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What changed in SEACOAST BANKING CORP OF FLORIDA's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SEACOAST BANKING CORP OF FLORIDA's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+375 added−436 removedSource: 10-K (2024-02-27) vs 10-K (2023-03-01)

Top changes in SEACOAST BANKING CORP OF FLORIDA's 2023 10-K

375 paragraphs added · 436 removed · 280 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

70 edited+15 added−19 removed89 unchanged
Biggest changeAcquisitions: The BHC Act permits acquisitions of banks by bank holding companies, such that Seacoast and any other bank holding company, whether located in Florida or elsewhere, may acquire a bank located in any other state, subject to certain deposit-percentages, age of bank charter requirements, and other restrictions.
Biggest changeAs regulator of Seacoast Bank, the Office of the Comptroller of the Currency (the “OCC”) may require reports from the Company to assess its ability to serve as a source of strength and the FRB may enforce compliance with the source of strength requirements and require the Company to provide financial assistance to Seacoast Bank in the event of financial distress. 7 Acquisitions: The BHC Act permits acquisitions of banks by bank holding companies, such that Seacoast and any other bank holding company, whether located in Florida or elsewhere, may acquire a bank located in any other state, subject to certain deposit-percentages, age of bank charter requirements, and other restrictions.
Supervision and regulation of banks, their holding companies and affiliates is intended primarily for the protection of depositors and customers, the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”), and the U.S. banking and financial system rather than holders of the Company's capital stock.
Supervision and regulation of banks, their holding companies and affiliates is intended primarily for the protection of depositors and customers, the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”), and the U.S. banking and financial system rather than protection for the holders of the Company's capital stock.
On December 16, 2022, the FRB adopted a final rule to implement the LIBOR Act by identifying benchmark rates based on SOFR (Secured Overnight Financing Rate) that will replace LIBOR in certain financial contracts after June 30, 2023.
On December 16, 2022, the FRB adopted a final rule to implement the LIBOR Act by identifying benchmark rates based on the Secured Overnight Financing Rate ("SOFR") that will replace LIBOR in certain financial contracts after June 30, 2023.
Item 1. Business General Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) is a financial holding company, incorporated in Florida in 1983, and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). Its principal subsidiary is Seacoast National Bank, a wholly-owned national banking association (“Seacoast Bank”), which commenced its operations in 1933.
Item 1. Business General Information Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) is a financial holding company, incorporated in Florida in 1983, and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). Its principal subsidiary is Seacoast National Bank, a wholly-owned national banking association (“Seacoast Bank”), which commenced its operations in 1933.
In addition, bank regulatory agencies may issue enforcement actions, policy statements, interpretive letters and similar written guidance applicable to the Company or Seacoast Bank. Changes in applicable laws, regulations or regulatory guidance, or their interpretation by regulatory agencies or courts may have a material adverse effect on the Company and Seacoast Bank’s business, operations, and earnings.
In addition, bank regulatory agencies may issue enforcement actions, policy statements, interpretive letters and similar written guidance applicable to the Company or Seacoast Bank. Changes in applicable laws, regulations or regulatory guidance, or their interpretation by regulatory agencies or courts may have a material adverse effect on the Company's and Seacoast Bank’s business, operations, and earnings.
The Department of Justice (the “DOJ”), and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending that provides guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent 14 discriminatory lending practices.
The Department of Justice (the “DOJ”), and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending that provides guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices.
Comprehensive Employee Assistance Plan (EAP) resources are accessible to all associates, addressing a wide range of topics from substance abuse to child and elder care resources. Associates are encouraged to balance their physical fitness with their work life, with a Company reimbursement for a portion of fitness center memberships.
Comprehensive Employee Assistance Plan ("EAP") resources are accessible to all associates, addressing a wide range of topics from substance abuse to 6 child and elder care resources. Associates are encouraged to balance their physical fitness with their work life, with a Company reimbursement for a portion of fitness center memberships.
The Guidance also applies when a bank has a sharp increase in CRE loans or has significant concentrations of CRE secured by a particular property type. Seacoast Bank has exposures to loans secured by commercial real estate due to the nature of its markets and the loan needs of both its retail and commercial customers.
The Guidance also applies when a bank has a sharp increase in commercial real estate loans or has significant concentrations of commercial real estate secured by a particular property type. Seacoast Bank has exposures to loans secured by commercial real estate due to the nature of its markets and the loan needs of both its retail and commercial customers.
In addition, 6 proposals to change the laws and regulations governing the banking industry are frequently raised at both the state and federal levels. The likelihood and timing of any changes in these laws and regulations, and the impact such changes may have on the Company and Seacoast Bank, are difficult to predict.
In addition, proposals to change the laws and regulations governing the banking industry are frequently raised at both the state and federal levels. The likelihood and timing of any changes in these laws and regulations, and the impact such changes may have on the Company and Seacoast Bank, are difficult to predict.
Available Information The Company's principal offices are located at 815 Colorado Avenue, Stuart, Florida 34994, and the telephone number at that address is (772) 287-4000. The Company and Seacoast Bank maintain Internet websites at www.seacoastbanking.com and www.seacoastbank.com , respectively.
Available Information The Company's principal offices are located at 815 Colorado Avenue, Stuart, Florida 34994, and the telephone number at that address is (772) 287-4000. The Company and Seacoast Bank maintain websites at www.seacoastbanking.com and www.seacoastbank.com , respectively.
Regulation of the Company: The Company is registered as a bank holding company with the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHC Act”) and has elected to be a financial holding company. As such, the Company is subject to comprehensive supervision and regulation by the Federal Reserve and to its regulatory reporting requirements.
Regulation of the Company: The Company is registered as a bank holding company with the FRB under the Bank Holding Company Act of 1956, as amended (the “BHC Act”) and has elected to be a financial holding company. As such, the Company is subject to comprehensive supervision and regulation by the Federal Reserve and to its regulatory reporting requirements.
Seacoast Bank is subject to such standards, as well as standards for notifying customers in the event of a security breach. Seacoast Bank is similarly 13 required to have an information security program to safeguard the confidentiality and security of customer information and to ensure proper disposal.
Seacoast Bank is subject to such standards, as well as standards for notifying customers in the event of a security breach. Seacoast Bank is similarly required to have an information security program to safeguard the confidentiality and security of customer information and to ensure proper disposal.
As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should consult with the Federal Reserve and eliminate, defer or significantly reduce the bank holding company’s dividends if: 10 • 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; • its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or • it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
As a 10 general matter, the FRB has indicated that the board of directors of a bank holding company should consult with the FRB and eliminate, defer or significantly reduce the bank holding company’s dividends if: • 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; • its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or • it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
Federal banking laws also place similar restrictions on certain extensions of credit by insured banks, such as Seacoast Bank, to their directors, executive officers and principal shareholders. Reserves: Federal Reserve rules require depository institutions, such as Seacoast Bank, to maintain reserves against their transaction accounts, primarily interest bearing and non-interest bearing checking accounts.
Federal banking laws also place similar restrictions on certain extensions of credit by insured banks, such as Seacoast Bank, to their directors, executive officers and principal shareholders. Reserves: FRB rules require depository institutions, such as Seacoast Bank, to maintain reserves against their transaction accounts, primarily interest bearing and non-interest bearing checking accounts.
The Company provides integrated financial services including commercial and retail banking, wealth management, mortgage and insurance services to customers through advanced online and mobile banking solutions, and through Seacoast Bank's network of 78 traditional branches. The Company’s legal structure includes wholly-owned subsidiaries through which the Company manages investments and foreclosed properties.
The Company provides integrated financial services including commercial and retail banking, wealth management, mortgage and insurance services to customers through advanced online and mobile banking solutions, and through Seacoast Bank's network of 77 traditional branches. The Company’s legal structure includes wholly-owned subsidiaries through which the Company manages investments and foreclosed properties.
Failure to comply with these internal control rules may materially adversely affect the Company's reputation, its ability to obtain the necessary certifications to financial statements, and the value of the Company's securities. The assessments of the Company's financial reporting controls as of December 31, 2022 are included in this report under “Item 9A.
Failure to comply with these internal control rules may materially adversely affect the Company's reputation, its ability to obtain the necessary certifications to financial statements, and the value of the Company's securities. The assessments of the Company's financial reporting controls as of December 31, 2023 are included in this report under “Item 9A.
The federal banking agencies issued proposed rules in 2011 and issued guidance on sound incentive compensation policies. In 2016, the federal banking agencies also proposed rules that would, depending upon the assets of the institution, directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping. As of December 31, 2022, these rules have not been implemented.
The federal banking agencies issued proposed rules in 2011 and issued guidance on sound incentive compensation policies. In 2016, the federal banking agencies also proposed rules that would, depending upon the assets of the institution, directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping. As of December 31, 2023, these rules have not been implemented.
Seacoast has grown to be one of the largest community banks headquartered in Florida, with an expanding presence in the state's fastest growing markets, each of which has unique characteristics and opportunities. This growth has been achieved through a balanced strategy consisting of organic growth and opportunistic acquisitions.
Seacoast has grown to be one of the largest regional banks headquartered in Florida, with an expanding presence in the state's fastest growing markets, each of which has unique characteristics and opportunities. This growth has been achieved through a balanced strategy consisting of organic growth and opportunistic acquisitions.
In 2022, the Company’s and Seacoast Bank’s regulatory capital ratios were above the well-capitalized standards and met the capital conservation buffer as of December 31, 2022. Based on current estimates, we believe that the Company and Seacoast Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2023.
In 2023, the Company’s and Seacoast Bank’s regulatory capital ratios were above the well-capitalized standards and met the capital conservation buffer as of December 31, 2023. Based on current estimates, we believe that the Company and Seacoast Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2024.
On January 1, 2021, Congress passed federal legislation that made sweeping changes to federal anti-money laundering laws, subject to pending implementation by regulatory rule making, and, on June 30, 2021, FinCEN published the first set of “national AML priorities,” as required by the Bank Secrecy Act, which include, but are not limited to, cybercrime, terrorist financing, fraud, and drug/human trafficking.
On January 1, 2021, Congress passed federal legislation that made sweeping changes to federal anti-money laundering laws, subject to pending implementation by regulatory rulemaking, and, on June 30, 2021, FinCEN published the first set of “national AML priorities,” as required by the Bank Secrecy Act, which include, but are not limited to, cybercrime, terrorist financing, fraud, and drug/human trafficking.
Seacoast Bank competes for deposits, commercial, fiduciary and investment services and various types of loans and other financial services. Seacoast Bank also competes for interest-bearing funds with a number of other financial intermediaries, including brokerage and insurance firms, as well as investment alternatives, including mutual funds, governmental and corporate bonds, and other securities.
Seacoast Bank competes for deposits, commercial, fiduciary and investment services and various types of loans and other financial services. Seacoast Bank also competes for interest-bearing funds with other financial intermediaries, including brokerage and insurance firms, as well as investment alternatives, including mutual funds, governmental and corporate bonds, and other securities.
It is the policy of the Federal Reserve that bank holding companies should pay cash dividends on common stock only on income available during the past year, only if prospective earnings retention is consistent with the organization's expected future needs and financial condition, and only if the level of cash dividends does not undermine the bank holding company's ability to serve as a source of strength to its banking subsidiary.
It is the policy of the FRB that bank holding companies should pay cash dividends on common stock only on income available during the past year, only if prospective earnings retention is consistent with the organization's expected future needs and financial condition, and only if the level of cash dividends does not undermine the bank holding company's ability to serve as a source of strength to its banking subsidiary.
In accordance with Federal Reserve policy, the board of directors of a bank holding company must consider different factors to ensure that its dividend level is prudent relative to maintaining a strong financial position, and is not based on overly optimistic earnings scenarios, such as potential events that could affect its ability to pay, while still maintaining a strong financial position.
In accordance with FRB policy, the board of directors of a bank holding company must consider different factors to ensure that its dividend level is prudent relative to maintaining a strong financial position, and is not based on overly optimistic earnings scenarios, such as potential events that could affect its ability to pay, while still maintaining a strong financial position.
In October of 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate by two basis points, applicable to all insured depository institutions beginning with the first quarterly assessment period in 2023 and will remain in effect until the level of the DIF reserve ratios to insured deposits meets the FDIC's long-term goals.
In October of 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate by two basis points, applicable to all insured depository institutions, which began with the first quarterly assessment period in 2023 and will remain in effect until the level of the DIF reserve ratios to insured deposits meets the FDIC's long-term goals.
FinCEN is required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these national priorities into their AML programs. As of December 31, 2022, no such regulations have been proposed.
FinCEN is required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these national priorities into their AML programs. As of December 31, 2023, no such regulations have been proposed.
The Federal Reserve may not approve any such transaction that would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any section of the United States, or the effect of which may be substantially to lessen competition or to tend to create a 7 monopoly in any section of the country, or that in any other manner would be in restraint of trade, unless the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction meeting the convenience and needs of the community to be served.
The FRB may not approve any such transaction that would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any section of the United States, or the effect of which may be substantially to lessen competition or to tend to create a monopoly in any section of the country, or that in any other manner would be in restraint of trade, unless the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction meeting the convenience and needs of the community to be served.
The Federal Reserve is also required to consider: (1) the financial and managerial resources of the companies involved, including pro forma capital ratios; (2) the risk to the stability of the United States banking or financial system; (3) the convenience and needs of the communities to be served, including performance under the CRA; and (4) the effectiveness of the companies in combating money laundering.
The FRB is also required to consider: (1) the financial and managerial resources of the companies involved, including pro forma capital ratios; (2) the risk to the stability of the United States banking or financial system; (3) the convenience and needs of the communities to be served, including performance under the CRA; and (4) the effectiveness of the companies in combating money laundering.
The BHC Act requires that a bank holding company obtain the prior approval of the Federal Reserve before (i) acquiring direct or indirect ownership or control of more than 5% of the voting shares of any additional bank or bank holding company, (ii) taking any action that causes an additional bank or bank holding company to become a subsidiary of the bank holding company, or (iii) merging or consolidating with any other bank holding company.
The BHC Act requires that a bank holding company obtain the prior approval of the FRB before (i) acquiring direct or indirect ownership or control of more than 5% of the voting shares of any additional bank or bank holding company, (ii) taking any action that causes an additional bank or bank holding company to become a subsidiary of the bank holding company, or (iii) merging or consolidating with any other bank holding company.
In addition, the Federal Reserve has the power to order a financial holding company or its subsidiaries to terminate any non-banking activity or terminate its ownership or control of any non-bank subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that financial holding company.
In addition, the FRB has the power to order a financial holding company or its subsidiaries to terminate any non-banking activity or terminate its ownership or control of any non-bank subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that financial holding company.
For purposes of the Federal Reserve’s Regulation Y, including determining whether a bank holding company meets the requirements to be a financial holding company, bank holding companies, such as the Company, must maintain a Tier 1 risk-based capital ratio of 6.0% or greater and a total risk-based capital ratio of 10.0% or greater to be well-capitalized.
For purposes of the FRB’s Regulation Y, including determining whether a bank holding company meets the requirements to be a financial holding company, bank holding companies, such as the Company, must maintain a Tier 1 risk-based capital ratio of 6.0% or greater and a total risk-based capital ratio of 10.0% or greater to be well-capitalized.
The OCC and the Federal Reserve have indicated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsound and unsafe banking practice. The OCC and the Federal Reserve have each indicated that depository institutions and their holding companies should generally pay dividends only out of current operating earnings.
The OCC and the FRB have indicated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsound and unsafe banking practice. The OCC and the FRB have each indicated that depository institutions and their holding companies should generally pay dividends only out of current operating earnings.
To offset these potential competitive disadvantages, the Company depends on its reputation for superior service, ability to make credit and other business decisions quickly, and the delivery of an integrated distribution of traditional branches and bankers, with digital technology. Human Capital As of December 31, 2022, the Company and its subsidiaries employed 1,490 full time-equivalent employees.
To offset these potential competitive disadvantages, the Company depends on its reputation for superior service, ability to make credit and other business decisions quickly, and the delivery of an integrated distribution of traditional branches and bankers, with digital technology. Human Capital As of December 31, 2023, the Company and its subsidiaries employed 1,541 full time-equivalent employees.
The required capital ratios are minimums, and the Federal Reserve and OCC may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner.
The required capital ratios are minimums, and the FRB and OCC may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner.
Also, the Federal Reserve may require bank holding companies, including the Company, to maintain capital ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a bank holding company’s particular condition, risk profile and growth plans.
Also, the FRB may require bank holding companies, including the Company, to maintain capital ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a bank holding company’s particular condition, risk profile and growth plans.
Under the Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to the Federal Reserve before acquiring control of any bank holding company, such as Seacoast, and the OCC before acquiring control of any national bank, such as Seacoast Bank.
Under the Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to the FRB before acquiring control of any bank holding company, such as Seacoast, and the OCC before acquiring control of any national bank, such as Seacoast Bank.
The Guidance is triggered when CRE loan concentrations exceed either: • Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk based capital; or • Total reported loans secured by multifamily and non-farm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk based capital.
The Guidance is triggered when commercial real estate loan concentrations exceed either: • Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based capital; or • Total reported loans secured by multifamily and non-farm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk-based capital.
Seacoast Bank believes that its long term experience in CRE lending, underwriting policies, internal controls, and other policies currently in place, as well as its loan and credit monitoring and administration procedures, are generally appropriate to managing its concentrations as required under the Guidance.
Seacoast Bank believes that its long-term experience in commercial real estate lending, underwriting policies, internal controls, and other policies currently in place, as well as its loan and credit monitoring and administration procedures, are generally appropriate to managing its concentrations as required under the Guidance.
Financial holding companies may also engage in activities that are considered to be financial in nature, as well as those incidental or, if so determined by the Federal Reserve, complementary to financial activities.
Financial holding companies may also engage in activities that are considered to be financial in nature, as well as those incidental or, if so determined by the FRB, complementary to financial activities.
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 year ended December 31, 2022, Seacoast Bank distributed $48.4 million to the Company. During the year ended December 31, 2021, Seacoast Bank distributed $47.7 million to the Company.
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 year ended December 31, 2023, Seacoast Bank distributed $40.7 million to the Company. During the year ended December 31, 2022, Seacoast Bank distributed $48.4 million to the Company.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), among other things, requires the federal bank regulatory agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital requirements. FDICIA establishes five regulatory capital tiers: “well capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized”, and “critically undercapitalized”.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), among other things, requires the federal bank regulatory agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital requirements. FDICIA establishes five regulatory capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized”.
The Federal Reserve has not yet revised the well-capitalized standard for bank holding companies to reflect the higher capital requirements imposed under the current capital rules.
The FRB has not yet revised the well-capitalized standard for bank holding companies to reflect the higher capital requirements imposed under the current capital rules.
As further described below, each of the Company and Seacoast Bank is well-capitalized as of December 31, 2022, and Seacoast Bank has a rating of “Outstanding” in its most recent CRA evaluation.
As further described below, each of the Company and Seacoast Bank is well-capitalized as of December 31, 2023, and Seacoast Bank achieved a rating of “Outstanding” in its most recent CRA evaluation.
