Commercial and financial	6,407		17,062		23,469
Consumer	Consumer	78		316		394		154		Consumer	1,143		251		1,394
Total	Total	$	12,462	$	13,980	$	26,442	$	4,022	Total	$	14,463	$	33,863	$	48,326

December 31, 2021
Nonaccrual Loans Accruing
Restructured Loans
(In thousands) Non-Current Current Total
Construction and land development $ — $ 259 $ 259 $ 12
Commercial real estate - owner-occupied 261 3,705 3,966 101
Commercial real estate - non owner-occupied 3,218 2,687 5,905 —
Residential real estate 5,130 7,915 13,045 3,298
Commercial and financial 2,914 3,955 6,869 318
Consumer 46 508 554 188
Total $ 11,569 $ 19,029 $ 30,598 $ 3,917

~~At June 30, 2022 and December 31, 2021, total TDRs (performing and nonperforming) were comprised of the following loans by type of modification:~~

June 30, 2022 December 31, 2021
(In thousands) Number Amount Number Amount
Maturity extended 51 $ 4,940 56 $ 5,385
Rate reduction 20 1,113 25 2,769
Chapter 7 bankruptcies 7 220 1 39
Not elsewhere classified 6 189 12 378
Total 84 $ 6,461 94 $ 8,571

During the six months ended June 30, 2022, there was one default totaling $2 thousand on a loan that had been modified to a TDR within the preceding twelve months. During the six months ended June 30, 2021, there were two defaults totaling $0.1 million of loans that had been modified to a TDR within the preceding twelve months. Loan modifications are not reported in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructuring agreements. A restructured loan is considered in default when it becomes 90 days or more past due under the modified terms, has been transferred to nonaccrual status, has been charged off or has been transferred to OREO.


	December 31, 2022
	Nonaccrual Loans
(In thousands)	Non-Current		Current		Total
Construction and land development	$	53	$	562	$	615
Commercial real estate - owner occupied	—		2,597		2,597
Commercial real estate - non-owner occupied	2,892		1,292		4,184
Residential real estate	2,213		6,896		9,109
Commercial and financial	4,189		7,426		11,615
Consumer	18		705		723
Total	$	9,365	$	19,478	$	28,843

In accordance with regulatory reporting requirements, loans are placed on nonaccrual following the Retail Classification of Loan interagency guidance. The accrual of interest is generally discontinued on loans, except consumer loans, that become 90 days past due as to principal or interest unless collection of both principal and interest is assured by way of collateralization, guarantees or other security. Consumer loans that become 120 days past due are generally charged off. The loan carrying value is analyzed and any changes are appropriately made as described above quarterly.

On January 1, 2023, the Company adopted ASU 2022-02 which includes disclosure requirements related to certain modifications of loans to borrowers experiencing financial difficulty, which the Company refers to as troubled borrower modifications (“TBMs”). TBMs are typically in the form of an interest rate reduction, an extension of the amortization period and/or converting the loan to interest only for a limited period of time. In addition to the change in payment terms, the Company seeks to obtain additional collateral and/or guarantors to provide additional support for the loan. The Company does not typically provide forgiveness of principal as a modification. As of June 30, 2023, there were five loans totaling $0.9 million that were TBMs, which is considered immaterial.

Allowance for Credit Losses on Loans

Management ~~estimates~~establishes the allowance using relevant available information from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. ~~Historical~~The forecasts of future economic conditions are over a period that has been deemed reasonable and supportable, and in segments where it can no longer develop reasonable and supportable forecasts, the Company reverts to longer-term historical loss experience to estimate losses over the remaining life of the loans. Expected credit losses ~~provide~~are estimated over the ~~basis~~contractual term of the loans, adjusted for

~~Table of Contents~~

~~estimation of~~ expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, loan to value ratios, borrower credit characteristics, loan seasoning or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, occupancy rates, and other macroeconomic metrics.prepayments.

During the ~~second quarter of 2022,~~six months ended June 30, 2023, the Company recorded a provision expense of ~~$0.8 million, reflecting the impact of higher loans outstanding.~~$30.8 million. The ~~first quarter of 2022~~provision expense included ~~a provision of $5.1~~$26.6 million for loans acquired in the ~~BBFC and Sabal Palm acquisitions as well as the impact of organic loan growth during the quarter.~~Professional acquisition. The Company reported net ~~recoveries~~charge-offs for the ~~second quarter~~six months ended June 30, 2023 of ~~2022 of $0.1~~$3.9 million and, for the four most recent quarters, net charge-offs averaged ~~0.04%~~0.06% of outstanding loans.

The ratio of allowance for credit losses to total loans was 1.58% at June 30, 2023, 1.40% at December 31, 2022, and 1.39% at June 30, ~~2022, 1.39% at March 31, 2022, and 1.49% at June 30, 2021. Excluding PPP loans, the ratio~~2022.

Table of ~~allowance for credit losses to total loans at June 30, 2022 was 1.39%, compared to 1.40% at March 31, 2022 and 1.60% at June 30, 2021.~~Content s

LIBOR Transition

The Company’s LIBOR transition steering committee ishas been responsible for overseeing the execution of the Company’s enterprise-wide LIBOR transition program, and for evaluating and mitigating risks associated with the transition from LIBOR. The remaining tenors of U.S. dollar LIBOR ~~transition program includes a comprehensive review of the financial products, agreements,~~ceased publication after June 30, 2023. The Company reviewed its LIBOR loan contracts and ~~business processes that may use LIBOR as a reference rate, and~~customer swap agreements to identify required remediation to support the ~~development and execution of strategy to~~ transition away from LIBOR, with appropriate consideration of the potential financial, customer, counterpart, regulatory and legal impacts. The Company continues to execute its LIBOR transition program, and to monitor regulatory and legislative activity to identify any necessary actions and facilitate the transition to alternative reference rates.