If the Federal Reserve were to apply the same or a similar well-capitalized standard to bank holding companies as that applicable to Seacoast Bank, the Company’s capital ratios as of December 31, 2022 would exceed such revised well-capitalized standard.
If the FRB were to apply the same or a similar well-capitalized standard to bank holding companies as that applicable to Seacoast Bank, the Company’s capital ratios as of December 31, 2023 would exceed such revised well-capitalized standard.
The principal provisions of Title III of the USA PATRIOT Act require that regulated financial institutions, including state member banks: (i) establish an anti-money laundering program that includes training and audit components; (ii) comply with regulations regarding the verification of the identity of any person seeking to open an account; (iii) take additional required precautions with non-U.S. owned accounts; and (iv) perform certain verification and certification of money laundering risk for their foreign correspondent banking relationships.
Title III of the USA PATRIOT Act requires that regulated banks such as Seacoast Bank: (i) establish an anti-money laundering program that includes training and audit components; (ii) comply with regulations regarding the verification of the identity of any person seeking to open an account; (iii) take additional required precautions with non-U.S. owned accounts; and (iv) perform certain verification and certification of money laundering risk for their foreign correspondent banking relationships.
As of December 31, 2022, the consolidated capital ratios of Seacoast and Seacoast Bank were as follows: Seacoast (Consolidated) Seacoast Bank Minimum to be Well-Capitalized 1 Total Risk-Based Capital Ratio 15.79% 14.47% 10.00% Tier 1 Capital Ratio 14.79 13.46 8.00 Common Equity Tier 1 Capital Ratio (CET1) 13.87 13.46 6.50 Leverage Ratio 11.46 10.44 5.00 1 For subsidiary bank only.
As of December 31, 2023, the consolidated capital ratios of Seacoast and Seacoast Bank were as follows: Seacoast (Consolidated) Seacoast Bank Minimum to be Well-Capitalized 1 Total Risk-Based Capital Ratio 15.92% 14.82% 10.00% Tier 1 Capital Ratio 14.54 13.64 8.00 Common Equity Tier 1 Capital Ratio (CET1) 13.87 13.64 6.50 Leverage Ratio 11.00 10.32 5.00 1 For subsidiary bank only.
Under this restriction Seacoast Bank is eligible to distribute dividends up to $198.9 million to the Company, without prior OCC approval, as of December 31, 2022.
Under this restriction Seacoast Bank is eligible to distribute dividends up to $205.7 million to the Company, without prior OCC approval, as of December 31, 2023.
Expansion of Market and Competition Seacoast has continued expanding the franchise and strengthening its competitive position throughout Florida with acquisitions and new market launches, adding to its footprint in the state’s fastest growing markets.
Market and Competition Seacoast has continued expanding the franchise and strengthening its competitive position throughout Florida with acquisitions and new market launches, adding to its footprint in the state’s fastest growing markets. In January 2023, Seacoast completed the acquisition of Professional Holding Corp.
Regulation of the Bank: As a national bank, Seacoast Bank is subject to comprehensive supervision and regulation by the OCC and is subject to its regulatory reporting requirements.
Regulation of the Bank: As a national bank, Seacoast Bank is subject to comprehensive supervision and regulation by the OCC and is subject to its regulatory reporting requirements. Additionally, Seacoast Bank also is subject to certain FRB and FDIC regulations.
Many of the Company's competitors are engaged in local, regional, national and international operations and have greater assets, personnel and other resources. Some of these competitors are subject to less regulation and/or more favorable tax treatment. Many of these institutions have greater resources, broader geographic markets and higher lending limits, and may offer services that the Company does not offer.
Some of these competitors are subject to less regulation and/or more favorable tax treatment. Many of these institutions have greater resources, broader geographic markets and higher lending limits, and may offer services that the Company does not offer.
On November 18, 2021, the federal banking agencies issued a new rule effective in 2022 that requires banks to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” Consumer Regulation: Activities of Seacoast Bank are subject to a variety of statutes and regulations designed to protect consumers.
The federal banking agencies also require banks to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” 13 Consumer Regulation: Activities of Seacoast Bank are subject to a variety of statutes and regulations designed to protect consumers.
The FDIC calculates quarterly deposit insurance assessments based on an institution’s average total consolidated assets less its average tangible equity, and applies one of four risk categories determined by reference to its capital levels, supervisory ratings, and certain other factors. The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits.
Seacoast Bank is subject to FDIC assessments for its deposit insurance. The FDIC calculates quarterly deposit 11 insurance assessments based on an institution’s average total consolidated assets less its average tangible equity, and applies one of four risk categories determined by reference to its capital levels, supervisory ratings, and certain other factors.
Seacoast operates in a highly competitive market, and Seacoast Bank's competition includes not only other banks of comparable or larger size in the same markets, but also various other non-bank financial institutions, including savings and loan associations, credit unions, mortgage companies, personal and commercial financial companies, peer to peer lending businesses, investment brokerage and financial advisory firms and mutual fund companies.
Also in the past two years, Seacoast entered the Naples and Jacksonville markets. 5 Seacoast operates in a highly competitive environment, and Seacoast Bank's competition includes not only other banks, but also various other non-bank financial institutions, including savings and loan associations, credit unions, mortgage companies, personal and commercial financial companies, peer-to-peer lending businesses, financial technology companies ("fintechs"), investment brokerage and financial advisory firms and mutual fund companies.
As of December 31, 2022, Seacoast had total consolidated assets of $12.1 billion, total deposits of $10.0 billion, total consolidated liabilities, including deposits, of $10.5 billion and consolidated shareholders’ equity of $1.6 billion.
As of December 31, 2023, Seacoast had total consolidated assets of $14.6 billion, total deposits of $11.8 billion, total consolidated liabilities, including deposits, of $12.5 billion and consolidated shareholders’ equity of $2.1 billion.
The CFPB also may participate in examinations of the Company's other direct or indirect subsidiaries that offer consumer financial products or services. In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce certain federal consumer financial protection law.
In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce certain federal consumer financial protection law.
For the past three years, Seacoast Bank has been named among the "Best Banks to Work For" by American Banker and has repeatedly been recognized as a best place to work for LGBTQ equality.
For the past several years, Seacoast Bank has been named among the "Best Banks to Work For" by American Banker and has repeatedly been recognized as a best place to work for LGBTQ equality. In addition, during 2023, Seacoast was recognized among Fortune's Best Workplaces for Women and has been certified by Great Place to Work for 2023.
FDIC Insurance Assessments and Depositor Preference: Seacoast Bank’s deposits are insured by the FDIC’s DIF up to the limits under applicable law, which currently are set at $250,000 per depositor, per insured bank, for each account ownership category. Seacoast Bank is subject to FDIC assessments for its deposit insurance.
In March 2020, reserve requirement ratios were reduced to zero percent. These reserve requirements are subject to annual adjustment by the FRB. FDIC Insurance Assessments and Depositor Preference: Seacoast Bank’s deposits are insured by the FDIC’s DIF up to the limits under applicable law, which currently are set at $250,000 per depositor, per insured bank, for each account ownership category.
The results of the survey and the process of continuous improvement are discussed with the Board at least annually. In 2022, 95% of associates participated in the annual engagement survey, and Seacoast maintained an associate engagement score of 83.1%, which is 8% higher than the Banking industry and 7% higher than the Finance industry benchmarks.
The results of the survey and the process of continuous improvement are discussed with the Board at least annually. In 2023, 97% of associates participated in the annual engagement survey, with the overall associate engagement score increasing two percentage points to 85%, which is 9% higher than the Banking industry and 8% higher than the Finance industry benchmarks.
The Volcker Rule also 8 specifies certain limited activities in which bank holding companies and their subsidiaries may continue to engage and requires banking organizations to implement compliance programs.
The Volcker Rule also specifies certain limited activities in which bank holding companies and their subsidiaries may continue to engage and requires banking organizations to implement compliance programs. The Company became subject to the Volcker Rule effective January 1, 2024, and this had no material effect on the Company's activities or operations.
The final rule identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act.
The final rule identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act. The Company has completed the transition from LIBOR with no material impact on the Company’s financial position or results of operations.
At December 31, 2022, the total CRE exposure for Seacoast Bank represents approximately 230% of total risk based capital, also below the Guidance’s threshold. On a consolidated basis, construction and land development and commercial real estate loans represent 41% and 210%, respectively, of total consolidated risk-based capital.
At December 31, 2023, Seacoast Bank's construction and land development loans represented approximately 45% of total risk-based capital at December 31, 2023, well below the Guidance’s threshold. At December 31, 2023, the total commercial real estate exposure for Seacoast Bank represented approximately 244% of total risk based capital, also below the Guidance’s threshold.
In the quarter following four consecutive quarters reporting assets over $10 billion, which will be the first quarter of 2023, Seacoast Bank will meet the definition of a “large institution” and will become subject to direct supervision by the Consumer Financial Protection Bureau (“CFPB”) for compliance with a wide range of consumer compliance laws, and for assessment of the effectiveness of the Bank's compliance management system.
As of January 1, 2023, Seacoast Bank, meets the definition of a “large institution” and is subject to direct supervision by the Consumer Financial Protection Bureau (“CFPB”) for compliance with a wide range of consumer compliance laws, and for assessment of the effectiveness of the Bank's compliance management system.
If the Company finds a name on any transaction, account or wire transfer that is on an OFAC list, it must undertake certain specified activities, which could include blocking or freezing the account or transaction requested, and it must notify the appropriate authorities. 12 Concentrations in Lending: In 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) and advised financial institutions of the risks posed by commercial real estate (“CRE”) lending concentrations.
If the Company finds a name on any transaction, account or wire transfer that is on an OFAC list, it must undertake certain specified activities, which could include blocking or freezing the account or transaction requested, and it must notify the appropriate authorities.
FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. 9 To be well-capitalized, Seacoast Bank must maintain at least the following capital ratios: • 10.0% Total capital to risk-weighted assets • 8.0% Tier 1 capital to risk-weighted asset • 6.5% CET1 to risk-weighted assets; and • 5.0% leverage ratio.
FDICIA generally prohibits a depository institution from making any capital 9 distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized.
The Company and Seacoast Bank have undertaken efforts to ensure that their incentive compensation plans do not encourage inappropriate risks, consistent with three key principles: that incentive compensation arrangements should appropriately balance risk and financial rewards, be compatible with effective controls and risk management, and be supported by strong corporate governance.
The Company and Seacoast Bank have undertaken efforts to ensure that their incentive compensation plans do not encourage inappropriate risks and that policies are in place to provide for recovery (i.e., "clawback") of erroneously awarded incentive compensation, consistent with three key principles: that incentive compensation arrangements should appropriately balance risk and financial rewards, be compatible with effective controls and risk management, and be supported by strong corporate governance. 8 Shareholder Say-On-Pay Votes: The Dodd-Frank Act requires public companies to provide shareholders with an advisory vote on executive compensation (known as say-on-pay votes), the frequency of a say-on-pay vote, and the golden parachutes available to executives in connection with change-in-control transactions.
Continued consolidation and rapid technological changes within the financial services industry will likely change the nature and intensity of competition, but should also create opportunities for the Company to demonstrate and leverage its competitive advantages. 5 Competitors include not only financial institutions based in Florida, but also a number of large out-of-state and foreign banks, bank holding companies and other financial institutions that have an established market presence in Florida or that offer internet-based products.
Continued consolidation, rapid technological changes, and regulatory developments within the financial services industry will likely change the nature and intensity of competition, but should also create opportunities for the Company to demonstrate and leverage its competitive advantages.
No final rule has been issued, but the rule making may affect the Bank’s CRA compliance obligations in the future. Privacy and Data Security: The GLBA generally prohibits disclosure of consumer information to non-affiliated third parties unless the consumer has been given the opportunity to object and has not objected to such disclosure.
The final rules are likely to make it more challenging and/or costly for the Bank to receive a rating of at least “satisfactory” on its CRA exam. Privacy and Data Security: The GLBA generally prohibits disclosure of consumer information to non-affiliated third parties unless the consumer has been given the opportunity to object and has not objected to such disclosure.
In addition, the securitizer of asset-backed securities must retain not less than five percent of the credit risk of the assets collateralizing the asset-backed securities, unless subject to an exemption for asset-backed securities that are collateralized exclusively by residential mortgages that qualify as “qualified residential mortgages.” The CFPB has also issued rules to implement requirements of the Dodd-Frank Act pertaining to mortgage loan origination (including with respect to loan originator compensation and loan originator qualifications) as well as integrated mortgage disclosure rules.
The CFPB has also issued rules to implement requirements of the Dodd-Frank Act pertaining to mortgage loan origination (including with respect to loan originator compensation and loan originator qualifications) as well as integrated mortgage disclosure rules.
Since opening our doors in 1926, Seacoast Bank has remained true to our local roots with high integrity, and we believe that our greatest assets will always be our people. Professional Development and Employee Engagement Seacoast offers comprehensive training and development programs to provide professional growth opportunities and career paths, and offers tuition reimbursement to promote continued professional education.
Our associates are not represented by a collective bargaining agreement and we believe our relationship with our associates is strong. Professional Development and Employee Engagement Seacoast offers comprehensive training and development programs to provide professional growth opportunities and career paths, and offers tuition reimbursement to promote continued professional education.
The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations. Higher allowances for credit losses and capital levels may also be required.
Concentrations in Lending: In 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) and advised financial institutions of the risks posed by commercial real estate (“CRE”) lending concentrations. The Guidance requires that appropriate processes be in place to identify, monitor and control risks 12 associated with real estate lending concentrations.
In early 2022, Seacoast completed the acquisitions of Sabal Palm Bancorp, Inc. and Business Bank of Florida Corp., creating a presence in the desirable Sarasota market, and continuing its growth in Brevard County. Also in the first quarter of 2022, Seacoast entered the Naples market with a new branch and the Jacksonville market with a commercial banking team.
(“Professional”), which further expanded Seacoast’s presence in the tri-county South Florida market, which includes Miami-Dade, Broward, and Palm Beach counties, Florida’s largest metropolitan statistical area ("MSA") and the 8th largest MSA in the nation. In 2022, Seacoast completed the acquisitions of Sabal Palm Bancorp, Inc. ("Sabal Palm"), creating a presence in the desirable Sarasota market, Business Bank of Florida Corp.
Removed
Early in the fourth quarter of 2022, the acquisition of Drummond Banking Company expanded the footprint into North Florida, including Ocala and Gainesville. Seacoast expanded its presence in the dynamic South Florida market with the acquisition of Apollo Bancorp, Inc. in the fourth quarter of 2022, and with the acquisition of Professional Holding Corp. in January of 2023.
Added
Also available on the Company's website are its Code of Conduct, Corporate Governance Guidelines, the charter of each active committee of the Board of Directors, and other materials outlining the Company's corporate governance practices.
Removed
Also in 2022, Seacoast continued its focus on delivering better digital experiences to its customers, completing a significant digital conversion, adding Zelle®, budgeting tools, account aggregation, improved digital onboarding, Spanish language, and several other digital customer experience improvements.
Added
("BBFC"), supporting continued growth in Brevard County, Drummond Banking Company ("Drummond") expanding the footprint into North Florida, including Ocala and Gainesville, and Apollo Bancshares, Inc. ("Apollo"), adding presence in Miami-Dade county.
Removed
As regulator of Seacoast Bank, the Office of the Comptroller of the Currency (the “OCC”) may require reports from the Company to assess its ability to serve as a source of strength and to enforce compliance with the source of strength requirements and require the Company to provide financial assistance to Seacoast Bank in the event of financial distress.
Added
Competitors include not only financial institutions based in Florida, but also large out-of-state and foreign banks, bank holding companies and other financial institutions that have an established market presence in Florida or that offer internet-based products. Many of the Company's competitors are engaged in local, regional, national and international operations and have greater assets, personnel and other resources.
Removed
Shareholder Say-On-Pay Votes: The Dodd-Frank Act requires public companies to provide shareholders with an advisory vote on executive compensation (known as say-on-pay votes), the frequency of a say-on-pay vote, and the golden parachutes available to executives in connection with change-in-control transactions.
Added
To be well-capitalized, Seacoast Bank must maintain at least the following capital ratios: • 10.0% Total capital to risk-weighted assets; • 8.0% Tier 1 capital to risk-weighted asset; • 6.5% CET1 to risk-weighted assets; and • 5.0% leverage ratio.
Removed
In 2020, amendments to the proprietary trading and covered funds regulations issued by the federal banking agencies, the SEC, and the CFTC took effect, simplifying compliance and providing additional exclusions and exemptions.
Added
The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAt December 31, 2022, our nonaccrual loans totaled $28.8 million, or 0.35%, of the loan portfolio and our nonperforming assets (which includes nonaccrual loans) were $31.1 million, or 0.26%, of assets. In addition, we had approximately $11.1 million in accruing loans that were 30 days or more delinquent at December 31, 2022.
Biggest changeNonperforming assets could result in an increase in our provision for credit losses on loans, which could adversely affect our results of operations and financial condition. At December 31, 2023, our nonaccrual loans totaled $65.1 million or 0.65% of the loan portfolio and our nonperforming assets (which includes nonaccrual loans) were $72.7 million or 0.50% of total assets.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. Investors, consumers and businesses also may change their behavior on their own as a result of these concerns. The state of Florida could be disproportionately impacted by long-term climate changes.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. Investors, consumers and businesses may also change their behavior on their own as a result of these concerns. The state of Florida could be disproportionately impacted by long-term climate changes.
Our failure to remain “well capitalized” for bank regulatory purposes could affect customer confidence, our ability to grow, our costs of funds and FDIC insurance costs, our ability to pay dividends on common stock, make distributions on our trust preferred securities, our ability to make acquisitions, and our business, results of operations and financial condition, generally.
Our failure to remain “well-capitalized” for bank regulatory purposes could affect customer confidence, our ability to grow, our costs of funds and FDIC insurance costs, our ability to pay dividends on common stock, our ability to make distributions on our trust preferred securities, our ability to make acquisitions, and our business, results of operations and financial condition, generally.
To the extent we grow through acquisition, we cannot assure you that we will be able to adequately or profitably manage this growth.
To the extent we grow through acquisition, we cannot assure you that we will be able to manage this growth adequately or profitably.
While we have substantial experience in successfully integrating institutions we have acquired, we may encounter difficulties during integration, such as the loss of key employees, the 26 disruption of operations and businesses, loan and deposit attrition, customer loss and revenue loss, possible inconsistencies in standards, control procedures and policies, and unexpected issues with expected branch closures costs, operations, personnel, technology and credit, all of which could divert resources from regular banking operations.
While we have substantial experience in successfully integrating institutions we have acquired, we may encounter difficulties during integration, such as the loss of key employees, the disruption of operations and businesses, loan and deposit attrition, customer loss and revenue loss, possible inconsistencies in standards, control procedures and policies, and unexpected issues with expected branch closures costs, operations, personnel, technology and credit, all of which could divert resources from regular banking operations.
Declines in home prices coupled with high or increased unemployment levels 15 or increased interest rates can cause losses which adversely affect our earnings and financial condition, including our capital and liquidity. We are subject to lending concentration risk. Our loan portfolio contains several industry and collateral concentrations including, but not limited to, commercial and residential real estate.