~~As of December 31, 2021, the Company ceased issuance of new LIBOR loans.~~LIBOR. As of June 30, 2022, the Company has approximately $218 million in existing loans for which the repricing index is tied to LIBOR. The Company's swap agreements and other derivatives are governed by the International Swap Dealers Association (“ISDA”). ISDA has developed2023, substantially all of these contracts include standardized fallback language ~~for swap agreements and has established a protocol~~or have been amended to ~~allow counterparties to modify legacy trades to include the~~ new ~~fallback language.~~reference rates, which are predominantly SOFR-based. The Company also invests in securities and has issued subordinated debt ~~tied~~indexed to ~~LIBOR.~~LIBOR which, as expected, have transitioned to SOFR-based reference rates or will transition on their next reset date in accordance with existing fallback provisions of the LIBOR Act. The ~~Company continues to monitor regulatory~~transition did not have a material impact on the Company’s financial position, and ~~legislative activity with regard to these products to identify~~results and ~~execute necessary actions to facilitate the transition to alternative reference rates.~~operations.

Cash and Cash Equivalents and Liquidity Risk Management

Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liability, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations cost effectively and to meet current and future potential obligations such as loan commitments and unexpected deposit outflows.

Funding sources 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 and marine loans. 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 $727.9 million at June 30, 2023, compared to $201.9 million at December 31, 2022. Higher cash and cash equivalent balances at June 30, 2023 reflect the Company’s increased liquidity position strategy during the year.

Deposits are a primary source of liquidity. The stability of this funding source is affected by numerous factors, including returns available to customers on alternative investments, the quality of customer service levels, perception of safety and competitive forces. Uninsured deposits represented only 34% of overall deposit accounts at June 30, 2023. This includes public funds under the Florida Qualified Public Depository program, which provides loss protection to depositors beyond FDIC insurance limits. Excluding such balances, the uninsured and uncollateralized deposits were 28% of total deposits.

The Company routinely uses debt securities and loans as collateral for secured borrowings. In the event of severe market disruptions, the Company has access to secured borrowings through the FHLB and the Federal Reserve Bank of Atlanta under its borrower-in-custody program.

The Company has liquidity sources as discussed below, including cash and lines of credit with the Federal Reserve and FHLB, that represent 155% of uninsured deposits, and 184% of uninsured and uncollateralized deposits.

In addition to $0.7 billion in cash and cash equivalents at June 30, 2023, the Company had $5.7 billion in available borrowing capacity, including $4.7 billion in available collateralized lines of credit, $0.7 billion of unpledged debt securities available as collateral for potential additional borrowings, and available unsecured lines of credit of $0.3 billion. Included in available borrowing capacity is approximately $0.4 billion under the Federal Reserve's Bank Term Funding Program, which the Company has not utilized and does not ~~rely on and is not dependent upon off-balance sheet financing or significant amounts of wholesale funding.~~plan to utilize. The Company may also access funding by acquiring brokered deposits. Brokered deposits at June 30, ~~2022 were $106.8 million, an increase compared to $8.0 million at~~2023, December 31, ~~2021, which reflected the Company’s year-end liquidity management activities.~~

~~Cash~~2022, and ~~cash equivalents, including interest bearing deposits, totaled $901.4 million on a consolidated basis at~~ June 30, 2022 ~~compared to $737.7~~totaled $591.5 million, ~~at December 31, 2021. Higher cash~~$58.6 million, and ~~cash equivalent balances at June 30, 2022 reflect the benefit of deposits acquired from BBFC and Sabal Palm in addition to favorable organic deposit growth.~~

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$106.8 million, respectively.

Contractual maturities for assets and liabilities are reviewed to meet current and expected future liquidity requirements. Sources of liquidity are maintained through a portfolio of high quality marketable assets, such as residential mortgage loans, debt securities available-for-sale and interest-bearing deposits. The Company is also able to provide short-term financing of its activities by selling, under an agreement to repurchase, United States Treasury and Government agency debt securities not pledged to secure public deposits or trust funds. At June 30, 2022, the Company had available unsecured lines of credit of $165.0 million and secured lines of credit, which are subject to change, of $2.2 billion. In addition, the Company had $2.1 billion of debt securities and $744.8 million in residential and commercial real estate loans available as collateral. In comparison, at December 31, 2021, the Company had available unsecured lines of $165.0 million and secured lines of credit of $1.6 billion, and $1.9 billion of debt securities and $614.2 million in residential and commercial real estate loans available as collateral.

The Company has traditionally relied upon dividends from Seacoast Bank and securities offerings to provide funds to pay the Company’s expenses and to service the Company’s debt. During the second quarter of ~~2022,~~2023, Seacoast Bank distributed ~~$8.4~~$5.1 million to the Company and, at June 30, ~~2022,~~2023, is eligible to distribute dividends to the Company of approximately ~~$169.5~~ $168.8

Table of Content s

million without prior regulatory approval. At June 30, ~~2022,~~2023, the Company had cash and cash equivalents at the parent of approximately ~~$104.4~~$117.9 million, compared to ~~$98.5~~$111.8 million at December 31, ~~2021.~~2022.