Declines in home prices coupled with high or increased unemployment levels or increased interest rates can cause losses which adversely affect our earnings and financial condition, including our capital and liquidity. We are subject to lending concentration risk. Our loan portfolio contains several industry and collateral concentrations including, but not limited to, commercial and residential real estate.
Such divestitures involve various risks, including the risks of not being able to timely or fully replace liquidity previously provided by deposits which may be transferred as part of a divestiture, which could adversely affect our financial condition and results of operations. General Risk Factors Shares of our common stock are not insured deposits and may lose value.
Such divestitures involve various risks, including the risks of not being able to timely or fully replace liquidity previously provided by deposits which may be transferred as part of a divestiture, which could adversely affect our financial condition and results of operations. 26 General Risk Factors Shares of our common stock are not insured deposits and may lose value.
Results could include reduced consumer and business confidence, credit deterioration, diminished capital markets activity, and actions by the Federal Reserve Board impacting interest rates or other U.S. monetary policy. We must attract and retain skilled personnel. Our success depends, in substantial part, on our ability to attract and retain skilled, experienced personnel in key positions within the organization.
Results could include reduced consumer and business confidence, credit deterioration, diminished capital markets activity, and actions by the Federal Reserve impacting interest rates or other U.S. monetary policy. We must attract and retain skilled personnel. Our success depends, in substantial part, on our ability to attract and retain skilled, experienced personnel in key positions within the organization.
When customers move money out of bank deposits in favor of alternative investments, we may lose a relatively inexpensive source of funds, and be forced to rely more heavily on borrowings and other sources of funding to fund our business and meet withdrawal demands, thereby increasing our funding costs and adversely affecting our net interest margin.
When customers move money out of bank deposits in favor of alternative investments, we may lose a relatively inexpensive source of funds, and be forced to rely more heavily on borrowings and other 19 sources of funding to fund our business and meet withdrawal demands, thereby increasing our funding costs and adversely affecting our net interest margin.
We might not be successful in developing or introducing new products and services, integrating new products or services into our existing offerings, responding or adapting to changes in consumer behavior, preferences, spending, investing 19 and/or saving habits, achieving market acceptance of our products and services, reducing costs in response to pressures to deliver products and services at lower prices or sufficiently developing and maintaining loyal customers.
We might not be successful in developing or introducing new products and services, integrating new products or services into our existing offerings, responding or adapting to changes in consumer behavior, preferences, spending, investing and/or saving habits, achieving market acceptance of our products and services, reducing costs in response to pressures to deliver products and services at lower prices or sufficiently developing and maintaining loyal customers.
These rules could have a negative effect on the financial performance of Seacoast Bank's mortgage lending operations such as limiting the volume of mortgage originations and sales into the secondary market, increased compliance burden and impairing Seacoast Bank's ability to proceed against certain delinquent borrowers with timely and effective collection efforts.
These rules could have a negative effect on the financial performance of Seacoast Bank's mortgage lending operations such as limiting the volume of 23 mortgage originations and sales into the secondary market, increased compliance burden and impairing Seacoast Bank's ability to proceed against certain delinquent borrowers with timely and effective collection efforts.
Additionally, compliance with the Dodd-Frank Act's requirements may necessitate that we hire or contract with additional compliance or other personnel, design and implement additional internal controls, or incur other significant expenses, any of which could have a material adverse effect on our business, financial condition or results of operations.
Compliance with the Dodd-Frank Act's requirements may necessitate that we hire or contract with additional compliance or other personnel, design and implement additional internal controls, or incur other significant expenses, any of which could have a material adverse effect on our business, financial condition or results of operations.
Our failure to track and comply with the various rules may materially adversely affect our reputation, ability to obtain the necessary certifications to financial statements, and the value of our securities. Additionally, the CFPB has issued mortgage-related rules required under the Dodd-Frank Act addressing borrower ability-to-repay and qualified mortgage standards.
Our failure to track and comply with the various rules may materially adversely affect our reputation, ability to obtain the necessary certifications to financial statements, and the value of our securities. The CFPB has issued mortgage-related rules required under the Dodd-Frank Act addressing borrower ability-to-repay and qualified mortgage standards.
We cannot be certain that our allowance will be adequate over time to cover credit losses in our portfolio because of unanticipated adverse changes in the economy, market conditions or events adversely affecting specific customers, industries or 16 markets, or borrowers repaying their loans.
We cannot be certain that our allowance will be adequate over time to cover credit losses in our portfolio because of unanticipated adverse changes in the economy, market conditions or events adversely affecting specific customers, industries or markets, or borrowers repaying their loans.
Our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay interest on our trust preferred securities or reinstate dividends. We are a legal entity separate and distinct from Seacoast Bank and our other subsidiaries. Our primary source of cash, other than securities offerings, is dividends from Seacoast Bank.
Our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay interest on our trust preferred securities or reinstate dividends. 18 We are a legal entity separate and distinct from Seacoast Bank and our other subsidiaries. Our primary source of cash, other than securities offerings, is dividends from Seacoast Bank.
To the extent that our clients' systems are not secure or are otherwise compromised, our network could be vulnerable to unauthorized access, malicious software, phishing schemes and other security breaches.
To the extent that our clients' systems are 22 not secure or are otherwise compromised, our network could be vulnerable to unauthorized access, malicious software, phishing schemes and other security breaches.
If, as a result of an examination, the Federal Reserve, the OCC and/or the CFPB were to determine that the financial condition, capital resources, asset quality, asset concentrations, earnings prospects, management, liquidity, sensitivity to market risk, or other aspects of any of our or Seacoast Bank’s operations had become unsatisfactory, or that we or our management were in violation of any law, regulation or guideline in effect from time to time, the regulators may take a number of different remedial actions as they deem appropriate.
If, as a result of an examination, the FRB, the OCC and/or the CFPB were to determine that the financial condition, capital resources, asset quality, asset concentrations, earnings prospects, management, liquidity, sensitivity to market risk, or other aspects of any of our or Seacoast Bank’s operations had become unsatisfactory, or that we or our management were in violation of any law, regulation or guideline in effect from time to time, the regulators may take a number of different remedial actions as they deem appropriate.
In addition, the widespread adoption of new technologies, including internet banking services, mobile banking services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions.
In addition, the widespread adoption of new technologies, including internet banking services, mobile banking services, cryptocurrencies and payment systems, and artificial intelligence, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions.
The integrity of information systems of financial institutions are under significant threat from cyber-attacks by third parties, including through coordinated attacks sponsored by foreign nations and criminal organizations to disrupt business operations and other compromises to data and systems for political or criminal purposes.
The integrity of information systems of financial institutions is under significant threat from cyber-attacks by third parties, including through coordinated attacks sponsored by foreign nations and criminal organizations to disrupt business operations and other compromises to data and systems for political or criminal purposes.
While we maintain an insurance policy which we believe provides sufficient coverage at a manageable expense for an institution of our size and scope with similar technological systems, we cannot assure that this policy would be sufficient to cover all related financial losses and damages should we experience any one or more of our or a third party’s systems failing or experiencing a cyber-attack.
While we maintain an insurance policy which we believe provides sufficient coverage at a manageable expense for an institution of our size and scope with similar technological systems, we cannot assure that this policy would be sufficient to cover all related financial losses and damages should we experience any one or more of our or a third party’s systems failing or failing to prevent, being breached, or experiencing a cyber-attack.
A reduction in consumer confidence could negatively impact our results of operations and financial condition. Significant market volatility driven in part by concerns relating to, among other things, actions by the U.S.
A reduction in consumer confidence could negatively impact our results of operations and financial condition. Significant market volatility driven in part by concerns relating to, among other things, bank failures, actions by the U.S.
Regulatory compliance burdens and associated costs can affect our business, including our reputation, the value of our securities, and the results of our operations. We and our subsidiaries are regulated by several regulators, including, but not limited to, the Federal Reserve, the OCC, the FDIC, the CFPB, the Small Business Administration, the SEC and NASDAQ.
Regulatory compliance burdens and associated costs can affect our business, including our reputation, the value of our securities, and the results of our operations. We and our subsidiaries are regulated by several regulators, including, but not limited to, the FRB, the OCC, the FDIC, the CFPB, the Small Business Administration, the SEC and NASDAQ.
The Federal Reserve and the OCC periodically conduct examinations of our business and Seacoast Bank’s business, including for compliance with laws and regulations, and Seacoast Bank also may be subject to future regulatory examinations by the CFPB as discussed in the “Supervision and Regulation” section above.
The FRB and the OCC periodically conduct examinations of our business and Seacoast Bank’s business, including for compliance with laws and regulations, and Seacoast Bank also may be subject to future regulatory examinations by the CFPB, as discussed in the “Supervision and Regulation” section above.
While to date we have not 22 experienced a significant compromise, significant data loss or material financial losses related to cyber security attacks, our systems and those of our clients and third-party service providers are under constant threat and it is possible that we could experience a significant event in the future.
While to date we have not experienced a significant compromise, significant data loss or material financial losses related to cybersecurity attacks, our systems and those of our clients and third-party service providers are under constant threat and it is possible that we could experience a significant event in the future.
The banking regulators continue to give CRE lending greater scrutiny, and banks with higher levels of CRE loans are expected to implement improved underwriting, internal controls, risk management policies and portfolio stress testing, as well as higher levels of allowances for expected losses and capital levels as a result of CRE lending growth and exposures.
The banking regulators continue to give commercial real estate lending greater scrutiny, and banks with higher levels of commercial real estate loans are expected to implement improved underwriting, internal controls, risk management policies and portfolio stress testing, as well as higher levels of allowances for expected losses and capital levels as a result of commercial real estate lending growth and exposures.
Under FDIC rules, if Seacoast Bank ceases to be a “well capitalized” institution for bank regulatory purposes, its ability to accept brokered deposits and the interest rates that it pays may both be restricted.
Under FDIC rules, if Seacoast Bank ceases to be a “well-capitalized” institution, its ability to accept brokered deposits and the interest rates that it pays may both be restricted.
Acquiring other banks, branches or businesses, as well as other geographic and product expansion activities, involve various risks including: • risk of unknown, undisclosed or contingent liabilities that could arise after the closing of an acquisition and for which there is no indemnification obligation or other price protection mechanism associated with the acquisition; • unanticipated costs and delays; • risks that acquired new businesses do not perform consistent with our growth and profitability expectations; • risks of entering new market or product areas where we have limited experience; • risks that growth will strain our infrastructure, staff, internal controls and management, which may require additional personnel, time and expenditures; • exposure to potential asset quality issues with acquired institutions; • difficulties, expenses and delays of integrating the operations and personnel of acquired institutions, and start-up delays and costs of other expansion activities; • potential disruptions to our business; • possible loss of key employees and customers of acquired institutions; • potential short-term decrease in profitability; • inaccurate estimates of value assigned to acquired assets; • litigation risk; and • diversion of our management’s time and attention from our existing operations and businesses.
Acquiring other banks, branches or businesses, as well as other geographic and product expansion activities, involve various risks including: • risk of unknown, undisclosed or contingent liabilities that could arise after the closing of an acquisition and for which there is no indemnification obligation or other price protection mechanism associated with the acquisition; • unanticipated costs and delays, including as a result of enhanced regulatory scrutiny; • risks that acquired new businesses do not perform consistent with our growth and profitability expectations; • risks of entering new market or product areas where we have limited experience; • risks that growth will strain our infrastructure, staff, internal controls and management, which may require additional personnel, time and expenditures; • exposure to potential asset quality issues with acquired institutions; • difficulties, expenses and delays of integrating the operations and personnel of acquired institutions, and start-up delays and costs of other expansion activities; • potential disruptions to our business; • possible loss of key employees and customers of acquired institutions; • potential short-term decrease in profitability; • inaccurate estimates of value assigned to acquired assets; • litigation; and • diversion of our management’s time and attention from our existing operations and businesses. 25 Attractive acquisition opportunities may not be available to us in the future.
Financial institutions are inherently exposed to fraud risk. Fraudulent activity can take many forms and has escalated as more tools for accessing financial services emerge, such as real-time payments. Fraud schemes are broad and continuously evolving. A fraud can be perpetrated by a customer of Seacoast, an employee, a vendor, or members of the general public.
Fraudulent activity can take many forms and has escalated as more tools for accessing financial services emerge, such as real-time payments. Fraud schemes are broad and continuously evolving. A fraud can be perpetrated by a customer of Seacoast, an employee, a vendor, or members of the general public.
Additionally, by having more than $10 billion in total assets at December 31, 2022, the method that the FDIC uses to determine the amount of our deposit insurance premium will change.
Additionally, by having more than $10 billion in total assets at December 31, 2022, the method that the FDIC uses to determine the amount of our deposit insurance premium has changed.
Further, we expect to continue to commit significant resources to our compliance with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the SEC, the Public Accounting Oversight Board and NASDAQ.
Further, we expect to continue to commit significant resources to our compliance with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the SEC, the PCAOB and NASDAQ.
Cyber security risks may also occur with our third-party service providers, and may interfere with their ability to fulfill their contractual obligations to us, with attendant potential for financial loss or liability that could adversely affect our financial condition or results of operations.
Cybersecurity risks also occur with our third-party service providers, and may interfere with their ability to fulfill their contractual obligations to us, with attendant financial loss or liability that could adversely affect our financial condition or results of operations.
Attractive acquisition opportunities may not be available to us in the future. While we seek continued organic growth, we anticipate continuing to evaluate merger and acquisition opportunities presented to us in our core markets and beyond. The number of financial institutions headquartered in Florida, the Southeastern United States, and across the country continues to decline through merger and other activity.
While we seek continued organic growth, we anticipate continuing to evaluate merger and acquisition opportunities presented to us in our core markets and beyond. The number of financial institutions headquartered in Florida, the Southeastern United States, and across the country continues to decline through merger and other activity.
While lower income tax rates should result in improved net income performance over prospective periods, the extent of the benefit will be influenced by the competitive environment and other factors. As of December 31, 2022, we had net deferred tax assets (“DTAs”) of $94.5 million, based on management’s estimation of the likelihood of those DTAs being realized.
While lower income tax rates should result in improved net income performance over prospective periods, the extent of the benefit will be influenced by the competitive environment and other factors. As of December 31, 2023, we had net deferred tax assets ("DTAs") of $113.2 million, based on management's estimation of the likelihood of those DTAs being realized.
If charge-offs in future periods exceed the allowance for credit losses on loans, we will need additional provisions to increase the allowance, which would result in a decrease in net income and capital, and could have a material adverse effect on our financial condition and results of operations. Interest Rate Risk We must effectively manage our interest rate risk .
If charge-offs in future periods exceed the allowance for credit losses on loans, we will need additional provisions to increase the allowance, 16 which would result in a decrease in net income and capital, and could have a material adverse effect on our financial condition and results of operations.
The impact of changing interest rates on our results is difficult to predict and changes in interest rates may impact our performance in ways we cannot predict.
Interest Rate Risk We must effectively manage our interest rate risk . The impact of changing interest rates on our results is difficult to predict and changes in interest rates may impact our performance in ways we cannot predict.
Due to the exposure in these concentrations, disruptions in markets, economic conditions, changes in laws or regulations or other events could cause a significant impact on the ability of borrowers to repay and may have a material adverse effect on our business, financial condition and results of operations. A substantial portion of our loan portfolio is secured by real estate.
Due to the exposure in these concentrations, disruptions in markets, economic conditions, changes in 15 laws or regulations or other events could cause a significant impact on the ability of borrowers to repay and may have a material adverse effect on our business, financial condition and results of operations.
The Federal Reserve has implemented significant economic strategies that have impacted interest rates, inflation, asset values, and the shape of the yield curve, over which the Company has no control and which the Company may not be able to adequately anticipate. Interest rates increased significantly in 2022 as the Federal Reserve attempted to slow economic growth and counteract rising inflation.
The FRB has implemented significant economic strategies that have impacted interest rates, inflation, asset values, and the shape of the yield curve, over which the Company has no control and which the Company may not be able to adequately anticipate.
Other sources of liquidity available to us or Seacoast Bank include the acquisition of additional deposits, the issuance and sale of debt securities, and the issuance and sale of preferred or common securities in public or private transactions.
We maintain a portfolio of securities that can be used as a secondary source of liquidity. Other sources of liquidity available to us or Seacoast Bank include the acquisition of additional deposits, the issuance and sale of debt securities, and the issuance and sale of preferred or common securities in public or private transactions.
We may not be able to effectively select, develop or implement new technology-driven products and services or be successful in marketing these products and services to our customers, which may negatively affect our business, results of operations or financial condition.
We may not be able to effectively select, develop or implement new technology-driven products and services or be successful in marketing these products and services to our customers, which may negatively affect our business, results of operations or financial condition. Evolving business practices, including having certain employees working remotely, introduces additional operational risk, including increased cybersecurity risk.
We rely on certain external vendors to provide products and services necessary to maintain our day-to-day operations, particularly in the areas of operations, treasury management systems, information technology and security, exposing us to the risk that these vendors will not perform as required by our agreements.
We rely on certain external vendors to provide products and services necessary to maintain our day-to-day operations, particularly in the areas of operations, treasury management systems, information technology and security, exposing us to the risk that these vendors will not perform as required by our agreements and exposing us to operational and informational security risks, including risks associated with operational errors, information system failures, interruptions or breaches and unauthorized disclosures of sensitive or confidential client or customer information.
The U.S. government’s decisions regarding its debt ceiling and the possibility that the U.S. could default on its debt obligations may cause further interest rate increases, disrupt access to capital markets and deepen recessionary conditions.
The U.S. government’s decisions regarding its debt ceiling and the possibility that the U.S. could default on its debt obligations may cause further interest rate increases, disrupt access to capital markets and deepen recessionary conditions. The effects of any economic downturn could continue for many years after the downturn is considered to have ended.
We may be required to seek additional regulatory capital through capital raises at terms that may be very dilutive to existing shareholders. Our ability to borrow could also be impaired by factors that are not specific to us, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
Our ability to borrow could also be impaired by factors that are not specific to us, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
In addition, improper use or disclosure of confidential information by our employees, even if inadvertent, could result in serious harm to our reputation, financial condition and current and future business relationships. The precautions we take to detect and prevent such misconduct may not always be effective. We are subject to losses due to fraudulent and negligent acts.
In addition, improper use or disclosure of confidential information by our employees, even if inadvertent, could result in serious harm to our reputation, financial condition and current and future business relationships. We are subject to losses due to fraudulent and negligent acts. Financial institutions are inherently exposed to fraud risk.
Access to liquidity may also be negatively impacted by the value of our securities portfolio, if liquidity and/or business strategy necessitate the sales of securities in a loss position. Access to liquidity 18 may also be negatively impacted by the value of our securities portfolio, if liquidity and/or business strategy necessitate the sales of securities in a loss position.
Access to liquidity may also be negatively impacted by the value of our securities portfolio, if liquidity and/or business strategy necessitate the sales of securities in a loss position. We may be required to seek additional regulatory capital through capital raises at terms that may be very dilutive to existing shareholders.