Deposits and Borrowings

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


		June 30,			December 31,				June 30,			December 31,
(In thousands, except ratios)	(In thousands, except ratios)	2022			2021			(In thousands, except ratios)	2023			2022
Noninterest demand	Noninterest demand	$	3,593,201		$	3,075,534		Noninterest demand	$	4,139,052		$	4,070,973
Interest-bearing demand	Interest-bearing demand	2,269,148			1,890,212			Interest-bearing demand	2,816,656			2,337,590
Money market	Money market	1,911,847			1,651,881			Money market	2,859,164			1,985,974
Savings	Savings	946,738			895,019			Savings	824,255			1,064,392
Time certificates of deposit	Time certificates of deposit	468,019			554,943			Time certificates of deposit	1,644,140			522,666
Total deposits	Total deposits	$	9,188,953		$	8,067,589		Total deposits	$	12,283,267		$	9,981,595

Customer sweep accounts	Customer sweep accounts	$	110,578		$	121,565		Customer sweep accounts	$	290,156		$	172,029

Noninterest demand deposits as % of total deposits	Noninterest demand deposits as % of total deposits	39		%	38		%	Noninterest demand deposits as % of total deposits	34		%	41		%

The Company’s balance sheet continues to be primarily funded by core deposits. Consumer deposits represent 43% of total deposits, with an average balance per account of $23 thousand. Business deposits represent 57% of total deposits, with an average balance per account of $109 thousand. Highlighting the Company's longstanding relationship-based strategy, the average tenure for a Seacoast customer is 9.6 years.

Total deposits increased ~~$1.1~~$2.3 billion, or ~~14%~~23%, to ~~$9.2~~$12.3 billion at June 30, ~~2022,~~2023, compared to ~~$8.1~~$10.0 billion at December 31, ~~2021.~~2022. The increase primarily reflects ~~growth in existing customer balances, the addition of new customers and~~ the impact of the ~~BBFC and Sabal Palm acquisitions,~~Professional acquisition, which added ~~$166.3 million and $396.0 million, respectively,~~$2.1 billion in deposits during the first quarter of ~~2022.~~2023.

Since December 31, 2021, interest bearing deposits (interest bearing demand, savings and money market deposits) increased $690.6 million, or 16%, to $5.1 billion, and CDs decreased $86.9 million, or 16%, to $468.0 million. Noninterest demand deposits were higher by $517.7 million, or 17%, compared to year-end 2021, totaling $3.6 billion. Noninterest demand deposits represented ~~39%~~34% of total deposits at ~~both~~ June 30, ~~2022~~2023 and 41% at December 31, ~~2021.~~

As2022. Transaction account balances (noninterest demand and interest-bearing demand) represented 57% of total deposits at June 30, ~~2022 and~~2023, compared to 64% at December 31, ~~2021, the Company did not hold any brokered CDs.~~2022.

Customer repurchase agreements totaled ~~$110.6~~$290.2 million at June 30, ~~2022, decreasing $11.0~~2023, increasing $118.1 million from December 31, ~~2021.~~2022. Repurchase agreements are offered by Seacoast to select customers who wish to sweep excess balances on a daily basis for investment purposes. ~~Public funds comprise a significant amount of the outstanding balance.~~

At June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, borrowings ~~were comprised of subordinated debt of $71.8~~included $72.1 million and $71.6 million, respectively, related to trust preferred securities issued by trusts organized or acquired by the Company.

On October 7, 2022 the Company acquired $12.3 million in subordinated 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. 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.

On January 31, 2023, the Company assumed subordinated debt in the acquisition of Professional having an outstanding principal amount of $25.0 million and ~~there were no borrowings from FHLB during any~~estimated fair value of ~~the periods presented.~~$21.1 million. The acquired debt carries a fixed interest rate of 3.375% until 2027, then converts to a floating rate note until maturity in 2032.

The weighted average interest rate of outstanding subordinated debt ~~related to trust preferred securities~~ was ~~2.85%~~6.73% and ~~2.40%~~2.85% for the six months ended June 30, ~~2022~~2023 and June 30, ~~2021,~~2022, respectively.

Federal Home Loan Bank advances totaled $160.0 million at June 30, 2023 with a weighted average interest rate of 3.64%, compared to $150.0 million at December 31, 2022 with a weighted average interest rate of 3.42%.

Table of ~~Contents~~Content s

Off-Balance Sheet Transactions

In the normal course of business, the Company may engage in a variety of financial transactions that, under generally accepted accounting principles, either are not recorded on the balance sheet or are recorded on the balance sheet in amounts that differ from the full contract or notional amounts. These transactions involve varying elements of market, credit and liquidity risk.

Lending commitments include unfunded loan commitments and standby and commercial letters of credit. For loan commitments, the contractual amount of a commitment represents the maximum potential credit risk that could result if the entire commitment had been funded, the borrower had not performed according to the terms of the contract, and no collateral had been provided. A large majority of loan commitments and standby letters of credit expire without being funded, and accordingly, total contractual amounts are not representative of actual future credit exposure or liquidity requirements. Loan commitments and letters of credit expose the Company to credit risk in the event that the customer draws on the commitment and subsequently fails to perform under the terms of the lending agreement.

For commercial customers, loan commitments generally take the form of revolving credit arrangements. For retail customers, loan commitments generally are lines of credit secured by residential property. These instruments are not recorded on the balance sheet until funds are advanced under the commitment. ~~Loan~~Unfunded commitments to extend credit were ~~$2.2~~$4.2 billion at June 30, ~~2022~~2023 and ~~$2.0~~$2.8 billion at December 31, ~~2021.~~2022.

Capital Resources

The Company’s equity capital at June 30, ~~2022~~2023 increased ~~$18.8~~$446.3 million, or 1%28%, from December 31, ~~2021~~2022 to ~~$1.3~~$2.1 billion. Changes in equity included increases from net income of ~~$53.3~~$43.1 million, ~~and~~ the issuance of ~~$94.1~~$421.0 million in equity in connection with the ~~BBFC~~Professional acquisition, and ~~Sabal Palm acquisitions,~~an increase in accumulated other comprehensive income of $1.2 million, partially offset by the issuance of a common stock ~~dividend~~dividends totaling ~~$18.5 million and the decrease in accumulated other comprehensive income of $116.5 million attributed to the impact of rising interest rates on the market value of available-for-sale debt securities.~~$29.9 million.