Our nonperforming assets adversely affect our net income in various ways. We generally do not record interest income on nonaccrual loans, thereby adversely affecting our income, and increasing our loan administration costs.
In addition, we had approximately $30.5 million in accruing loans that were 30 days or more delinquent at December 31, 2023. Our nonperforming assets adversely affect our net income in various ways. We generally do not record interest income on nonaccrual loans, thereby adversely affecting our income, and increasing our loan administration costs.
To mitigate this risk, the Company has an established process to oversee vendor relationships. We must effectively manage our information systems risk. We rely heavily on our communications and information systems to conduct our business. The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products, services and methods of delivery.
To mitigate this risk, the Company has an established process to oversee vendor relationships. We must effectively manage our information systems risk. We rely heavily on our communications and information systems to conduct our business.
The Company cannot predict the nature of timing of future changes in monetary, economic, or other policies, or the effect that changes will have on the Company’s business activities, financial condition and results of operations. Our cost of funds may increase as a result of general economic conditions, FDIC insurance assessments, interest rates and competitive pressures.
A significant reduction in our net interest income could have a material adverse impact on our capital, financial condition and results of operations. The Company cannot predict the nature of timing of future changes in monetary, economic, or other policies, or the effect that changes will have on the Company’s business activities, financial condition and results of operations.
Seacoast Bank has a CRE concentration risk management program and monitors its exposure to CRE; however, there can be no assurance that the program will be effective in managing our concentration in CRE. Nonperforming assets could result in an increase in our provision for credit losses on loans, which could adversely affect our results of operations and financial condition.
Seacoast Bank has a commercial real estate concentration risk management program and monitors its exposure to CRE; however, there can be no assurance that the program will be effective in managing our concentration in CRE.
We have traditionally obtained funds through local deposits and thus we have a base of lower cost transaction deposits.
Our cost of funds may increase as a result of general economic conditions, FDIC insurance assessments, interest rates and competitive pressures. We have traditionally obtained funds through local deposits and thus we have a base of lower cost transaction deposits.
An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity. Our funding sources include customer deposits, federal funds purchases, securities sold under repurchase agreements, and short- and long-term debt.
Liquidity Risk Liquidity risks could affect operations and jeopardize our financial condition. Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity.
Our ability to dispose of foreclosed real estate at prices at or above the respective carrying values could also be impaired, causing additional losses. Commercial real estate (“CRE”) is cyclical and poses risks of loss to us due to our concentration levels and risk of the asset, especially during a difficult economy, including the current stressed economy.
Commercial real estate (“CRE”) is cyclical and poses risks of loss to us due to our concentration levels and risk of the asset, especially during a difficult economy, including the current stressed economy. As of December 31, 2023, 50% of our loan portfolio was comprised of loans secured by commercial real estate.
Further changes in interest rates and monetary policy reportedly are dependent upon the Federal Reserve’s assessment of economic data as it becomes available, though the rising interest rate environment is expected to continue in 2023. Inflationary pressures are currently expected to remain elevated in 2023.
Interest rates increased significantly in 2022 and through the first half of 2023 as the FRB attempted to slow economic growth and counteract rising inflation. Further changes in interest rates and monetary policy reportedly are dependent upon the FRB’s assessment of economic data as it becomes available.
Inflation could lead to increased costs to our customers, making it more difficult for them to repay their loans or other obligations, increasing our credit risk. The Federal Reserve may maintain higher interest rates to counteract persistent inflationary price pressures, which could push down asset prices and weaken economic activity.
The FRB may maintain higher interest rates to counteract persistent inflationary price pressures, which could push down asset prices and weaken economic activity.
In weak economies, or in areas where real estate market conditions are distressed, we may experience a higher than normal level of nonperforming real estate loans. The collateral value of the portfolio and the revenue stream from those loans could come under stress, and additional provisions for the allowance for credit losses could be necessitated.
A substantial portion of our loan portfolio is secured by real estate. In weak economies, or in areas where real estate market conditions are distressed, we may experience a higher than normal level of nonperforming real estate loans.
We are also members of the Federal Home Loan Bank of Atlanta (the “FHLB”) and the Federal Reserve Bank of Atlanta, where we can obtain advances collateralized with eligible assets. We maintain a portfolio of securities that can be used as a secondary source of liquidity.
Our funding sources include customer deposits, federal funds purchases, securities sold under repurchase agreements, and short- and long-term debt. We are also members of the Federal Home Loan Bank of Atlanta (the “FHLB”) and the Federal Reserve Bank of Atlanta, where we can obtain advances collateralized with eligible assets.
Generally speaking, the credit quality of our borrowers can deteriorate as a result of economic downturns in our markets.
Generally, the credit quality of our borrowers can deteriorate as a result of economic downturns in our markets. For example, inflation could lead to increased costs to our customers, making it more difficult for them to repay their loans or other obligations, increasing our credit risk.
Management does not believe any stock offerings, issuances, or reverse stock split have had any negative implications for the Company under Section 382 to date. 25 Merger-Related Risks Future acquisition and expansion activities may disrupt our business, dilute existing shareholders and adversely affect our operating results. We periodically evaluate potential acquisitions and expansion opportunities.
These and future DTAs may be reduced in the future if our estimates of future taxable income from our operations and tax planning strategies do not support the amounts recorded. Merger-Related Risks Future acquisition and expansion activities may disrupt our business, dilute existing shareholders and adversely affect our operating results. We periodically evaluate potential acquisitions and expansion opportunities.
Removed
As of December 31, 2022, 50% of our loan portfolio was comprised of loans secured by commercial real estate.
Added
The collateral value of the portfolio and the revenue stream from those loans could come under stress, and additional provisions for the allowance for credit losses could be necessitated. Our ability to dispose of foreclosed real estate at prices at or above the respective carrying values could also be impaired, causing additional losses.
Removed
The discontinuation of the London Interbank Offered Rate ( “ LIBOR ” ), and the identification and use of alternative replacement reference rates, could adversely affect our revenue, expenses, and the value of the Company's financial instruments, and may subject the Company to litigation risk.
Added
Conversely, lower interest rates may reduce our realized yield on variable rate loans and investment securities and on new loans and securities, which would reduce our interest income and cause downward pressure on net interest income and net interest margin.
Removed
In 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, publicly announced its intention to stop persuading or compelling banks to submit LIBOR rates after 2021.The publication of most U.S. dollar LIBOR settings will cease immediately following the LIBOR publication on June 30, 2023.
Added
Recently proposed changes to the Federal Home Loan Bank system could adversely impact the Company's access to Federal Home Loan Bank borrowings or increase the cost of such borrowings. Access to liquidity may also be negatively impacted by the value of our securities portfolio, if liquidity and/or business strategy necessitate the sales of securities in a loss position.
Removed
In the United States, the Alternative Reference Rate Committee (“ARRC”), a group of market participants including large U.S. financial institutions, assembled by the Federal Reserve Board and the Federal Reserve Bank of New York, was tasked with identifying alternative reference interest rates to replace LIBOR.
Added
Adverse developments or concerns affecting the financial services industry in general or financial institutions that are similar to us or that may be viewed as being similar to us, such as bank failures and disruption in the United States banking industry, could adversely affect our financial condition and results of operations.
Removed
The Secured Overnight Finance Rate (“SOFR”) has emerged as the ARRC's preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S.-Treasury-backed repurchased transactions.
Added
Several financial institutions have failed or required outside liquidity support, often as a result of the inability of the institutions to obtain needed liquidity. The impact of this situation led to heightened risk of additional stress to other financial institutions, and the financial services industry generally as a result of increased lack of confidence in the financial sector.
Removed
In December 2022, the Board of Governors of the Federal Reserve System adopted a final rule that implements the Adjustable Interest Rate (LIBOR) Act, enacted by Congress to provide a uniform, nationwide solution for contracts that do not have clear and practicable provisions for replacing LIBOR by identifying replacement benchmark rates based on SOFR.
Added
Banking regulators are taking action in an effort to strengthen public confidence in the banking system, but there can be no assurance that these actions will stabilize the financial services industry and financial markets.
Removed
The consequences of these developments with respect to LIBOR cannot be entirely predicted, and these reforms may cause benchmark rates to perform differently than in the past or have other consequences, which could adversely affect the value of our floating rate obligations, loans, derivatives, and other financial instruments tied to LIBOR rates.
Added
While we currently do not anticipate liquidity constraints of the kind that caused certain other financial institutions to fail or require external support, constraints on our liquidity could occur as a result of unanticipated deposit withdrawals, because of market distress or our inability to access other sources of liquidity, including through the capital markets due to unforeseen market dislocations or interruptions.
Removed
The Company's LIBOR transition program includes the development and execution of a strategy to transition away from LIBOR, with appropriate consideration of the potential financial, customer, counterparty, regulatory and legal impacts.
Added
Moreover, some of our customers may become less willing to maintain deposits at Seacoast because of broader market concerns with the level of insurance available on those deposits.
Removed
The Company ceased issuance of new LIBOR loans in 2021, and as of December 31, 2022, had approximately $244 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”).
Added
Our business and our financial condition and results of operations could be adversely affected by continued soundness concerns regarding financial institutions generally and our counterparties specifically and limitations resulting from further governmental action in an effort to stabilize or provide additional regulation of the financial system, as well as the impact of excessive deposit withdrawals.
Removed
ISDA has developed fallback language for swap agreements and has established a protocol to allow counterparties to modify legacy trades to include the new fallback language. The Company also invests in securities and has issued subordinated debt tied to LIBOR, which are expected to transition to SOFR-based rates after June 30, 2023 under the LIBOR Act.
Added
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about any events of these kinds or other similar events, have in the past and may in the future lead to erosion of customer confidence in the banking system or certain banks, deposit volatility, liquidity issues, stock price volatility and other adverse developments.
Removed
The market transition away from LIBOR to an alternative reference rate is complex. We may incur significant expense in effecting the transition and we may be subject to disputes or litigation with our borrowers or counterparties over the appropriateness or comparability to LIBOR of the replacement reference rates.
Added
Any of these impacts, or any other impacts resulting from bank failures or other related or similar events, could have a material adverse effect on our liquidity and our current and/or projected business operations and financial condition and results of operations.
Removed
The replacement reference rates could also result in a reduction in our interest income. We may also receive inquiries and other actions from regulators about the Company's preparation and readiness for the replacement of LIBOR with alternative reference rates. Liquidity Risk Liquidity risks could affect operations and jeopardize our financial condition. Liquidity is essential to our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt December 31, 2022, Seacoast Bank had 78 branch offices, in addition to stand-alone commercial lending offices, and its main office, all located in Florida. For additional information regarding properties, please refer to Notes 7 and 11 of the Notes to Consolidated Financial Statements.
Biggest changeAt December 31, 2023, Seacoast Bank had 77 branch offices, in addition to stand-alone commercial lending offices, and its main office, all located in Florida. For additional information regarding properties, please refer to Notes 7 and 11 of the Notes to Consolidated Financial Statements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed0 unchanged
Biggest changeManagement presently believes that none of the legal proceedings to which they are a party are likely to have a material effect on the Company's consolidated financial position, operating results or cash flows, although no assurance can be given with respect to the ultimate outcome of any such claim or litigation. Item 4. Mine Safety Disclosures Not applicable. Part II
Biggest changeManagement 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 position, operating results or cash flows. Item 4. Mine Safety Disclosures Not applicable. Part II
Item 3. Legal Proceedings The Company and its subsidiaries are subject, in the ordinary course, to litigation incidental to the businesses in which they are engaged.
Item 3. Legal Proceedings The Company and its subsidiaries, because of the nature of their businesses, are at all times subject to numerous legal actions, threatened or filed.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−1 removed4 unchanged
Biggest changeRepurchase of Common Stock On December 15, 2022, the Company's Board of Directors authorized the renewal of the 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.
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans See the information included under Part III, Item 12, which is incorporated in response to this item by reference. 29 Share Repurchase Program and Other Repurchases On December 15, 2023, the Company's Board of Directors authorized the renewal of the 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, 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.
Under the share repurchase program, which will expire on December 31, 2024, 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.
With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements. Item 6. [Reserved]
With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements.
The Company's common stock is traded under the symbol “SBCF” on the NASDAQ Global Select Market (“NASDAQ”). As of January 31, 2023, there were 84,526,816 shares of the Company's common stock outstanding, held by approximately 2,802 record holders. 28 Dividends from Seacoast Bank are the Company's primary source of funds to pay dividends to its shareholders.
The Company's common stock is traded under the symbol “SBCF” on the NASDAQ Global Select Market (“NASDAQ”). As of January 31, 2024, there were 84,889,092 shares of the Company's common stock outstanding, held by approximately 2,616 record holders. Dividends from Seacoast Bank are the Company's primary source of funds to pay dividends to its shareholders.
The Company did not repurchase shares of its common stock during the year ended December 31, 2022. In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted. Among other things, the IRA imposes a new 1% excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations.
In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted. Among other things, the IRA imposes a new 1% excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans See the information included under Part III, Item 12, which is incorporated in response to this item by reference.
Added
The following table provides details of our common stock repurchases for the three months ended December 31, 2023: Period Total Number of Shares Purchased 1 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) 10/1/23 to 10/31/23 13,415 $ 19.84 527,300 $ 89,520 11/1/23 to 11/30/23 — 19.98 18,900 89,143 12/1/23 to 12/31/23 89,539 28.95 — 100,000 Total - 4th Quarter 102,954 $ 21.10 546,200 $ 100,000 1 Includes shares that were repurchased to pay for the exercises of stock options or for income taxes owed on vesting shares of restricted stock.
Added
These shares were not purchased under the Company's stock repurchase plan to repurchase shares. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

130 edited+55 added−103 removed39 unchanged
Biggest changeQuarters Fourth Third Second First Total (In thousands except per share data) 2022 2022 2022 2022 Year Net income $ 23,927 $ 29,237 $ 32,755 $ 20,588 $ 106,507 Total noninterest income $ 17,651 $ 16,103 $ 16,964 $ 15,373 $ 66,091 Securities losses (gains), net (18) 362 300 452 1,096 Total Adjustments to Noninterest Income (18) 362 300 452 1,096 Total Adjusted Noninterest Income $ 17,633 $ 16,465 $ 17,264 $ 15,825 $ 67,187 Total noninterest expense $ 91,510 $ 61,359 $ 56,148 $ 58,917 $ 267,934 Merger-related charges (16,140) (2,054) (3,039) (6,692) (27,925) Amortization of intangibles (4,763) (1,446) (1,446) (1,446) (9,101) Branch reductions and other expense initiatives (176) (960) — (74) (1,210) Total Adjustments to Noninterest Expense (21,079) (4,460) (4,485) (8,212) (38,236) 39 Quarters Fourth Third Second First Total (In thousands except per share data) 2022 2022 2022 2022 Year Total Adjusted Noninterest Expense $ 70,431 $ 56,899 $ 51,663 $ 50,705 $ 229,698 Income Taxes $ 7,794 $ 9,115 $ 8,886 $ 5,834 $ 31,629 Tax effect of adjustments 5,338 1,222 1,213 2,196 9,969 Tax expense on BOLI surrender (276) — — — (276) Total Adjustments to Income Taxes 5,062 1,222 1,213 2,196 9,693 Adjusted Income Taxes 12,856 10,337 10,099 8,030 41,322 Adjusted Net Income $ 39,926 $ 32,837 $ 36,327 $ 27,056 $ 136,146 Earnings per diluted share, as reported $ 0.34 $ 0.47 $ 0.53 $ 0.33 $ 1.66 Adjusted Earnings per Diluted Share 0.56 0.53 0.59 0.44 2.12 Average diluted shares outstanding (in thousands) 71,374 61,961 61,923 61,704 64,264 Adjusted Noninterest Expense $ 70,431 $ 56,899 $ 51,663 $ 50,705 $ 229,698 Provision for credit losses on unfunded commitments — (1,015) — (142) (1,157) 40 Quarters Fourth Third Second First Total (In thousands except per share data) 2022 2022 2022 2022 Year Foreclosed property expense and net gain (loss) on sale 411 (9) 968 164 1,534 Net Adjusted Noninterest Expense $ 70,842 $ 55,875 $ 52,631 $ 50,727 $ 230,075 Revenue $ 137,360 $ 104,387 $ 98,611 $ 91,895 $ 432,253 Total Adjustments to Revenue (18) 362 300 452 1,096 Impact of FTE adjustment 149 115 117 117 498 Adjusted revenue on a fully tax equivalent basis $ 137,491 $ 104,864 $ 99,028 $ 92,464 $ 433,847 Adjusted Efficiency Ratio 51.52 % 53.28 % 53.15 % 54.86 % 53.03 % Net Interest Income $ 119,709 $ 88,284 $ 81,647 $ 76,522 $ 366,162 Impact of FTE Adjustment 149 115 117 117 498 Net interest income including FTE adjustment 119,858 88,399 81,764 76,639 366,660 Total noninterest income 17,651 16,103 16,964 15,373 66,091 Total noninterest expense 91,510 61,359 56,148 58,917 267,934 Pre-Tax Pre-Provision Earnings 45,999 43,143 42,580 33,095 164,817 Total Adjustments to Noninterest Income (18) 362 300 452 1,096 Total Adjustments to Noninterest Expense (20,668) (5,484) (3,517) (8,190) (37,859) Adjusted Pre-Tax Pre-Provision Earnings $ 66,649 $ 48,989 $ 46,397 $ 41,737 $ 203,772 Average Assets $12,139,856 $10,585,338 $10,840,518 $10,628,516 $11,051,428 Less average goodwill and intangible assets (521,412) (305,935) (307,411) (304,321) (360,217) Average Tangible Assets $11,618,444 $10,279,403 $10,533,107 $10,324,195 $10,691,211 Return on Average Assets (“ROA”) 0.78 % 1.10 % 1.21 % 0.79 % 0.96 % Impact of removing average intangible assets and related amortization 0.16 0.07 0.08 0.06 0.10 Return on Average Tangible Assets (“ROTA”) 0.94 1.17 1.29 0.85 1.06 Impact of other adjustments for Adjusted Net Income 0.42 0.10 0.09 0.21 0.21 Adjusted Return on Average Tangible Assets 1.36 % 1.27 % 1.38 % 1.06 % 1.27 % Pre-Tax Pre-Provision Return on average tangible assets 1.69 % 1.71 % 1.66 % 1.34 % 1.61 % Impact of adjustments on Pre-Tax Pre-Provision earnings 0.59 0.18 0.11 0.30 0.30 Adjusted Pre-Tax Pre-Provision Return on Tangible Assets 2.28 1.89 1.77 1.64 1.91 Average Shareholders' Equity $1,573,704 $1,349,475 $1,350,568 $1,400,535 $1,418,855 Less average goodwill and intangible assets (521,412) (305,935) (307,411) (304,321) (360,217) Average Tangible Equity $1,052,292 $1,043,540 $1,043,157 $1,096,214 $1,058,638 Return on Average Shareholders' Equity 6.03 % 8.60 % 9.73 % 5.96 % 7.51 % Impact of removing average intangible assets and related amortization 4.33 2.93 3.28 2.06 3.19 Return on Average Tangible Common Equity (“ROTCE”) 10.36 11.53 13.01 8.02 10.70 Impact of other adjustments for Adjusted Net Income 4.69 0.95 0.96 1.99 2.16 Adjusted Return on Average Tangible Common Equity 15.05 % 12.48 % 13.97 % 10.01 % 12.86 % Loan interest income 1 $ 105,437 $ 74,050 $ 69,388 $ 67,198 $ 316,073 41 Quarters Fourth Third Second First Total (In thousands except per share data) 2022 2022 2022 2022 Year Accretion on acquired loans (9,710) (2,242) (2,720) (3,717) (18,389) Interest and fees on PPP loans (39) (320) (741) (1,523) (2,623) Loan interest income excluding PPP and accretion on acquired loans $ 95,688 $ 71,488 $ 65,927 $ 61,958 $ 295,061 Yield on loans 1 5.29 % 4.45 % 4.29 % 4.30 % 4.62 % Impact of accretion on acquired loans (0.49) (0.14) (0.16) (0.24) (0.27) Impact of PPP — (0.01) (0.03) (0.06) (0.02) Yield on loans excluding PPP and accretion on acquired loans 4.80 % 4.30 % 4.10 % 4.00 % 4.33 % Net interest income 1 $ 119,858 $ 88,399 $ 81,764 $ 76,639 $ 366,660 Accretion on acquired loans (9,710) (2,242) (2,720) (3,717) (18,389) Interest and fees on PPP (39) (320) (741) (1,523) (2,623) Net interest income excluding PPP and accretion on acquired loans $ 110,109 $ 85,837 $ 78,303 $ 71,399 $ 345,648 Net interest margin 4.36 % 3.67 % 3.38 % 3.25 % 3.69 % Impact of accretion on acquired loans (0.35) (0.09) (0.12) (0.15) (0.18) Impact of PPP — (0.01) (0.02) (0.05) (0.02) Net interest margin excluding PPP and accretion on acquired loans 4.01 % 3.57 % 3.24 % 3.05 % 3.49 % Security interest income 1 $ 18,694 $ 15,827 $ 12,562 $ 10,218 $ 57,301 Tax equivalent adjustment to securities (34) (35) (36) (37) (142) Securities interest income excluding tax equivalent adjustment $ 18,660 $ 15,792 $ 12,526 $ 10,181 $ 57,159 Loan interest income 1 $ 105,437 $ 74,050 $ 69,388 $ 67,198 $ 316,073 Tax equivalent adjustment to loans (115) (80) (81) (80) (356) Loan interest income excluding tax equivalent adjustment $ 105,322 $ 73,970 $ 69,307 $ 67,118 $ 315,717 Net Interest Income 1 $ 119,858 $ 88,399 $ 81,764 $ 76,639 $ 366,660 Tax equivalent adjustment to securities (34) (35) (36) (37) (142) Tax equivalent adjustment to loans (115) (80) (81) (80) (356) Net interest income excluding tax equivalent adjustments $ 119,709 $ 88,284 $ 81,647 $ 76,522 $ 366,162 1 On a fully taxable equivalent basis.