The ratio of shareholders’ equity to period end total assets was ~~12.30%~~13.66% and ~~13.54%~~13.24% at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The ratio of tangible shareholders’ equity to tangible assets was ~~9.74%~~8.53% and ~~11.09%~~9.08% at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The decrease in the tangible common equity ratio was due to growth in the balance sheet from the ~~result of bank acquisitions and deposit growth, and~~Professional acquisition. Changes in the ~~impact on equity of the decline in~~ value of ~~available-for-sale~~held-to-maturity securities ~~due to rising interest rates in~~are not reflected under GAAP; however, illustratively, if all held-to-maturity securities were presented at fair value, the ~~first half of 2022.~~tangible common equity ratio would have been 7.87% at June 30, 2023.

Activity in shareholders’ equity for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 follows:


(In thousands)	(In thousands)	2022		2021		(In thousands)	2023		2022
Beginning balance at December 31, 2021 and 2020		$	1,310,736	$	1,130,402
Beginning balance at December 31, 2022 and 2021						Beginning balance at December 31, 2022 and 2021	$	1,607,775	$	1,310,736
Net income	Net income	53,343		65,129		Net income	43,076		53,343
Common stock issued for stock options	Common stock issued for stock options	3,442		2,270		Common stock issued for stock options	5,040		3,442
Issuance of common stock and conversion of options pursuant to acquisitions	Issuance of common stock and conversion of options pursuant to acquisitions	94,067		—		Issuance of common stock and conversion of options pursuant to acquisitions	421,042		94,067
Stock compensation, net of Treasury shares acquired	Stock compensation, net of Treasury shares acquired	3,035		2,361		Stock compensation, net of Treasury shares acquired	5,787		3,035
Issuance of common share dividend	Issuance of common share dividend	(18,510)		(7,246)		Issuance of common share dividend	(29,852)		(18,510)
Change in accumulated other comprehensive income	Change in accumulated other comprehensive income	(116,538)		(10,569)		Change in accumulated other comprehensive income	1,209		(116,538)
Ending balance at June 30, 2022 and 2021		$	1,329,575	$	1,182,347
Repurchase of common stock						Repurchase of common stock	(45)		—
Ending balance at June 30, 2023 and 2022						Ending balance at June 30, 2023 and 2022	$	2,054,032	$	1,329,575

Capital ratios are well above regulatory requirements for well-capitalized institutions. ~~Seacoast management's~~Management’s use of risk-based capital ratios in its analysis of the Company’s capital adequacy are ~~“non-GAAP”~~not GAAP financial measures. ~~Seacoast~~Seacoast’s management uses these measures to assess the quality of capital and believes that investors may find it useful in their analysis of the Company. The capital measures are not necessarily comparable to similar capital measures that may be presented by other companies and Seacoast does not nor should investors consider such non-GAAP financial measures in isolation from, or as a substitute for GAAP financial information (see “~~Note~~“Note 8 – Equity ~~Capital~~”Capital”). ~~See “Reconciliation of Non-GAAP Measures” for more information.~~

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June 30, 2022		Seacoast (Consolidated)	Seacoast Bank	Minimum to be Well- Capitalized1
June 30, 2023					June 30, 2023	Seacoast (Consolidated)	Seacoast Bank	Minimum to be Well- Capitalized1
Total Risk-Based Capital Ratio	Total Risk-Based Capital Ratio	17.70%	16.25%	10.00%	Total Risk-Based Capital Ratio	14.70%	13.84%	10.00%
Tier 1 Capital Ratio	Tier 1 Capital Ratio	16.77	15.33	8.00	Tier 1 Capital Ratio	13.53	12.67	8.00
Common Equity Tier 1 Ratio (CET1)	Common Equity Tier 1 Ratio (CET1)	15.80	15.33	6.50	Common Equity Tier 1 Ratio (CET1)	12.89	12.67	6.50
Leverage Ratio	Leverage Ratio	11.61	10.61	5.00	Leverage Ratio	10.56	9.87	5.00
1For subsidiary bank only.	1For subsidiary bank only.				1For subsidiary bank only.

The Company’s total risk-based capital ratio was ~~17.70%~~14.70% at June 30, ~~2022,~~2023, a decrease from ~~18.21%~~15.79% at December 31, ~~2021,~~2022, primarily due to growth including the ~~acquisitions~~acquisition of ~~Sabal Palm and BBFC.~~Professional. At June 30, ~~2022,~~2023, the Bank’s leverage ratio (Tier 1 capital to adjusted total assets) was ~~10.61%~~9.87%, well above the minimum to be ~~well capitalized~~well-capitalized under regulatory guidelines.

The Company and Seacoast Bank are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The appropriate federal bank regulatory authority may prohibit the payment of dividends where it has determined that the payment of dividends would be an unsafe or unsound practice. The Company is a legal entity separate and distinct from Seacoast Bank and its other subsidiaries, and the Company’s primary source of cash and liquidity, other than securities offerings and borrowings, is dividends from its bank subsidiary. Without Office of the Comptroller of the Currency (“OCC”) approval, Seacoast Bank can pay ~~$169.5~~$168.8 million of dividends to the Company.

The OCC and the Federal Reserve have policies that encourage banks and bank holding companies to pay dividends from current earnings, and have the general authority to limit the dividends paid by national banks and bank holding companies, respectively, if such payment may be deemed to constitute an unsafe or unsound practice. If, in the particular circumstances, either of these federal regulators determined that the payment of dividends would constitute an unsafe or unsound banking practice, either the OCC or the Federal Reserve may, among other things, issue a cease and desist order prohibiting the payment of dividends by Seacoast Bank or us, respectively. The board of directors of a bank holding company must consider different factors to ensure that its dividend level, if any, is prudent relative to the organization’s financial position and is not based on overly optimistic earnings scenarios such as any potential events that may occur before the payment date that could affect its ability to pay, while still maintaining a strong financial position. As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company, such as Seacoast, should consult with the Federal Reserve and eliminate, defer, or significantly reduce the bank holding company’s dividends if: (i) its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or (iii) it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.

The Company has paid quarterly dividends since the second quarter of 2021. Whether the Company continues to pay quarterly dividends and the amount of any such dividends will be at the discretion of the Company's Board of Directors and will depend on the Company's earnings, financial condition, results of operations, business prospects, capital requirements, regulatory restrictions, and other factors that the Board of Directors may deem relevant. ~~In the second quarter of 2022, the Company's Board of Directors approved a quarterly increase from $0.13 to $0.17 per share.~~

The Company has seven wholly owned trust subsidiaries that have issued trust preferred stock. Trust preferred securities from acquisitions were recorded at fair value when acquired. All trust preferred securities are guaranteed by the Company on a junior subordinated basis. The Federal Reserve’s rules permit qualified trust preferred securities and other restricted capital elements to be included under Basel III capital guidelines, with limitations, and net of goodwill and intangibles. The Company believes that its trust preferred securities qualify under these revised regulatory capital rules and believes that it can treat all ~~$71.8 million of~~its trust preferred securities as Tier 1 capital. For regulatory purposes, the trust preferred securities are added to the Company’s tangible common shareholders’ equity to calculate Tier 1 capital.

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Critical Accounting Policies and Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, (“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. The Company has established policies and control procedures that are intended to ensure valuation methods are well controlled and applied consistently from period to period. These estimates and assumptions, which may materially affect the reported amounts of certain assets, liabilities, revenues and expenses, are based on information available as of the date of the financial statements, and changes in this information over time and the use of revised estimates and assumptions could materially affect amounts reported in subsequent financial statements. Management, after consultation with the Company’s Audit Committee, believes the most critical accounting estimates and assumptions that involve the most difficult, subjective and complex assessments are:

•the allowance and the provision for credit losses;

•acquisition accounting and purchased loans;

•intangible assets and impairment testing;

•other fair value measurements;

•impairment of debt securities; and

•contingent liabilities.

The ~~following is a discussion of the~~ critical accounting policies ~~intended to facilitate a reader’s understanding of~~are discussed in MD&A in Seacoast’s Annual Report on Form 10-K for the ~~judgments, estimates and assumptions underlying these~~year ended December 31, 2022. Significant 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 significantchanges in accounting ~~policies~~principles and ~~recent~~effects of recently issued accounting pronouncements ~~see~~are discussed in “Note ~~1-Basis~~1 – Significant Accounting Policies” in Form 10-K for the year ended December 31, 2022. Disclosures regarding the effects of new accounting pronouncements are included in “Note 1 – Basis of Presentation” in this report. There have been no changes to the Company’s ~~consolidated financial statements.~~

~~Allowance for Credit Losses – Critical Accounting Policies and Estimates~~

On January 1, 2020, the Company adopted ASC Topic 326 - Financial Instruments - Credit Losses, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.

For loans, management estimates the allowance for credit losses using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit losses provide the basis for estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, loan to value ratios, borrower credit characteristics, loan seasoning or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, occupancy rates, and other macroeconomic metrics.

The allowance for credit losses is measured on a collective basis when similar risk characteristics exist. The Company has developed an allowance model based on an analysis of probability of default (“PD”) and loss given default (“LGD”) to determine an expected loss by loan segment. PDs and LGDs are developed by analyzing the average historical loss migration of loans to default.

The allowance estimation process also applies an economic forecast scenario over a three year forecast period. 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. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. For portfolio segments with a weighted average life longer than three years, the Company reverts to longer term historical loss experience, adjusted for prepayments, to estimate losses over the remaining life of the loans within each segment.

Adjustments may be made to baseline reserves for some of the loan pools based on an assessment of internal and external influences on credit quality not fully reflected in the quantitative components of the allowance model. These influences may include elements such as changes in concentration, macroeconomic conditions, recent observable asset quality trends, staff turnover, regional market conditions, employment levels and loan growth. Based upon management's assessments of these factors, the Company may apply qualitative adjustments to the allowance.

~~Table of Contents~~

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

The contractual term of a loan excludes expected extensions, renewals, and modification unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring (“TDR”) will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and not unconditionally cancellable by the Company.

The allowance for credit losses on TDRs is measured using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the allowance for credit losses is determining by discounting the expected future cash flows at the original interest rate of the loan.

It is the Company's practice to ensure that the charge-off policy meets or exceeds regulatory requirements. Losses on unsecured consumer loans are recognized at 90 days past due, compared to the regulatory loss criteria of 120 days. In compliance with Federal Financial Institution Examination Council guidelines, secured consumer loans, including residential real estate, are typically charged off or charged down between 120 and 180 days past due, depending on the collateral type. Commercial loans and real estate loans are typically placed on nonaccrual status when principal or interest is past due for 90 days or more, unless the loan is both secured by collateral having realizable value sufficient to discharge the debt in-full and the loan is in process of collection. Loans provided with short-term payment deferrals under the CARES Act or interagency guidance are not considered past due if in compliance with the terms of their deferral. Secured loans may be charged down to the estimated value of the collateral with previously accrued unpaid interest reversed against interest income. Subsequent charge-offs may be required as a result of changes in the market value of collateral or other repayment prospects. Initial charge-off amounts are based on valuation estimates derived from appraisals, broker price opinions, or other market information. Generally, new appraisals are not received until the foreclosure process is completed; however, collateral values are evaluated periodically based on market information and incremental charge-offs are recorded if it is determined that collateral values have declined from their initial estimates.