Biggest changeQuarters Fourth Third Fourth Full Year Full Year (In thousands except per share data) 2023 2023 2022 2023 2022 Net income $ 29,543 $ 31,414 $ 23,927 $ 104,033 $ 106,507 Total noninterest income $ 17,338 $ 17,793 $ 17,651 $ 79,152 $ 66,091 Securities losses (gains), net 2,437 387 (18) 2,893 1,096 BOLI benefits on death (included in other income) — — — (2,117) — Total Adjustments to Noninterest Income 2,437 387 (18) 776 1,096 Total Adjusted Noninterest Income $ 19,775 $ 18,180 $ 17,633 $ 79,928 $ 67,187 Noninterest expense $ 86,367 $ 93,915 $ 91,510 $ 395,622 $ 267,934 Merger-related charges — — (16,140) (33,180) (27,925) Amortization of intangibles (6,888) (7,457) (4,763) (28,726) (9,101) Branch reductions and other expense initiatives — (3,305) (176) (5,167) (1,210) 38 Quarters Fourth Third Fourth Full Year Full Year (In thousands except per share data) 2023 2023 2022 2023 2022 Total Adjustments to Noninterest Expense (6,888) (10,762) (21,079) (67,073) (38,236) Total Adjusted Noninterest Expense $ 79,479 $ 83,153 $ 70,431 $ 328,549 $ 229,698 Income Taxes $ 8,257 $ 9,076 $ 7,794 $ 30,219 $ 31,629 Tax effect of adjustments 2,363 2,826 5,062 17,196 9,693 Adjusted Income Taxes 10,620 11,902 12,856 47,415 41,322 Adjusted Net Income $ 36,505 $ 39,737 $ 39,926 $ 154,686 $ 136,146 Earnings per diluted share, as reported $ 0.35 $ 0.37 $ 0.34 $ 1.23 $ 1.66 Adjusted Earnings per Diluted Share 0.43 0.46 0.56 1.83 2.12 Average diluted shares outstanding 85,336 85,666 71,374 84,329 64,264 Adjusted Noninterest Expense $ 79,479 $ 83,153 $ 70,431 $ 328,549 $ 229,698 Provision for credit losses on unfunded commitments — — — (1,239) (1,157) Other real estate owned expense and net (loss) gain on sale (573) (274) 411 (985) 1,534 Net Adjusted Noninterest Expense $ 78,906 $ 82,879 $ 70,842 $ 326,325 $ 230,075 Revenue $ 128,157 $ 137,099 $ 137,360 $ 567,392 $ 432,253 Total Adjustments to Revenue 2,437 387 (18) 776 1,096 Impact of FTE adjustment 216 199 149 803 498 Adjusted revenue on a fully tax equivalent basis $ 130,810 $ 137,685 $ 137,491 $ 568,971 $ 433,847 Adjusted Efficiency Ratio 60.32 % 60.19 % 51.52 % 57.35 % 53.03 % Net Interest Income $ 110,819 $ 119,306 $ 119,709 $ 488,240 $ 366,162 Impact of FTE Adjustment 216 199 149 803 498 Net interest income including FTE adjustment 111,035 119,505 119,858 489,043 366,660 Total noninterest income 17,338 17,793 17,651 79,152 66,091 Total noninterest expense 86,367 93,915 91,510 395,622 267,934 Pre-Tax Pre-Provision Earnings 42,006 43,383 45,999 172,573 164,817 Total Adjustments to Noninterest Income 2,437 387 (18) 776 1,096 Total Adjustments to Noninterest Expense (7,461) (11,036) (20,668) (69,297) (37,859) Adjusted Pre-Tax Pre-Provision Earnings $ 51,904 $ 54,806 $ 66,649 $ 242,646 $ 203,772 Average Assets $ 14,738,034 $ 14,906,003 $ 12,139,856 $ 14,622,774 $ 11,051,428 Less average goodwill and intangible assets (832,029) (839,787) (521,412) (816,662) (360,217) Average Tangible Assets $ 13,906,005 $ 14,066,216 $ 11,618,444 $ 13,806,112 $ 10,691,211 Return on Average Assets (“ROA”) 0.80 % 0.84 % 0.78 % 0.71 % 0.96 % Impact of removing average intangible assets and related amortization 0.19 0.20 0.16 0.20 0.10 Return on Average Tangible Assets (“ROTA”) 0.99 1.04 0.94 0.91 1.06 Impact of other adjustments for Adjusted Net Income 0.05 0.08 0.42 0.21 0.21 Adjusted Return on Average Tangible Assets 1.04 % 1.12 % 1.36 % 1.12 % 1.27 % Pre-Tax Pre-Provision Return on average tangible assets 1.35 % 1.38 % 1.69 % 1.41 % 1.61 % Impact of adjustments on Pre-Tax Pre-Provision earnings 0.13 0.17 0.59 0.35 0.30 Adjusted Pre-Tax Pre-Provision Return on Tangible Assets 1.48 1.55 2.28 1.76 1.91 Average Shareholders' Equity $ 2,058,912 $ 2,072,747 $ 1,573,704 $ 2,025,382 $ 1,418,855 Less average goodwill and intangible assets (832,029) (839,787) (521,412) (816,662) (360,217) 39 Quarters Fourth Third Fourth Full Year Full Year (In thousands except per share data) 2023 2023 2022 2023 2022 Average Tangible Equity $ 1,226,883 $ 1,232,960 $ 1,052,292 $ 1,208,720 $ 1,058,638 Return on Average Shareholders' Equity 5.69 % 6.01 % 6.03 % 5.14 % 7.51 % Impact of removing average intangible assets and related amortization 5.53 5.89 4.33 5.24 3.19 Return on Average Tangible Common Equity (“ROTCE”) 11.22 11.90 10.36 10.38 10.70 Impact of other adjustments for Adjusted Net Income 0.58 0.89 4.69 2.42 2.16 Adjusted Return on Average Tangible Common Equity 11.80 % 12.79 % 15.05 % 12.80 % 12.86 % Loan interest income 1 $ 148,004 $ 150,048 $ 105,437 $ 581,825 $ 316,073 Accretion on acquired loans (11,324) (14,843) (9,710) (56,689) (18,389) Loan interest income excluding accretion on acquired loans $ 136,680 $ 135,205 $ 95,727 $ 525,136 $ 297,684 Yield on loans 1 5.85 % 5.93 % 5.29 % 5.88 % 4.62 % Impact of accretion on acquired loans (0.45) (0.59) (0.49) (0.57) (0.27) Yield on loans excluding accretion on acquired loans 5.40 % 5.34 % 4.80 % 5.31 % 4.35 % Net interest income 1 $ 111,035 $ 119,505 $ 119,858 $ 489,043 $ 366,660 Accretion on acquired loans (11,324) (14,843) (9,710) (56,689) (18,389) Net interest income excluding accretion on acquired loans $ 99,711 $ 104,662 $ 110,148 $ 432,354 $ 348,271 Net interest margin 3.36 % 3.57 % 4.36 % 3.77 % 3.69 % Impact of accretion on acquired loans (0.34) (0.44) (0.35) (0.44) (0.18) Net interest margin excluding accretion on acquired loans 3.02 % 3.13 % 4.01 % 3.33 % 3.51 % Security interest income 1 $ 21,451 $ 21,520 $ 18,694 $ 83,364 $ 57,301 Tax equivalent adjustment to securities (13) (22) (34) (83) (142) Securities interest income excluding tax equivalent adjustment $ 21,438 $ 21,498 $ 18,660 $ 83,281 $ 57,159 Loan interest income 1 $ 148,004 $ 150,048 $ 105,437 $ 581,825 $ 316,073 Tax equivalent adjustment to loans (203) (177) (115) (720) (356) Loan interest income excluding tax equivalent adjustment $ 147,801 $ 149,871 $ 105,322 $ 581,105 $ 315,717 Net Interest Income 1 $ 111,035 $ 119,505 $ 119,858 $ 489,043 $ 366,660 Tax equivalent adjustment to securities (13) (22) (34) (83) (142) Tax equivalent adjustment to loans (203) (177) (115) (720) (356) Net interest income excluding tax equivalent adjustments $ 110,819 $ 119,306 $ 119,709 $ 488,240 $ 366,162 1 On a fully taxable equivalent basis.
All deposits presented in the table with indeterminate maturities such as interest bearing and noninterest bearing demand deposits, savings accounts and money market accounts are presented as having a maturity of one year or less. The Company considers these low cost deposits to be its largest, most stable funding source, despite no contracted maturity.
All deposits presented in the table with indeterminate maturities such as interest bearing and noninterest bearing demand deposits, savings accounts and money market accounts are presented as having a maturity of one year or less. The Company considers these low cost deposits to be its largest, most stable funding source, despite having no contracted maturity.
For retail customers, loan commitments are generally lines of credit secured by residential property. These instruments are not recorded on the balance sheet until funds are advanced under the commitment.
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.
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. Forecast data is sourced from Moody’s Analytics (“Moody’s”), a firm widely recognized for its research, analysis, and economic forecasts.
Management establishes the allowance using relevant available information from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Economic forecast data is sourced from Moody’s Analytics (“Moody’s”), a firm widely recognized for its research, analysis, and economic forecasts.
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.
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.
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, multifamily property, and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property (i.e. loans for which 50 percent or more of the source of repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property.
To determine these ratios, the Company defines commercial real estate in accordance with the guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) issued by the federal bank regulatory agencies in 2006 (and reinforced in 2015), which defines commercial real estate loans as exposures secured by land development and construction, including 1-4 family residential construction, multifamily property, and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property (i.e. loans for which 50 percent or more of the source of repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property.
The forecasts of future economic conditions are over a period that has been deemed reasonable and supportable, and in 56 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.
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.
Core deposit intangibles are amortized using an amortization method that reflects the expected value over time, and are evaluated for indications of potential 57 impairment at least annually. Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis.
Core deposit intangibles are amortized using an amortization method that reflects the expected value over time, and are evaluated for indications of potential impairment at least annually. Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis.
Changes in the assumptions and forecasts of economic conditions could significantly affect the estimate for the Company’s estimate of expected credit losses at the balance sheet date or lead to significant changes in the estimate from one reporting period to the next.
Changes in the assumptions and forecasts of economic conditions could significantly affect the Company’s estimate of expected credit losses at the balance sheet date or lead to significant changes in the estimate from one reporting period to the next.
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.
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 52 value of the security.
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 Consolidated Financial Statements and the related notes included in this report. The emphasis of this discussion will be on the years ended December 31, 2022 and 2021.
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 Consolidated Financial Statements and the related notes included in this report. The emphasis of this discussion will be on the years ended December 31, 2023 and 2022.
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.
As a general matter, the FRB has indicated that the board of directors of a bank holding company, such as Seacoast, should consult with the FRB and eliminate, defer, or significantly reduce the bank holding company’s dividends if: (i) its net income available to shareholders for the past four quarters, net of dividends previously paid during that 50 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.
Additional information about the Company’s financial condition and results of operations in 2020 and changes in the Company’s financial condition and results of operations from 2020 to 2021 may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Additional information about the Company’s financial condition and results of operations in 2021 and changes in the Company’s financial condition and results of operations from 2021 to 2022 may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
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.
The OCC and the FRB have policies that encourage banks and bank holding companies to pay dividends from current earnings, and have the general authority to limit the dividends paid by national banks and bank holding companies, respectively, if such payment may be deemed to constitute an unsafe or unsound practice.
Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments. One of the most significant judgments in estimating the Allowance for credit losses, relates to the macroeconomic forecasts. As of December 31, 2022, the Company utilized a blend of Moody’s most recent “U.S.
Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments. 51 One of the most significant judgments in estimating the Allowance for credit losses relates to the macroeconomic forecasts. As of December 31, 2023, the Company utilized a blend of Moody’s most recent “U.S.
The capital measures are not necessarily comparable to similar capital measures that may be presented by other companies and Seacoast does not nor should investors consider such non-GAAP financial measures in isolation from, or as a substitute for GAAP financial information (see “Table 1 - Capital Resources” and “Note 13 - Shareholders’ Equity”).
The capital measures are not necessarily comparable to similar capital measures that may be presented by other companies and Seacoast does not nor should investors consider such non-GAAP financial measures in isolation from, or as a substitute for GAAP financial information (see “Table 1 - Capital Resources” and “Note 13 - Regulatory Capital”).
There was no reserve requirement at December 31, 2022 or December 31, 2021. Under Federal Reserve regulation, Seacoast Bank is limited as to the amount it may loan to its affiliates, including the Company, unless such loans are collateralized by specified obligations.
There was no reserve requirement at December 31, 2023 or December 31, 2022. Under FRB regulation, Seacoast Bank is limited as to the amount it may loan to its affiliates, including the Company, unless such loans are collateralized by specified obligations.
We performed an annual impairment test of goodwill in the fourth quarter of 2022 and concluded that no impairment existed.
We performed an annual impairment test of goodwill in the fourth quarter of 2023 and concluded that no impairment existed.
As of December 31, 2022, 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.
As of December 31, 2023, all of the Company's collateralized loan obligations were in AAA/AA tranches with weighted average credit support of 33%. 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.
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 55 of dividends by Seacoast Bank or the Company, respectively.
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 FRB may, among other things, issue a cease and desist order prohibiting the payment of dividends by Seacoast Bank or us, respectively.
Unfunded commitments to extend credit were $2.8 billion at December 31, 2022, and $2.0 billion at December 31, 2021 (see “Note 15 - Contingent Liabilities and Commitments with Off-Balance Sheet Risk” to the Company’s consolidated financial statements).
Unfunded commitments to extend credit were $2.7 billion at December 31, 2023, and $2.8 billion at December 31, 2022 (see “Note 15 - Contingent Liabilities and Commitments with Off-Balance Sheet Risk” to the Company’s consolidated financial statements).
Under a recently adopted Federal Reserve policy, the board of directors of a bank holding company must consider different factors to ensure that its dividend level 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.
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.
Securities Information related to yields, maturities, carrying values and fair value of the Company’s securities is set forth in Tables 7 and 8 and “Note 3 - Securities” of the Company’s consolidated financial statements. At December 31, 2022, the Company had $1.9 billion in securities available-for-sale, and $747.4 million in securities held-to-maturity.
Securities Information related to yields, maturities, carrying values and fair value of the Company’s securities is set forth in Tables 7 and 8 and “Note 3 - Securities” of the Company’s consolidated financial statements. At December 31, 2023, the Company had $1.8 billion in securities available-for-sale, and $680.3 million in securities held-to-maturity.
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.
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, and; • impairment of debt securities.
Without Office of the Comptroller of the Currency (“OCC”) approval, Seacoast Bank can pay up to $198.9 million of dividends to the Company (see “Part I. Item 1. Business”).
Without Office of the Comptroller of the Currency (“OCC”) approval, Seacoast Bank can pay up to $205.7 million of dividends to the Company (see “Part I. Item 1. Business”).
The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP. The following tables provide reconciliation between GAAP and adjusted (non-GAAP) financial measures.
The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP. The following table provides reconciliations between GAAP and adjusted (non-GAAP) financial measures.
Regulatory guidance suggests limits of 100% and 300%, respectively. On a consolidated basis, construction and land development and commercial real estate loans represent 41% and 210%, respectively, of total consolidated risk based capital.
Regulatory guidance suggests limits of 100% and 300%, respectively. On a consolidated basis, 44 construction and land development and commercial real estate loans represent 45% and 228%, respectively, of total consolidated risk based capital.
The average LTV of our HELOC portfolio is 69% with 31% of the portfolio being in the first lien position at December 31, 2022, compared to an average LTV of 69% with 42% of the portfolio being in the first lien position at December 31, 2021.
The average LTV of our HELOC portfolio is 63% with 35% of the portfolio being in the first lien position at December 31, 2023, compared to an average LTV of 69% with 31% of the portfolio being in the first lien position at December 31, 2022.
Outstanding balances for commercial and commercial real estate (“CRE”) loan relationships greater than $10 million totaled $2.2 billion, representing 27% of the total portfolio at December 31, 2022, compared to $1.2 billion, or 20%, at December 31, 2021.
Outstanding balances for commercial and commercial real estate loan relationships greater than $10 million totaled $2.3 billion, representing 23% of the total portfolio at December 31, 2023, compared to $2.2 billion, or 27%, at December 31, 2022.
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 2022, Seacoast Bank distributed $48.4 million to the Company and, at December 31, 2022, is eligible to distribute dividends to the Company of approximately $198.9 million without prior regulatory approval.
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 2023, Seacoast Bank distributed $40.7 million to the Company and, at December 31, 2023, is eligible to distribute dividends to the Company of approximately $205.7 million without prior regulatory approval.
Overview – Strategy and Results Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”), a financial holding company, registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), is one of the largest community banks in Florida, with $12.1 billion in assets and $10.0 billion in deposits as of December 31, 2022.
Overview – Strategy and Results Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”), a financial holding company, registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), is one of the largest community banks in Florida, with $14.6 billion in assets and $11.8 billion in deposits as of December 31, 2023.
Seacoast (Consolidated) Seacoast Bank Minimum to be Well-Capitalized 1 Total Risk-Based Capital Ratio 15.79% 14.47% 10.00% Tier 1 Capital Ratio 14.79 13.46 8.00 Common Equity Tier 1 Ratio (CET1) 13.87 13.46 6.50 Leverage Ratio 11.46 10.44 5.00 1 For subsidiary bank only.
Seacoast (Consolidated) Seacoast Bank Minimum to be Well-Capitalized 1 Total Risk-Based Capital Ratio 15.92% 14.82% 10.00% Tier 1 Capital Ratio 14.54 13.64 8.00 Common Equity Tier 1 Ratio (CET1) 13.87 13.64 6.50 Leverage Ratio 11.00 10.32 5.00 1 For subsidiary bank only.
For the year ended December 31, 2022, debt securities with a fair value of $515.2 million obtained through bank acquisition were sold with no gains or losses recognized. During the year ended December 31, 2021, there were $1.5 billion of debt security purchases and $679.3 million in paydowns and maturities over the same period.
During the year ended December 31, 2022, there were $899.7 million of debt security purchases and $367.7 million in paydowns and maturities over the same period. For the year ended December 31, 2022, debt securities with a fair value of $515.2 million obtained through bank acquisitions were sold with no gains or losses recognized.
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 45% and 230%, respectively, at December 31, 2022, compared to 21% and 177% as of December 31, 2021.
Concentrations in total construction and land development loans and total commercial real estate loans are maintained well below regulatory limits. Construction and land development and commercial real estate loan concentrations as a percentage of subsidiary bank total risk based capital, were 48% and 244%, respectively, at December 31, 2023, compared to 45% and 230% as of December 31, 2022.
The Company’s total risk-based capital ratio was 15.79% at December 31, 2022, a decrease from 18.21% at December 31, 2021. As of December 31, 2022, the Bank’s leverage ratio (Tier 1 capital to adjusted total assets) was 10.44%, compared to 10.65% at December 31, 2021, well above the minimum to be well capitalized under regulatory guidelines.
The Company’s total risk-based capital ratio was 15.92% at December 31, 2023, an increase from 15.79% at December 31, 2022. As of December 31, 2023, the Bank’s leverage ratio (Tier 1 capital to adjusted total assets) was 10.32%, compared to 10.44% at December 31, 2022, well above the minimum to be well capitalized under regulatory guidelines.
During 2022, average transaction deposits (noninterest and interest bearing demand deposits) increased $1.2 billion, or 27%, compared to 2021. The Company’s deposit mix remains favorable, with 95% of average deposit balances comprised of savings, money market, and demand deposits in 2022.
During 2023, average transaction deposits (noninterest and interest bearing demand deposits) increased $0.9 billion, or 15%, compared to 2022. The Company’s deposit mix remains favorable, with 89% of average deposit balances comprised of savings, money market, and demand deposits in 2023.
Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments. The provision for credit losses was $26.2 million for the year ended December 31, 2022, compared to a net benefit of $9.4 million for the year ended December 31, 2021.
Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments. The provision for credit losses was $37.5 million for the year ended December 31, 2023, compared to $26.2 million for the year ended December 31, 2022.
All yields and rates have been computed using amortized costs. Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances. Changes attributable to rate/volume (mix) are allocated to rate and volume on an equal basis. Total average loans increased $1.1 billion, or 19%, during 2022 compared to 2021.
All yields and rates have been computed using amortized costs. Fees on loans have been included in interest on loans. Nonaccrual loans are included in loan balances. Changes attributable to rate/volume (mix) are allocated to rate and volume on an equal basis.
The Company’s ten largest commercial and commercial real estate funded and unfunded loan relationships at December 31, 2022 aggregated to $468.9 million, of which $312.4 million was funded, compared to $312.0 million at December 31, 2021, of which $157.8 million was funded.
The Company’s ten largest commercial and commercial real estate funded and unfunded relationships at December 31, 2023 aggregated to $505.7 million, of which $348.3 million was funded, compared to $468.9 million at December 31, 2022, of which $312.4 million was funded.
Management believes that each investment will recover any price depreciation over its holding period as the debt securities move to maturity, and management has the intent and ability to hold these investments to maturity, if necessary. Therefore, at December 31, 2022, no allowance for credit losses has been recorded.
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.
Included in the balance as of December 31, 2022 were $964.3 million of fixed rate mortgages, $402.3 million of adjustable rate mortgages, and $482.9 million in home equity loans and home equity lines of credit ("HELOCs"), compared to $773.7 million, $278.9 million and $336.6 million, respectively, as of December 31, 2021.
Included in the balance as of December 31, 2023 were $1.0 billion of fixed rate mortgages, $865.2 million of adjustable rate mortgages, and $488.2 million in home equity loans and home equity lines of credit ("HELOCs"), compared to $964.3 million, $402.3 million and $482.9 million, respectively, as of December 31, 2022.
Diluted earnings per common share (“EPS”) was $0.34 and adjusted diluted EPS 1 2 was $0.56 in the fourth quarter of 2022, compared to diluted EPS of $0.47 and adjusted diluted EPS 1 of $0.53 in the third quarter of 2022 and compared to diluted EPS of $0.62 and adjusted diluted EPS 1 of $0.62 in the fourth quarter of 2021.
Diluted earnings per share (“EPS”) was $0.35 and adjusted diluted EPS 1 2 was $0.43 in the fourth quarter of 2023, compared to diluted EPS of $0.37 and adjusted diluted EPS 1 of $0.46 in the third quarter of 2023 and compared to diluted EPS of $0.34 and adjusted diluted EPS 1 of $0.56 in the fourth quarter of 2022.
For additional information regarding the Company's methodology for calculating the Allowance for Credit Losses, see Note 1 – Significant Accounting Policies and Note 5 – Allowance for Credit Losses in the Notes to the Consolidated Financial Statements.
For additional information regarding the Company's methodology for calculating the Allowance for Credit Losses, see Note 1 – Significant Accounting Policies and Note 5 – Allowance for Credit Losses in the Notes to the Consolidated Financial Statements. Acquisition Accounting and Purchased Loans – Critical Accounting Policies and Estimates The Company accounts for acquisitions using the acquisition method of accounting.
Seacoast Bank distributed $47.7 million to the Company during 2021. At December 31, 2022, the Company had cash and cash equivalents at the parent of approximately $111.8 million compared to $98.5 million at December 31, 2021. 52 The following table presents contractual obligations by remaining maturity.
At December 31, 2023, the Company had cash and cash equivalents at the parent of $101.7 million, compared to $111.8 million at December 31, 2022. The following table presents contractual obligations by remaining maturity.
Activity in shareholders’ equity for the year ended December 31, 2022 and December 31, 2021 follows: For the Year Ended December 31, (In thousands) 2022 2021 Beginning balance at January 1, 2022 and 2021 $ 1,310,736 $ 1,130,402 Net income 106,507 124,403 Issuance of common stock and conversion of options, pursuant to acquisitions 398,249 92,094 Stock compensation (net of Treasury shares acquired) 14,564 13,707 Dividends on common stock (41,242) (22,506) Change in other comprehensive income (181,039) (27,364) Ending balance at December 31, 2022 and 2021 $ 1,607,775 $ 1,310,736 Capital ratios are well above regulatory requirements for well-capitalized institutions.
Activity in shareholders’ equity for the years ended December 31, 2023 and December 31, 2022 follows: For the Year Ended December 31, (In thousands) 2023 2022 Beginning balance at January 1, 2023 and 2022 $ 1,607,775 $ 1,310,736 Net income 104,033 106,507 Issuance of common stock and conversion of options, pursuant to acquisitions 421,042 398,249 Stock compensation (net of Treasury shares acquired) 18,540 14,564 Dividends on common stock (60,591) (41,242) Change in other comprehensive income 28,155 (181,039) Repurchases of common stock (10,868) — Ending balance at December 31, 2023 and 2022 $ 2,108,086 $ 1,607,775 Capital ratios are well above regulatory requirements for well-capitalized institutions.
Noninterest expenses in 2022 totaled $267.9 million and included acquisition-related expenses of $27.9 million, and expenses related to branch consolidation and other expense reduction initiatives of $1.2 million. In 2021, noninterest expenses totaled $197.4 million, including $7.9 million in acquisition-related expenses and $2.2 million in expenses related to branch consolidation and other expense reduction initiatives.
Noninterest expenses in 2023 totaled $395.6 million, including $33.2 million in acquisition-related expenses, and $5.2 million related to branch consolidation and other expense reduction initiatives. In 2022, noninterest expenses totaled $267.9 million, including $27.9 million in acquisition-related expenses and $1.2 million in expenses related to branch consolidation and other expense reduction initiatives.
The Company utilizes third parties for core data processing systems. Ongoing data processing costs are directly related to the number of transactions processed and the negotiated rates associated with those transactions. Outsourced data processing costs totaled $27.5 million in 2022, an increase of $7.6 million, or 38%. Results include $3.4 million in acquisition-related charges compared to $0.9 million in 2021.
The Company utilizes third parties for core data processing systems. Ongoing data processing costs are directly related to the number of transactions processed and the negotiated rates associated with those transactions. Outsourced data processing costs totaled $52.1 million in 2023, an increase of $24.6 million, or 89%, compared to 2022.
Sources of liquidity, both anticipated and unanticipated, are maintained through a portfolio of high-quality marketable assets, such as residential mortgage loans, available-for-sale debt securities and interest-bearing deposits.
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.
In contrast, expected credit losses on loans not considered PCD are recognized through the provision for credit losses at the date of acquisition.
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 through the provision for credit losses at the date of acquisition.
Fourth Quarter Results and Analysis Net income totaled $23.9 million in the fourth quarter of 2022, a decrease of $5.3 million, or 18%, from the third quarter of 2022, and a decrease of $12.4 million, or 34%, compared to the fourth quarter of 2021.
Fourth Quarter Results and Analysis Net income totaled $29.5 million in the fourth quarter of 2023, a decrease of $1.9 million, or 6%, from the third quarter of 2023, and an increase of $5.6 million, or 23%, compared to the fourth quarter of 2022.
The Company's acquisition strategy has not only increased customer households and been accretive to earnings, but has also opened markets and Seacoast's customer base. The table below summarizes acquisition activity in recent years: (In millions) Primary Market(s) Year of Acquisition Acquired Loans Acquired Deposits Drummond Banking Company Gainesville and Ocala 2022 $ 545 $ 881 Apollo Bancshares, Inc.
The Company's acquisition strategy has not only increased customer households and been accretive to earnings, but has also opened markets and expanded Seacoast's customer base. The table below summarizes acquisition activity in the past ten years: (In millions) Primary Market(s) Year of Acquisition Acquired Loans Acquired Deposits Professional Bank/ Professional Holding Corp.
Net revenues, which are calculated as net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses, increased $33.0 million, or 32%, from the third quarter of 2022 and increased $46.4 million, or 51%, from the fourth quarter of 2021.
Net revenues, which are calculated as net interest income on a fully taxable equivalent basis plus noninterest income excluding securities gains and losses were $128.2 million, a decrease of $8.9 million, or 7%, from the third quarter of 2023 and a decrease of $9.2 million, or 7%, from the fourth quarter of 2022.
Loans to real estate investment trusts (“REITs”) and unsecured loans to developers that closely correlate to the inherent risks in CRE markets would also be considered CRE loans under the Guidance. Loans on owner-occupied CRE are generally excluded. In addition, the Company is subject to a geographic concentration of credit because it primarily operates in Florida.
Loans to real estate investment trusts (“REITs”) and unsecured loans to developers that closely correlate to the inherent risks in commercial real estate markets would also be considered commercial real estate loans under the Guidance. Loans on owner-occupied commercial real estate are generally excluded.
At December 31, 2022, the maximum amount available for transfer from Seacoast Bank to the Company in the form of loans approximated $141.1 million, if the Company has sufficient acceptable collateral.
At December 31, 2023, the maximum amount available for transfer from Seacoast Bank to the Company in the form of loans approximated $183.8 million, if the Company has sufficient acceptable collateral. There were no loans made to affiliates during the periods ending December 31, 2023 and 2022.
Securities losses in 2021 totaled $0.6 million, resulting from a $0.4 million net loss on the sale of debt securities, and a $0.2 million decline in the value of the CRA-qualified mutual fund investment. Noninterest Expense The Company has demonstrated its commitment to efficiency through disciplined, proactive management of its cost structure.
Securities losses in 2022 totaled $1.1 million resulting solely from the decline in the market value of the CRA-qualified mutual fund investment. 35 Noninterest Expense The Company has demonstrated its commitment to efficiency through disciplined, proactive management of its cost structure.
The following table details loan portfolio composition at December 31, 2022 and 2021 for portfolio loans, purchased credit deteriorated loans (“PCD”) and loans purchased which are not considered credit deteriorated (“Non-PCD”) as defined in “Note 4 - Loans”.
The Company's exposure to commercial real estate lending remains well below regulatory limits (see “Loan Concentrations”). The following table details loan portfolio composition at December 31, 2023 and 2022 for portfolio loans, purchased credit deteriorated loans (“PCD”) and loans purchased which are not considered credit deteriorated (“Non-PCD”) as defined in “Note 4 - Loans”.
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.
The consumer pipeline was $18.7 million as of December 31, 2023, compared to $36.6 million as of December 31, 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.
The cost of deposits increased by three basis points to 11 basis points in 2022. 1 Non-GAAP measure - see “ Explanation of Certain Unaudited Non-GAAP Financial Measures ” for more information and a reconciliation to GAAP. 31 The following table details the Company’s average balance sheets, interest income and expenses, and yields and rates 1 , for the past three years: For the Year Ended December 31, 2022 2021 2020 (In thousands, except percentages) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Assets Earning Assets: Securities Taxable $ 2,568,568 $ 56,611 2.20 % $ 1,839,619 $ 29,206 1.59 % $ 1,277,441 $ 29,718 2.33 % Nontaxable 22,188 690 3.11 25,369 730 2.88 22,164 570 2.57 Total Securities 2,590,756 57,301 2.21 1,864,988 29,936 1.61 1,299,605 30,288 2.33 Federal funds sold 433,359 4,103 0.95 763,795 1,043 0.14 187,400 260 0.14 Other investments 69,604 3,517 5.05 65,534 1,947 2.97 52,094 2,237 4.29 Loan excluding PPP loans 6,812,654 313,450 4.60 5,369,204 230,552 4.29 5,259,653 242,736 4.62 PPP loans 25,612 2,623 10.24 381,860 21,282 5.57 419,154 11,974 2.86 Total Loans 6,838,266 316,073 4.62 5,751,064 251,834 4.38 5,678,807 254,710 4.49 Total Earning Assets 9,931,985 380,994 3.84 8,445,380 284,760 3.37 7,217,906 287,495 3.98 Allowance for credit losses on loans (94,693) (88,659) (81,858) Cash and due from banks 305,775 332,664 142,314 Bank premises and equipment, net 85,568 71,771 71,846 Intangible assets 360,217 249,089 231,267 Bank owned life insurance 214,468 156,599 128,569 Other assets 248,108 170,210 149,956 Total Assets $ 11,051,428 $ 9,337,054 $ 7,860,000 Liabilities and Shareholders' Equity Interest-Bearing Liabilities: Interest-bearing demand $ 2,220,307 $ 3,099 0.14 % $ 1,787,234 895 0.05 % $ 1,324,433 1,710 0.13 % Savings 989,997 397 0.04 805,816 383 0.05 610,015 849 0.14 Money market 1,925,176 3,824 0.20 1,765,444 2,327 0.13 1,294,629 4,361 0.34 Time deposits 500,471 2,642 0.53 602,739 2,788 0.46 1,101,321 13,365 1.21 Securities sold under agreements to repurchase 121,318 986 0.81 113,881 141 0.12 84,514 283 0.33 Federal Home Loan Bank borrowings 10,264 330 3.22 — — — 139,439 1,540 1.10 Other borrowings 74,713 3,056 4.09 71,495 1,685 2.36 71,220 2,184 3.07 Total Interest-Bearing Liabilities 5,842,246 14,334 0.25 5,146,609 8,219 0.16 4,625,571 24,292 0.53 Noninterest demand 3,667,345 2,851,687 2,107,931 Other liabilities 122,982 123,446 81,279 Total Liabilities 9,632,573 8,121,742 6,814,781 Shareholders' equity 1,418,855 1,215,312 1,045,219 Total Liabilities & Shareholders' Equity $ 11,051,428 $ 9,337,054 $ 7,860,000 Cost of deposits 0.11 % 0.08 % 0.32 % Interest expense as % of earning assets 0.14 % 0.10 % 0.34 % Net interest income/yield on earning assets $ 366,660 3.69 % $ 276,541 3.27 % $ 263,203 3.65 % 1 On a fully taxable equivalent basis.