Note 5 to the financial statements (titled “Allowance for Credit Losses”) summarizes the Company’s allocation of the allowance for credit losses on loans by loan segment and provides detail regarding charge-offs and recoveries for each loan segment and the composition of the loan portfolio.

~~Acquisition Accounting and Purchased Loans – Critical Accounting Policies and Estimates~~

~~The Company accounts for acquisitions under ASC Topic 805,~~ ~~Business Combinations~~, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. All loans acquired are recorded at fair value in accordance with the fair value methodology prescribed in ASC Topic 820, ~~Fair Value Measurement~~. 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. In contrast, expected credit losses on loans not considered PCD are recognized in net income at the date of acquisition.

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 intangibles and loan servicing rights. 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 as determined by valuation specialists. Core deposit intangibles are amortized on a straight-line basis, 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

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~~impairment test of goodwill, as required by ASC Topic 350,~~ ~~Intangibles—Goodwill and Other, in the fourth quarter of 2021, and concluded that no impairment existed.~~

~~Other Fair Value Measurements – Critical Accounting Policies and Estimates~~

The fair value of collateral-dependent loans, OREO and repossessed assets is typically based on current appraisals, which are reviewed quarterly to determine if fair value adjustments are necessary based on known changes in the market and/or the project assumptions. When necessary, the appraised value may be adjusted based on more recent appraisal assumptions received by the Company on other similar properties, the tax assessed market value, comparative sales and/or an internal valuation. Collateral-dependent loans are loans where repayment is solely dependent on the liquidation of the collateral or operation of the collateral for repayment.

The Company also holds 11,330 shares of Visa Class B stock, which, following resolution of Visa’s litigation, will be converted to Visa Class A shares. Under the current conversion rate that became effective June 29, 2022, the Company expects to receive 1.6059 shares of Class A stock for each share of Class B stock for a total of 18,194 shares of Visa Class A stock. The Company’s ownership is related to prior ownership in Visa's network while Visa operated as a cooperative. This ownership is recorded on the Company's financial records at a zero basis.

~~Impairment of Debt Securities – Critical Accounting Policies and Estimates~~

~~On January 1, 2020, the Company adopted ASC Topic 326 –~~ ~~Financial Instruments – Credit Losses~~, which requires expected credit losses on both held-to-maturity (“HTM”) and available-for-sale (“AFS”) securities to be recognized through a valuation allowance instead of as a direct write-down to the amortized cost basis of the security. For HTM securities, the guidance requires management to estimate expected credit losses over the remaining expected life and recognize this estimate as an allowance for credit losses. An AFS security is 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~~. However, 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. 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.

~~Contingent Liabilities – Critical Accounting Policies and Estimates~~

Seacoast is subject to contingent liabilities, including judicial, regulatory and arbitration proceedings, and tax and other claims arising from the conduct of the Company's business activities. These proceedings include actions brought against the Company and/or its subsidiaries with respect to transactions in which the Company and/or its subsidiaries acted as a lender, a financial adviser, a broker or acted in a related activity. Accruals are established for legal and other claims when it becomes probable that the Company will incur an expense and the amount can be reasonably estimated. Company management, together with attorneys, consultants and other professionals, assesses the probability and estimated amounts involved in a contingency. Throughout the life of a contingency, the Company or its advisers may learn of additional information that can affect the

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assessments about probability or about the estimates of amounts involved. Changes in these assessments can lead to changes in recorded reserves. In addition, the actual costs of resolving these claims may be substantially higher or lower than the amounts reserved for the claims. At June 30, 2022 and December 31, 2021, the Company had no significant accruals for contingent liabilities and had no known pending matters that could potentially be significant.critical accounting policies during 2023.

Interest Rate Sensitivity

Fluctuations in interest rates may result in changes in the fair value of the Company’s financial instruments, cash flows and net interest income. This risk is managed using simulation modeling to calculate the most likely interest rate risk utilizing estimated loan and deposit growth. The objective is to optimize the Company’s financial position, liquidity, and net interest income while limiting ~~their~~ volatility.

Senior management regularly reviews the overall interest rate risk position and evaluates strategies to manage the risk. The Company's Asset and Liability Management Committee (“ALCO”) uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to ~~minimize~~assess the impact of market interest rate swings. The analysis of the impact on net interest income over a twelve-month period is subjected to instantaneous changes in market rates ~~of 100 basis point increases up to 200 basis points of change on net interest income~~ and is monitored on a quarterly basis.

The following table presents the ALCO simulation model's projected impact of a change in interest rates on the projected baseline net interest income for the 12 ~~and 24~~ month ~~periods~~period beginning on July 1, ~~2022,~~2023, holding all balances on the balance sheet static. This change in interest rates assumes parallel shifts in the yield curve and does not ~~take into account~~consider changes in the slope of the yield curve.

% Change in Projected Baseline Net
Change in Interest Rates Interest Income
1-12 months 13-24 months
+2.00% 10.3% 14.6%
+1.00% 5.1% 7.2%
Current —% —%
-1.00% (3.4%) (7.7%)

~~The Company had a positive gap position based on contractual and prepayment assumptions for~~ In particular, the ~~next 12 months, with a positive cumulative~~steepening or inversion of the yield curve as well as gradually changing interest rate ~~sensitivity gap as a percentage~~changes could result in different outcomes when compared to the parallel shifts contemplated below.