In 2023, average long-term debt of $104.2 million carried an average cost of 6.96%, up from 4.09% in 2022, reflecting the impact of higher interest rates. 1 Non-GAAP measure, see “ Explanation of Certain Unaudited Non-GAAP Financial Measures ” for more information and a reconciliation to GAAP. 32 The following table details the Company’s average balance sheets, interest income and expenses, and yields and rates 1 , for the past three years: For the Year Ended December 31, 2023 2022 2021 (In thousands, except percentages) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Assets Earning Assets: Securities Taxable $ 2,611,299 $ 82,926 3.18 % $ 2,568,568 $ 56,611 2.20 % $ 1,839,619 $ 29,206 1.59 % Nontaxable 13,733 438 3.19 22,188 690 3.11 25,369 730 2.88 Total Securities 2,625,032 83,364 3.18 2,590,756 57,301 2.21 1,864,988 29,936 1.61 Federal funds sold 368,659 18,871 5.12 433,359 4,103 0.95 763,795 1,043 0.14 Other investments 90,692 5,718 6.30 69,604 3,517 5.05 65,533 1,947 2.97 Loans 9,889,070 581,825 5.88 6,838,266 316,073 4.62 5,751,064 251,834 4.38 Total Earning Assets 12,973,453 689,778 5.32 9,931,985 380,994 3.84 8,445,380 284,760 3.37 Allowance for credit losses on loans (150,982) (94,693) (88,659) Cash and due from banks 184,035 305,775 332,664 Bank premises and equipment, net 116,516 85,568 71,771 Intangible assets 816,662 360,217 249,089 Bank owned life insurance 290,218 214,468 156,599 Other assets 392,872 248,108 170,210 Total Assets $ 14,622,774 $ 11,051,428 $ 9,337,054 Liabilities and Shareholders' Equity Interest-Bearing Liabilities: Interest-bearing demand $ 2,686,936 $ 41,438 1.54 % $ 2,220,307 $ 3,099 0.14 % $ 1,787,234 $ 895 0.05 % Savings 851,347 1,796 0.21 989,997 397 0.04 805,816 383 0.05 Money market 2,941,916 83,301 2.83 1,925,176 3,824 0.20 1,765,444 2,327 0.13 Time deposits 1,348,152 52,254 3.88 500,471 2,642 0.53 602,739 2,788 0.46 Securities sold under agreements to repurchase 270,999 8,323 3.07 121,318 986 0.81 113,881 141 0.12 Federal Home Loan Bank borrowings 175,247 6,378 3.64 10,264 330 3.22 — — — Other borrowings 104,158 7,245 6.96 74,713 3,056 4.09 71,495 1,685 2.36 Total Interest-Bearing Liabilities 8,378,755 200,735 2.40 5,842,246 14,334 0.25 5,146,609 8,219 0.16 Noninterest demand 4,087,335 3,667,345 2,851,687 Other liabilities 131,302 122,982 123,446 Total Liabilities 12,597,392 9,632,573 8,121,742 Shareholders' equity 2,025,382 1,418,855 1,215,312 Total Liabilities & Shareholders' Equity $ 14,622,774 $ 11,051,428 $ 9,337,054 Cost of deposits 1.50 % 0.11 % 0.08 % Interest expense as % of earning assets 1.55 % 0.14 % 0.10 % Net interest income/yield on earning assets $ 489,043 3.77 % $ 366,660 3.69 % $ 276,541 3.27 % 1 On a fully taxable equivalent basis.
The collateral underlying these mortgage investments includes both fixed-rate and adjustable-rate mortgage loans. Private label commercial securities total $17.2 million, with a fair value of $16.3 million. These securities have weighted average credit support of 23%. The collateral underlying these mortgages are primarily pooled multifamily loans.
Included are $123.6 million, with a fair value of $113.5 million, in private label residential securities with weighted average credit support of 23%. The collateral underlying these mortgage investments includes both fixed-rate and adjustable-rate residential mortgage loans. Commercial securities totaled $12.2 million, with a fair value of $11.5 million. These securities have weighted average credit support of 22%.
Adjusted net income 1 totaled $39.9 million, an increase of $7.1 million, or 22%, from the third quarter of 2022, and an increase of $3.1 million, or 8%, compared to the fourth quarter of 2021.
Adjusted net income 1 totaled $36.5 million, a decrease of $3.2 million, or 8%, from the third quarter of 2023, and a decrease of $3.4 million, or 9%, compared to the fourth quarter of 2022.
Net Interest Income and Margin Net interest income for the year ended December 31, 2022 totaled $366.2 million, increasing $90.1 million, or 33%, compared to the year ended December 31, 2021.
Fourth quarter 2023 expenses were 8% lower than the prior quarter. Net Interest Income and Margin Net interest income for the year ended December 31, 2023, totaled $488.2 million, increasing $122.1 million, or 33%, compared to the year ended December 31, 2022.
Nonperforming assets (“NPAs”) at December 31, 2022 totaled $31.1 million, a decrease of $13.1 million, or 29.6%, compared to 2021, and were comprised of $28.8 million of nonaccrual loans and other real estate owned (“OREO”) of $2.3 million that includes $1.8 million of branches taken out of service.
Nonperforming assets (“NPAs”) at December 31, 2023 totaled $72.7 million, an increase of $41.5 million, or 133.3%, compared to 2022, and were comprised of $65.1 million of nonaccrual loans, and $7.6 million of other real estate owned (“OREO”), including $7.3 million of branches taken out of service.
The Company also has $313.2 million, with a fair value of $302.9 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.
The collateral underlying these mortgages are primarily pooled multifamily loans. The Company also has invested $300.9 million in floating rate collateralized loan obligations. Collateralized loan obligations are special purpose vehicles that purchase first lien broadly syndicated corporate loans while providing support to senior tranche investors.
The 2022 provision includes $20.2 million in initial provisioning for loans acquired through bank acquisitions, along with increases reflecting organic loan growth and changes in economic forecast factors. The net benefit of $9.4 million in 2021 reflects the improvement in the economic outlook following the COVID-19 pandemic.
The 2023 provision includes $26.6 million for loans acquired in the Professional acquisition, along with increases reflecting organic loan growth and changes in economic forecast factors. The 2022 provision included $20.2 million in initial provisioning for loans acquired through bank acquisitions.
Substantially all residential originations have been underwritten to conventional loan agency standards, including loans having balances that exceed agency value limitations.
In the first quarter of 2023, the Company acquired $483.6 million residential loans from Professional. Substantially all residential mortgage originations have been underwritten to conventional loan agency standards, including loans having balances that exceed agency value limitations.
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. Deposits are a primary source of liquidity.
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 $447.2 million at December 31, 2023, compared to $201.9 million at December 31, 2022.
The transaction further expands Seacoast’s presence in the tri-county South Florida market, which includes Miami-Dade, Broward, and Palm Beach counties, Florida’s largest MSA and the 8th largest in the nation. Professional Bank, the sixth largest bank headquartered in South Florida, had deposits of approximately $2.2 billion and loans of approximately $2.1 billion as of December 31, 2022.
(“Professional”), parent company of Professional Bank, was completed on January 31, 2023. The transaction further expanded Seacoast’s presence in the tri-county South Florida market, which includes Miami-Dade, Broward, and Palm Beach counties, Florida’s largest MSA and the 8th largest in the nation.
The 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. Outstanding FHLB advances totaled $150.0 million at December 31, 2022, of which $75.0 million mature within 30 days with a weighted average rate of 4.28%.
The debt was recorded at fair value, resulting in a $3.9 million discount that is being accreted into interest expense over the remaining term to maturity. Federal Home Loan Bank advances totaled $50 million at December 31, 2023 with an interest rate of 3.23%, compared to $150.0 million at December 31, 2022 with a weighted average interest rate of 3.42%.
At December 31, 2022, the Company had unfunded commitments to extend credit of $2.8 billion, compared to $2.0 billion at December 31, 2021 (see “Note 15 - Contingent Liabilities and Commitments with Off-Balance Sheet Risk” to the Company’s consolidated financial statements).
The Company also provides consumer loans, which include installment loans, auto loans, marine loans and other consumer loans, which decreased $35.0 million, or 12%, year-over-year to a total of $251.6 million at December 31, 2023, compared to $286.6 million at December 31, 2022. 43 At December 31, 2023, the Company had unfunded commitments to extend credit of $2.7 billion, compared to $2.8 billion at December 31, 2022 (see “Note 15 - Contingent Liabilities and Commitments with Off-Balance Sheet Risk” to the Company’s consolidated financial statements).
Petersburg 2017 251 285 Orlando banking operations of BMO Harris Bank, N.A. Orlando 2016 63 314 Floridian Bank/ Floridian Financial Group, Inc. Orlando 2016 266 337 Grand Bank & Trust of Florida/ Grand Bankshares, Inc. West Palm Beach 2015 111 188 BankFirst/ The BANKshares, Inc.
Orlando 2016 266 337 Grand Bank & Trust of Florida/ Grand Bankshares, Inc. West Palm Beach 2015 111 188 BankFirst/ The BANKshares, Inc.
Owner-occupied commercial real estate loans represent $1.5 billion, or 36%, of the commercial real estate portfolio. Co mmercial and financial loans increased year-over-year by $279.3 million, or 26%, totaling $1.3 billion at December 31, 2022. The addition of well-established commercial bankers and expansion into new markets across the state have generated disciplined loan growth.
Commercial and financial loans increased year-over-year by $254.7 million, or 19%, totaling $1.6 billion at December 31, 2023. The addition of well-established commercial bankers and expansion into new markets across the state have generated disciplined loan growth. In the first quarter of 2023, the Company acquired $350.6 million in commercial and financial loans from Professional.
During 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, increased $1.2 million, or 6%, compared to 2021. The increase reflects the impact of higher health insurance related costs and payroll taxes resulting from headcount added through acquisitions and investments made to support organic growth.
During 2023, employee benefit costs, which include costs associated with the Company's self-funded health insurance benefits, 401(k) plan, payroll taxes, and unemployment compensation, increased $10.9 million, or 57%, compared to 2022. The increase reflects the overall growth of the organization, including as a result of the acquisitions completed in 2023 and 2022.
There were no loans made to affiliates during the periods ending December 31, 2022 and 2021. 54 Capital Resources and Management Table 1 summarizes the Company’s capital position and selected ratios. The Company's equity capital at December 31, 2022 increased $297.0 million, or 23%, from December 31, 2021, to $1.6 billion.
Capital Resources and Management Table 1 summarizes the Company’s capital position and selected ratios. The Company's equity capital at December 31, 2023 increased $500.3 million, or 31%, from December 31, 2022, to $2.1 billion.
The wealth management team has continued to demonstrate success in building new relationships, resulting in a 12% increase in assets under management year-over-year to $1.4 billion as of December 31, 2022. Mortgage banking fees decreased by $8.3 million, or 70%, to $3.5 million for the year ended December 31, 2022 compared to 2021.
Wealth management revenues, including brokerage commissions and fees and trust income, increased $1.7 million, or 16%, to $12.8 million for the year ended December 31, 2023. The wealth management team continued to demonstrate notable success in building relationships, resulting in a 23% increase in assets under management year-over-year to $1.7 billion as of December 31, 2023.
At December 31, 2022, the remaining fair value adjustments on acquired loans were $97.7 million, or 4.3% of the outstanding acquired loan balances, compared to $23.1 million, or 2.3% of the acquired loan balances at December 31, 2021.
At December 31, 2023, the remaining fair value adjustments on acquired loans were $174.0 million, or 4.8%, of the outstanding acquired loan balances, compared to $97.7 million, or 4.3% of the acquired loan 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 weighting applied in the December 31, 2022 analysis reflects a deterioration in the economic outlook as compared to the December 31, 2021 analysis and considers the 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, the potential impact of persistent high inflation on economic growth and expectations around a recession occurring over the next 12 to 24 months.
The weighting applied in the December 31, 2023 analysis reflects a deterioration in the economic outlook as compared to the December 31, 2022 analysis and considers the continued actions taken by the FRB with regard to monetary policy and interest rates and the potential impact of those actions.
Petersburg 2020 303 330 First Bank of the Palm Beaches West Palm Beach 2020 147 174 First Green Bank/ First Green Bancorp, Inc. Orlando and Fort Lauderdale 2018 631 624 Palm Beach Community Bank West Palm Beach 2017 270 269 NorthStar Bank/ NorthStar Banking Corporation, Inc. Tampa- St. Petersburg 2017 137 182 GulfShore Bank/ GulfShore BancShares, Inc. Tampa- St.
Orlando and Fort Lauderdale 2018 631 624 Palm Beach Community Bank West Palm Beach 2017 270 269 NorthStar Bank/ NorthStar Banking Corporation, Inc. Tampa- St. Petersburg 2017 137 182 GulfShore Bank/ GulfShore BancShares, Inc. Tampa- St. Petersburg 2017 251 285 Orlando banking operations of BMO Harris Bank, N.A. Orlando 2016 63 314 Floridian Bank/ Floridian Financial Group, Inc.
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.
Impairment of Debt Securities – Critical Accounting Policies and Estimates For held-to-maturity (“HTM”) securities, expected credit losses are estimated over the remaining expected life and this estimate is recognized as an allowance for credit losses. Available-for-sale (“AFS”) securities are considered impaired if the fair value is less than amortized cost basis.
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.
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.
Nonaccrual loans are included in loan balances. 32 The following table shows the impact of changes in volume and rate on earning assets and interest bearing liabilities 1 : 2022 vs 2021 Due to Change in: 2021 vs 2020 Due to Change in: (In thousands) Volume Rate Total Volume Rate Total Amount of increase (decrease) Earning Assets: Securities Taxable $ 13,819 $ 13,586 $ 27,405 $ 11,002 $ (11,514) $ (512) Nontaxable (95) 55 (40) 87 73 160 Total Securities 13,724 13,641 27,365 11,089 (11,441) (352) Federal funds sold (1,790) 4,850 3,060 793 (10) 783 Other investments 163 1,407 1,570 488 (778) (290) Loans excluding PPP loans 64,197 18,701 82,898 4,880 (17,064) (12,184) PPP loans (28,169) 9,510 (18,659) (1,572) 10,880 9,308 Total Loans 36,028 28,211 64,239 3,308 (6,184) (2,876) Total Earning Assets 48,125 48,109 96,234 15,678 (18,413) (2,735) Interest-Bearing Liabilities: Interest-bearing demand 411 1,793 2,204 415 (1,230) (815) Savings 81 (67) 14 183 (649) (466) Money market accounts 264 1,233 1,497 1,103 (3,137) (2,034) Time deposits (506) 360 (146) (4,178) (6,399) (10,577) Total Deposits 250 3,319 3,569 (2,477) (11,415) (13,892) Securities sold under agreements to repurchase 35 810 845 67 (209) (142) Federal Home Loan Bank borrowings 330 — 330 (1,540) — (1,540) Other borrowings 104 1,267 1,371 7 (506) (499) Total Interest Bearing Liabilities 719 5,396 6,115 (3,943) (12,130) (16,073) Net Interest Income $ 47,406 $ 42,713 $ 90,119 $ 19,621 $ (6,283) $ 13,338 1 On a fully taxable equivalent basis.
Nonaccrual loans are included in loan balances. 33 The following table shows the impact of changes in volume and rate on earning assets and interest bearing liabilities 1 : 2023 vs 2022 Due to Change in: 2022 vs 2021 Due to Change in: (In thousands) Volume Rate Total Volume Rate Total Amount of increase (decrease) Earning Assets: Securities Taxable $ 1,149 $ 25,166 $ 26,315 $ 13,819 $ 13,586 $ 27,405 Nontaxable (266) 14 (252) (95) 55 (40) Total Securities 883 25,180 26,063 13,724 13,641 27,365 Federal funds sold (1,962) 16,730 14,768 (1,790) 4,850 3,060 Other investments 1,198 1,003 2,201 163 1,407 1,570 Loans 160,253 105,499 265,752 36,028 28,211 64,239 Total Earning Assets 160,372 148,412 308,784 48,125 48,109 96,234 Interest-Bearing Liabilities: Interest-bearing demand 3,924 34,415 38,339 411 1,793 2,204 Savings (174) 1,573 1,399 81 (67) 14 Money market accounts 15,404 64,072 79,476 264 1,233 1,497 Time deposits 18,665 30,947 49,612 (506) 360 (146) Total Deposits 37,819 131,007 168,826 250 3,319 3,569 Securities sold under agreements to repurchase 2,907 4,431 7,338 35 810 845 Federal Home Loan Bank borrowings 5,654 394 6,048 330 — 330 Other borrowings 1,626 2,563 4,189 104 1,267 1,371 Total Interest Bearing Liabilities 48,006 138,395 186,401 719 5,396 6,115 Net Interest Income $ 112,366 $ 10,017 $ 122,383 $ 47,406 $ 42,713 $ 90,119 1 On a fully taxable equivalent basis.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBMI Banks - Southeast Region Index 100.00 82.62 116.45 104.41 149.13 121.30 Source: S&P Global Market Intelligence © 2023 69 SELECTED QUARTERLY INFORMATION QUARTERLY CONSOLIDATED INCOME STATEMENTS (UNAUDITED) 2022 Quarters 2021 Quarters (In thousands, except per share data) Fourth Third Second First Fourth Third Second First Net interest income: Interest income $ 127,109 $ 91,404 $ 83,749 $ 78,232 $ 73,942 $ 73,209 $ 67,763 $ 69,330 Interest expense 7,400 3,120 2,102 1,710 1,653 1,885 1,961 2,720 Net interest income 119,709 88,284 81,647 76,522 72,289 71,324 65,802 66,610 Provision for credit losses 14,129 4,676 822 6,556 (3,942) 5,091 (4,855) (5,715) Net interest income after provision for credit losses on loans 105,580 83,608 80,825 69,966 76,231 66,233 70,657 72,325 Noninterest income: Service charges on deposit accounts 3,996 3,504 3,408 2,801 2,606 2,495 2,338 2,338 Interchange income 4,650 4,138 4,255 4,128 4,135 4,131 4,145 3,820 Wealth management income 2,886 2,732 2,774 2,659 2,356 2,562 2,387 2,323 Mortgage banking fees 426 434 932 1,686 2,030 2,550 2,977 4,225 Marine finance fees 208 209 312 191 147 152 177 189 SBA gains 105 108 473 156 200 812 232 287 BOLI income 1,526 1,363 1,349 1,334 1,295 1,128 872 859 Other income 3,836 3,977 3,761 2,870 6,316 5,228 2,249 3,744 Securities gains (losses), net 18 (362) (300) (452) (379) (30) (55) (114) Total noninterest income 17,651 16,103 16,964 15,373 18,706 19,028 15,322 17,671 Noninterest expenses: Salaries and wages 45,405 28,420 28,056 28,219 25,005 27,919 22,966 21,393 Employee benefits 5,300 4,074 4,151 5,501 4,763 4,177 3,953 4,980 Outsourced data processing costs 9,918 5,393 6,043 6,156 5,165 5,610 4,676 4,468 Telephone and data lines 1,185 973 908 733 790 810 838 785 Occupancy 5,457 5,046 4,050 3,986 3,500 3,541 3,310 3,789 Furniture and equipment 1,944 1,462 1,588 1,426 1,403 1,567 1,166 1,254 Marketing 1,772 1,461 1,882 1,171 1,060 1,353 1,002 1,168 Legal and professional fees 9,174 3,794 2,946 4,789 2,461 4,151 2,182 2,582 FDIC assessments 889 760 699 789 713 651 515 526 Amortization of intangibles 4,763 1,446 1,446 1,446 1,304 1,306 1,212 1,211 Foreclosed property expense and net (gain) loss on sale (411) 9 (968) (164) (175) 66 (90) (65) Provision for credit losses on unfunded commitments — 1,015 — 142 — 133 — — Other 6,114 7,506 5,347 4,723 4,274 3,984 4,054 4,029 Total noninterest expenses 91,510 61,359 56,148 58,917 50,263 55,268 45,784 46,120 Income before income taxes 31,721 38,352 41,641 26,422 44,674 29,993 40,195 43,876 Income taxes 7,794 9,115 8,886 5,834 8,344 7,049 8,785 10,157 Net income $ 23,927 $ 29,237 $ 32,755 $ 20,588 $ 36,330 $ 22,944 $ 31,410 $ 33,719 70 2022 Quarters 2021 Quarters (In thousands, except per share data) Fourth Third Second First Fourth Third Second First Per Common Share Data Net income diluted $ 0.34 $ 0.47 $ 0.53 $ 0.33 $ 0.62 $ 0.40 $ 0.56 $ 0.60 Net income basic 0.34 0.48 0.53 0.34 0.62 0.40 0.57 0.61 Cash dividends declared: Common stock $ 0.17 $ 0.17 $ 0.17 $ 0.13 $ 0.13 $ 0.13 $ 0.13 $ 0.00 Market price common stock: Low close 29.60 30.23 31.46 32.43 33.29 29.62 33.08 29.17 High close 34.94 36.75 35.21 39.15 38.31 34.26 38.81 40.35 Bid price at end of period 31.19 30.23 33.04 35.02 35.39 33.81 34.15 36.24 71
Biggest changeBMI Banks - Southeast Region Index 100.00 140.94 126.37 180.49 146.81 151.44 Source: S&P Global Market Intelligence © 2024 62 SELECTED QUARTERLY INFORMATION QUARTERLY CONSOLIDATED INCOME STATEMENTS (UNAUDITED) 2023 Quarters 2022 Quarters (In thousands, except per share data) Fourth Third Second First Fourth Third Second First Net interest income: Interest income $ 176,855 $ 179,846 $ 174,283 $ 157,991 $ 127,109 $ 91,404 $ 83,749 $ 78,232 Interest expense 66,036 60,540 47,320 26,839 7,400 3,120 2,102 1,710 Net interest income 110,819 119,306 126,963 131,152 119,709 88,284 81,647 76,522 Provision for credit losses 3,990 2,694 (764) 31,598 14,129 4,676 822 6,556 Net interest income after provision for credit losses on loans 106,829 116,612 127,727 99,554 105,580 83,608 80,825 69,966 Noninterest income: Service charges on deposit accounts 4,828 4,648 4,560 4,242 3,996 3,504 3,408 2,801 Interchange income 2,433 1,684 5,066 4,694 4,650 4,138 4,255 4,128 Wealth management income 3,261 3,138 3,318 3,063 2,886 2,732 2,774 2,659 Mortgage banking fees 378 410 576 426 426 434 932 1,686 Insurance agency income 1,066 1,183 1,160 1,101 805 — — — SBA gains 921 613 249 322 105 108 473 156 BOLI income 2,220 2,197 2,068 1,916 1,526 1,363 1,349 1,334 Other income 4,668 4,307 4,755 6,574 3,239 4,186 4,073 3,061 Securities (losses) gains, net (2,437) (387) (176) 107 18 (362) (300) (452) Total noninterest income 17,338 17,793 21,576 22,445 17,651 16,103 16,964 15,373 Noninterest expenses: Salaries and wages 38,435 46,431 45,155 47,616 45,405 28,420 28,056 28,219 Employee benefits 6,678 7,206 7,472 8,562 5,300 4,074 4,151 5,501 Outsourced data processing costs 8,609 8,714 20,222 14,553 9,918 5,393 6,043 6,156 Telephone and data lines 1,196 1,409 1,518 1,081 1,185 973 908 733 Occupancy 6,316 6,349 7,065 6,938 5,457 5,046 4,050 3,986 Furniture and equipment 2,028 2,052 2,345 2,267 1,944 1,462 1,588 1,426 Marketing 2,995 1,876 2,047 2,238 1,772 1,461 1,882 1,171 Legal and professional fees 3,294 2,679 4,062 7,479 9,174 3,794 2,946 4,789 FDIC assessments 2,813 2,258 2,116 1,443 889 760 699 789 Amortization of intangibles 6,888 7,457 7,654 6,727 4,763 1,446 1,446 1,446 Other real estate owned expense and net loss (gain) on sale 573 274 (57) 195 (411) 9 (968) (164) Provision for credit losses on unfunded commitments — — — 1,239 — 1,015 — 142 Other 6,542 7,210 8,266 7,137 6,114 7,506 5,347 4,723 Total noninterest expenses 86,367 93,915 107,865 107,475 91,510 61,359 56,148 58,917 Income before income taxes 37,800 40,490 41,438 14,524 31,721 38,352 41,641 26,422 Income taxes 8,257 9,076 10,189 2,697 7,794 9,115 8,886 5,834 Net income $ 29,543 $ 31,414 $ 31,249 $ 11,827 $ 23,927 $ 29,237 $ 32,755 $ 20,588 63 2023 Quarters 2022 Quarters (In thousands, except per share data) Fourth Third Second First Fourth Third Second First Per Common Share Data Net income diluted $ 0.35 $ 0.37 $ 0.37 $ 0.15 $ 0.34 $ 0.47 $ 0.53 $ 0.33 Net income basic 0.35 0.37 0.37 0.15 0.34 0.48 0.53 0.34 Cash dividends declared: Common stock $ 0.18 $ 0.18 $ 0.18 $ 0.17 $ 0.17 $ 0.17 $ 0.17 $ 0.13 Market price common stock: Low close 19.59 21.51 18.83 21.31 29.60 30.23 31.46 32.43 High close 29.28 27.01 23.85 33.50 34.94 36.75 35.21 39.15 Bid price at end of period 28.46 21.82 21.78 23.18 31.19 30.23 33.04 35.02 64
Particularly important are the assumptions driving prepayments and 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 our modeling of EVE.