Table of ~~total earning assets of 27.1% at June 30, 2022. This result includes assumptions for core deposit re-pricing from a statistical study commissioned from a third party consulting group.~~Content s


						% Change in Projected Baseline
Change in Interest Rates						Net Interest Income
						1-12 months
+2.00%						(8.5)%
+1.00%						(4.0)%
Current						—%
-1.00%						1.8%
-2.00%						3.6%
-3.00%						5.0%

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. ~~Derivative~~Management may adjust asset or liability pricing or structure in order to manage interest rate risk through an interest rate cycle. This may include the use of investment portfolio purchases or sales or the use of derivative financial instruments, such as interest rate swaps, options, caps, floors, futures ~~and~~or forward ~~contracts may be utilized as components of the Company’s risk management profile.~~contracts.

Effects of Inflation and Changing Prices

The condensed consolidated financial statements and related financial data presented herein have been prepared in accordance with U.S. GAAP, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money, over time, due to inflation.

Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the general level of inflation. However, inflation affects financial institutions by increasing their cost of goods and services purchased, as well as the cost of salaries and benefits, occupancy expense, and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings, and shareholders’ equity. Mortgage ~~originations~~origination and ~~re-financings tend~~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.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 Economic Value of Equity, or “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 Company’s Asset/Liability Committee, or “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~~board of ~~Directors.~~directors. The primary goal of interest rate risk management is to control exposure to interest rate risk, within policy limits approved by the ~~Board.~~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~~considered 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. In contrast to the net interest income simulation, which assumes interest rates will change over a period of time, EVE uses instantaneous changes in rates.

EVE values only the current balance sheet, and does not incorporate the growth 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

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the expected changes in balances and pricing of the indeterminate life deposit portfolios. Core deposits are a more significant funding source for the Company, making the lives attached to core deposits more important to the accuracy of EVE modeling. The Company periodically reassesses its assumptions regarding the indeterminate lives of core deposits utilizing an independent ~~third party~~third-party resource to assist. ~~With lower~~These assumptions could see greater volatility due to changes in the level of interest rates ~~over a prolonged period,~~and recent industry events. With higher interest rates, the average lives of core deposits have trended ~~higher~~lower and ~~favorably~~unfavorably impacted model estimates of EVE. In addition, the Company’s acquisitions have changed the composition of the balance sheet, both of which have resulted in changes to our EVE ~~for higher rates.~~profile.

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		% Change in
Change in Interest Rates	Change in Interest Rates	Economic Value of	Change in Interest Rates	Economic Value of
		Equity		Equity
+2.00%	+2.00%	11.0%	+2.00%	(11.1)%
+1.00%	+1.00%	6.0%	+1.00%	(5.0)%
Current	Current	—%	Current	—%
-1.00%	-1.00%	(6.6%)	-1.00%	1.3%
-2.00%			-2.00%	1.0%
-3.00%			-3.00%	(1.7%)

While an instantaneous and severe shift in interest rates is used in this analysis to provide an estimate of exposure under an extremely adverse scenario, 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 ~~take into account~~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.

Item 4. CONTROLS AND PROCEDURES

The Company’s management, with the participation of its chief executive officer and chief financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of June 30, ~~2022~~2023 and concluded that those disclosure controls and procedures are effective.

During the quarter ended June 30, ~~2022,~~2023, there have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

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Part II OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should consider the factors discussed in “Part I, Item 1A. Risk Factors” in our report on Form 10-K for the year ended December 31, ~~2021,~~2022, which could materially affect our business, financial condition and prospective results. The risks described in this report, in our Form 10-K or our other SEC filings are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes with respect to the risk factors disclosed in our Annual Report on form 10-K for the year ended December 31, ~~2021.~~2022.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the six month period ended June 30, ~~2022,~~2023, the Company repurchased shares of its common stock as indicated in the following table:

Period
Total
Number of
Shares
Purchased1
Average Price
Paid Per Share Total Number of
Shares Purchased
as part of Public
Announced Plan Maximum
Value of
Shares that May
Yet be Purchased
Under the Plan
(in thousands)
1/1/22 to 1/31/22 940 $ 35.39 — $ 100,000
2/1/22 to 2/28/22 — — — 100,000
3/1/22 to 3/31/22 — — — 100,000
Total - 1st Quarter 940 $ 35.39 — $ 100,000
4/1/22 to 4/30/22 39,489 34.34 — 100,000
5/1/22 to 5/31/22 — — — 100,000
6/1/22 to 6/30/22 — — — 100,000
Total - 2nd Quarter 39,489 $ 34.34 — $ 100,000
1Shares purchased from January 1, 2022 through June 30, 2022 represent shares surrendered to the Company to satisfy tax withholding related to the exercise of stock options and the vesting of share-based awards.


Period	Total Number of Shares Purchased1	Average Price Paid Per Share		Total Number of Shares Purchased as part of Public Announced Plan	Maximum Value of Shares that May Yet be Purchased Under the Plan (in thousands)
1/1/23 to 1/31/23	8,783	$	31.23	—	$	100,000
2/1/23 to 2/28/23	—	—		—	100,000
3/1/23 to 3/31/23	2,703	28.15		—	100,000
Total - 1st Quarter	11,486	$	29.84	—	$	100,000
4/1/23 to 4/30/23	47,516	23.70		—	100,000
5/1/23 to 5/31/23	—	17.99		2,515	97,485
6/1/23 to 6/30/23	7,117	31.90		—	97,485
Total - 2nd Quarter	54,633	$	23.72	2,515	$	97,485









1Shares purchased from January 1, 2023 through June 30, 2023 represent shares surrendered to the Company to satisfy tax withholding related to the exercise of stock options and the vesting of share-based awards.

On December 15, ~~2021,~~2022, the Company's Board of Directors authorized the renewal of the ~~Company’s~~Company's share repurchase program, under which the Company may, from time to time, purchase up to $100 million of its shares of outstanding common stock. Under the share repurchase program, which will expire on December 31, ~~2022,~~2023, repurchases will be made, if at all, in accordance with applicable securities laws and may be made from time to time in the open market, by block purchase or by negotiated transactions. The amount and timing of repurchases, if any, will be based on a variety of factors, including share acquisition price, regulatory limitations, market conditions and other factors. The program does not obligate the Company to purchase any of its shares, and may be terminated or amended by the Board of Directors at any time prior to its expiration date.

As of June 30, ~~2022, no~~2023, 2,515 shares of the Company's common stock had been repurchased under the program.

Item 3. Defaults upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

~~None.~~

During the three months ended June 30, 2023, there were no Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements adopted, modified or terminated by any director or officer of the Company.

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Item 6. Exhibits



			Exhibit ~~2.1~~2.1 Agreement and Plan of Merger dated ~~March 29,~~August 7, 2022 by and among the Company, Seacoast Bank, ~~Apollo Bancshares, Inc.~~Professional Holding Corp. and ~~Apollo~~Professional Bank incorporated herein by reference from Exhibit 2.1 to the Company’s Form 8-K, filed ~~April 1,~~August 11, 2022.

			~~Exhibit 2.~~2 ~~Agreement and Plan of Merger~~ dated May 4, 2022 by and among the Company, Seacoast Bank, Drummond Banking Company and Drummond Community Bank incorporated herein by reference from Exhibit 2.1 to the Company’s Form 8-K, filed May 10, 2022.

			Exhibit 3.1.1 Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q, filed May 10, 2006.

			Exhibit 3.1.2 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company’s Form 8-K, filed December 23, 2008.

			Exhibit 3.1.3 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.4 to the Company's Form S-1, filed June 22, 2009.

			Exhibit 3.1.4 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company's Form 8-K, filed July 20, 2009.

			Exhibit 3.1.5 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company’s Form 8-K, filed December 3, 2009.

			Exhibit 3.1.6 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company’s Form 8-K/A, filed July 14, 2010.

			Exhibit 3.1.7 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company’s Form 8-K, filed June 25, 2010.

			Exhibit 3.1.8 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company’s Form 8-K, filed June 1, 2011.

			Exhibit 3.1.9 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company’s Form 8-K, filed December 13, 2013.

			Exhibit 3.1.10 Articles of Amendment to the Amended and Restated Articles of Incorporation Incorporated herein by reference from Exhibit 3.1 to the Company's Form 8K, filed May 30, 2018.

			Exhibit 3.2 Amended and Restated By-laws of the Company Incorporated herein by reference from Exhibit 3.1 to the Company’s Form 8-K, filed October 26, 2020.



			Exhibit 31.1			Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			Exhibit 31.2			Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			Exhibit 32.1			Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			Exhibit 32.2			Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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			Exhibit 101			The following materials from Seacoast Banking Corporation of Florida’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022~~2023 formatted in Inline XBRL: (i) the ~~Condensed~~ Consolidated Statements of Income, (ii) the ~~Condensed~~ Consolidated Statements of Comprehensive Income, (iii) the ~~Condensed~~ Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders' Equity and (vi) the Notes to the ~~Condensed~~ Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
			Exhibit 104			The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022,~~2023, formatted in Inline XBRL.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			SEACOAST BANKING CORPORATION OF FLORIDA


August ~~4, 2022~~9, 2023			/s/ Charles M. Shaffer
			Charles M. Shaffer
			Chairman and Chief Executive Officer


August ~~4, 2022~~9, 2023			/s/ Tracey L. Dexter
			Tracey L. Dexter
			Executive Vice President and Chief Financial Officer

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	Three Months Ended June 30, 2021
(In thousands)	Beginning Balance		Provision for Credit Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	4,428	$	(469)	$	—	$	96	$	(2)	$	4,053
Commercial real estate - owner occupied	9,792		(1,116)		—		—		—		8,676
Commercial real estate - non-owner occupied	36,229		(1,423)		—		1		—		34,807
Residential real estate	14,353		(2,407)		(21)		621		(3)		12,543
Commercial and financial	18,916		399		(1,564)		265		—		18,016
Consumer	2,925		161		(199)		146		(1)		3,032

Paycheck Protection Program	—		—		—		—		—		—
Totals	$	86,643	$	(4,855)	$	(1,784)	$	1,129	$	(6)	$	81,127


	August 6, 2021
(In thousands)	Book Balance		Fair Value
Loans:
Construction and land development	$	37,558	$	36,651
Commercial real estate - owner-occupied	35,765		35,363
Commercial real estate - non owner-occupied	241,322		237,091
Residential real estate	71,118		70,541
Commercial and financial	61,274		58,324
Consumer	647		647
PPP loans	38,598		38,598
Total acquired loans	$	486,282	$	477,215


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except per share amounts)	2022		2021		2022		2021
Net interest income	$	81,647	$	78,315	$	158,169	$	157,149
Net income	32,755		41,913		58,025		73,205
EPS - basic	$	0.53	$	0.69	$	0.95	$	1.21
EPS - diluted	0.53		0.69		0.94		1.24


	% Change in Projected Baseline Net
Change in Interest Rates	Interest Income
	1-12 months	13-24 months
+2.00%	10.3%	14.6%
+1.00%	5.1%	7.2%
Current	—%	—%
-1.00%	(3.4%)	(7.7%)