Particularly important are the assumptions driving prepayments and the expected changes in balances and pricing of the indeterminate life deposit portfolios. Core deposits are a more significant 54 funding source for the Company, making the lives attached to core deposits more important to the accuracy of our modeling of EVE.
The Company periodically reassesses its assumptions regarding the indeterminate lives of core deposits utilizing an independent third party resource to assist. 60 The following table presents the projected impact of a change in interest rates on the balance sheet.
The Company periodically reassesses its assumptions regarding the indeterminate lives of core deposits utilizing an independent third party resource to assist. The following table presents the projected impact of a change in interest rates on the balance sheet.
The following table presents the ALCO simulation model's projected impact of a change in interest rates on the projected baseline net interest income for the 12 and 24 month periods beginning on January 1, 2023, holding all other changes in the balance sheet static.
The following table presents the ALCO simulation model's projected impact of a change in interest rates on the projected baseline net interest income for the 12 and 24 month periods beginning on January 1, 2024, holding all other changes in the balance sheet static.
BMI Banks - Southeast Region Index for the same period. The graph and table assume that $100 was invested on December 29, 2017 (the last day of trading for the year ended December 31, 2017) in each of Seacoast common stock, the NASDAQ Composite Index and the S&P U.S. BMI Banks - Southeast Region Index.
BMI Banks - Southeast Region Index for the same period. The graph and table assume that $100 was invested on December 31, 2018 (the last day of trading for the year ended December 31, 2018) in each of Seacoast common stock, the NASDAQ Composite Index and the S&P U.S. BMI Banks - Southeast Region Index.
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 nor changes in balance sheet size or mix. % Change in Projected Baseline Net Interest Income December 31, 2022 December 31, 2021 Changes in Interest Rates 1-12 months 13-24 months 1-12 months 13-24 months +2.00% 7.1% 9.9% 13.4% 19.6% +1.00% 3.5 4.8 6.7 10.1 Current — — — — -1.00% (3.7) (5.9) (2.5) (8.8) -2.00% (8.9) (14.4) N/A N/A The Company's calculation of interest rate sensitivity for the year ended December 31, 2022 is presented below.
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 nor changes in balance sheet size or mix. % Change in Projected Baseline Net Interest Income December 31, 2023 Changes in Interest Rates 1-12 months 13-24 months +2.00% (9.2%) (7.7%) +1.00% (3.7) (2.4) Current — — -1.00% 1.3 — -2.00% 2.6 (1.2) -3.00% 1.7 (5.3) The Company's calculation of interest rate sensitivity for the year ended December 31, 2023 is presented below.
This change in interest rates assumes parallel shifts in the yield curve and does not take into account changes in the slope of the yield curve. % Change in Economic Value of Equity Changes in Interest Rates 2022 2021 +2.00% 8.1% 18.6% +1.00% 4.3 10.2 Current — — -1.00% (5.4) (10.8) -2.00% (13.9) N/A While an instantaneous and severe shift in interest rates is used in this analysis, a gradual shift in interest rates would have a much more modest impact.
This change in interest rates assumes parallel shifts in the yield curve and does not take into account changes in the slope of the yield curve. % Change in Economic Value of Equity Changes in Interest Rates 2023 +2.00% (14.8) +1.00% (6.8) Current — -1.00% 4.3 -2.00% 5.7 -3.00% 6.7 While an instantaneous and severe shift in interest rates is used in this analysis, a gradual shift in interest rates would have a much more modest impact.
The balances of interest rate sensitive assets and liabilities are presented in the periods in which they reprice to market rates or mature. The amounts are aggregated to reflect the interest rate sensitivity gap. This analysis includes assumptions for prepayments of loans and securities and assumptions for core deposit re-pricing.
The balances of interest rate sensitive assets and liabilities are presented in the periods in which they reprice to market rates or mature. The amounts are aggregated to reflect the interest rate sensitivity gap.
Mortgage originations and re-financings tend 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. 61 Table 1 - Capital Resources December 31, (In thousands, except percentages) 2022 2021 Tier 1 Capital Common stock $ 7,162 $ 5,850 Additional paid in capital 1,377,698 963,747 Retained earnings 423,863 358,598 Treasury stock (13,019) (10,569) Goodwill (480,319) (252,154) Intangibles (71,285) (12,998) Other 1 33,195 23,182 Common Equity Tier 1 Capital $ 1,277,295 $ 1,075,656 Qualifying subordinated debt $ 84,533 $ 71,646 Other 4 4 Total Tier 1 Capital $ 1,361,832 $ 1,147,306 Tier 2 Capital Allowance for credit losses on loans 1 , as limited $ 92,336 $ 53,579 Total Tier 2 Capital 92,336 53,579 Total Risk-Based Capital $ 1,454,168 $ 1,200,885 Risk weighted assets $ 9,208,859 $ 6,595,378 Common equity Tier 1 ratio (CET1) 13.87 % 16.31 % Regulatory minimum 2 4.50 4.50 Tier 1 capital ratio 14.79 17.40 Regulatory minimum 2 6.00 6.00 Total capital ratio 15.79 18.21 Regulatory minimum 2 8.00 8.00 Tier 1 capital to adjusted total assets 11.46 11.68 Regulatory minimum 4.00 4.00 Shareholders' equity to assets 13.24 13.54 Average shareholders' equity to average total assets 12.84 13.02 Tangible shareholders' equity to tangible assets 9.08 11.09 1 Upon adoption of the CECL accounting standard in 2020, the Company elected, in accordance with interagency guidance, to delay the estimated impact on regulatory capital resulting from the implementation of CECL.
Mortgage origination and refinancing tends to slow as interest rates increase, and higher interest rates will likely reduce the Company’s earnings from such activities and the income from the sale of residential mortgage loans in the secondary market. 55 Table 1 - Capital Resources December 31, (In thousands, except percentages) 2023 2022 Tier 1 Capital Common stock $ 8,486 $ 7,162 Additional paid in capital 1,808,883 1,377,698 Retained earnings 467,305 423,863 Treasury stock (16,710) (13,019) Goodwill (732,417) (480,319) Intangibles (95,645) (71,285) Other 1 53,597 33,195 Common Equity Tier 1 Capital $ 1,493,499 $ 1,277,295 Qualifying Trust Preferred Debt $ 72,207 $ 84,533 Other 4 4 Total Tier 1 Capital $ 1,565,710 $ 1,361,832 Tier 2 Capital Allowance for credit losses on loans 1 , as limited $ 126,553 $ 92,336 Qualifying subordinated debt 21,534 — Total Tier 2 Capital 148,087 92,336 Total Risk-Based Capital $ 1,713,797 $ 1,454,168 Risk weighted assets $ 10,766,942 $ 9,208,859 Common equity Tier 1 ratio (CET1) 13.87 % 13.87 % Regulatory minimum 2 4.50 4.50 Tier 1 capital ratio 14.54 14.79 Regulatory minimum 2 6.00 6.00 Total capital ratio 15.92 15.79 Regulatory minimum 2 8.00 8.00 Tier 1 capital to adjusted total assets 11.00 11.46 Regulatory minimum 4.00 4.00 Shareholders' equity to assets 14.46 13.24 Average shareholders' equity to average total assets 13.85 12.84 Tangible shareholders' equity to tangible assets 9.31 9.08 1 Upon adoption of the CECL accounting standard in 2020, the Company elected, in accordance with interagency guidance, to delay the estimated impact on regulatory capital resulting from the implementation of CECL.
The Company utilizes interest rate floors for certain variable rate loans to offset the potential impact of declining interest rates. The computations of interest rate sensitivity are based on the static balance sheet and do not necessarily include certain actions management may undertake to manage this risk in response to changes in interest rates in the future.
This analysis includes assumptions for prepayments of loans and securities and assumptions for core deposit re-pricing. 53 The computations of interest rate sensitivity are based on the static balance sheet and do not necessarily include certain actions management may undertake to manage this risk in response to changes in interest rates in the future.
As of December 31, 2022 and 2021, the adjustment to Tier 1 Capital was $18.5 million and $23.0 million, respectively, and the adjustment to Tier 2 Capital was $22.6 million and $28.5 million, respectively. 2 Excludes the Basel III capital conservation buffer of 2.5% which, if not exceeded, may constrain dividends, equity repurchases and compensation. 62 Table 2 - Loans Outstanding December 31, (In thousands) 2022 2021 Amount % to Total Loans Amount % to Total Loans Construction and land development $ 587,332 7 % $ 230,824 4 % Commercial real estate - owner occupied 1,478,302 18 % 1,197,774 20 % Commercial real estate - non-owner occupied 2,589,774 32 % 1,736,439 29 % Residential real estate 1,849,503 23 % 1,425,354 24 % Commercial and financial 1,348,636 17 % 1,069,356 18 % Consumer 286,587 3 % 174,175 3 % Paycheck Protection Program 4,590 — % 91,107 2 % Total Loans $ 8,144,724 100 % $ 5,925,029 100 % 63 Table 3 - Loan Maturity Distribution The following table presents loans by maturity, separately presenting fixed rate loans from those with floating or adjustable rates.
As of December 31, 2023 and 2022, the adjustment to Tier 1 Capital was $12.3 million and $18.5 million, respectively, and the adjustment to Tier 2 Capital was $15.1 million and $22.6 million, respectively. 2 Excludes the Basel III capital conservation buffer of 2.5% which, if not exceeded, may constrain dividends, equity repurchases and compensation. 56 Table 2 - Loans Outstanding December 31, (In thousands) 2023 2022 Amount % to Total Loans Amount % to Total Loans Construction and land development $ 767,622 8 % $ 587,332 7 % Commercial real estate - owner occupied 1,670,281 17 1,478,302 18 Commercial real estate - non-owner occupied 3,319,890 33 2,589,774 32 Residential real estate 2,445,692 24 1,849,503 23 Commercial and financial 1,607,888 16 1,353,226 17 Consumer 251,567 2 286,587 3 Total Loans $ 10,062,940 100 % $ 8,144,724 100 % 57 Table 3 - Loan Maturity Distribution The following table presents loans by maturity, separately presenting fixed rate loans from those with floating or adjustable rates.
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 and 200 basis point increases and 100 basis point and 200 basis point decreases on net interest income and is monitored at least quarterly.
The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to assess the impact of market interest rate swings. The analysis of the impact on net interest income over a twelve month period is subjected to instantaneous changes in market rates on net interest income and is monitored at least quarterly.
Treasury securities and obligations of U.S. government agencies 2.50 % 4.67 % — % 4.41 % 4.46 % Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities — 2.96 2.61 1.84 2.07 Private mortgage-backed securities and collateralized mortgage obligations — — — 2.59 2.59 Collateralized loan obligations — 6.01 5.67 5.77 5.74 Obligations of state and political subdivisions 2.65 2.76 2.41 2.45 2.61 Other debt securities — — — 4.92 4.92 Total Available-For-Sale Debt Securities 2.65 % 3.06 % 4.03 % 2.44 % 2.71 % 1 All yields and rates have been computed using amortized costs. 67 Table 8 - Maturity Distribution of Held-to-Maturity Debt Securities December 31, 2022 (In thousands) Less than 1 year After 1-5 Years After 5-10 Years After 10 Years Total Amortized Cost Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities $ 5,531 $ 1,181 $ 100,111 $ 640,585 $ 747,408 Total Held-to-Maturity Debt Securities $ 5,531 $ 1,181 $ 100,111 $ 640,585 $ 747,408 Fair Value Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities $ 5,470 $ 1,146 $ 88,810 $ 522,315 $ 617,741 Total Held-to-Maturity Debt Securities $ 5,470 $ 1,146 $ 88,810 $ 522,315 $ 617,741 Weighted Average Yield 1 Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 2.75 % 1.55 % 2.43 % 1.87 % 1.95 % Total Held-to-Maturity Debt Securities 2.75 % 1.55 % 2.43 % 1.87 % 1.95 % 1 All yields and rates have been computed using amortized costs. 68 Stock Performance Graph The line graph below compares the cumulative total stockholder return on Seacoast common stock with the cumulative total return of the NASDAQ Composite Index and the S&P U.S.
Treasury securities and obligations of U.S. government agencies 3.99 % 4.81 % 6.43 % 5.83 % 5.75 % Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 2.79 3.69 3.09 2.03 2.03 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 2.92 3.16 3.14 5.69 3.67 Private mortgage-backed securities and collateralized mortgage obligations — — 6.31 2.76 2.79 Collateralized loan obligations — 7.02 6.99 7.02 7.01 Obligations of state and political subdivisions 2.52 — 1.55 2.16 2.25 Other debt securities — 6.70 — 7.15 7.03 Total Available-For-Sale Debt Securities 2.92 % 3.44 % 5.11 % 2.96 % 3.26 % 1 All yields and rates have been computed using amortized costs. 60 Table 8 - Maturity Distribution of Held-to-Maturity Debt Securities December 31, 2023 (In thousands) Less than 1 Year After 1-5 Years After 5-10 Years After 10 Years Total Amortized Cost Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities $ — $ — $ — $ 590,676 $ 590,676 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 196 20,679 62,500 6,262 89,637 Total Held-to-Maturity Debt Securities $ 196 $ 20,679 $ 62,500 $ 596,938 $ 680,313 Fair Value Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities $ — $ — $ — $ 478,930 $ 478,930 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 195 18,960 55,493 4,781 79,429 Total Held-to-Maturity Debt Securities $ 195 $ 18,960 $ 55,493 $ 483,711 $ 558,359 Weighted Average Yield 1 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities — % — % — % 1.88 % 1.88 % Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities — 2.48 2.29 1.67 2.28 Total Held-to-Maturity Debt Securities — % 2.48 % 2.29 % 1.88 % 1.93 % 1 All yields and rates have been computed using amortized costs. 61 Stock Performance Graph The line graph below compares the cumulative total stockholder return on Seacoast common stock with the cumulative total return of the NASDAQ Composite Index and the S&P U.S.
Table 5 - Allowance for Credit Losses on Loans December 31, (In thousands, except percentages) 2022 2021 2020 Allocation by Loan Type Amount % of Total Allowance Amount % of Total Allowance Amount % of Total Allowance Construction and land development $ 6,464 6 % $ 2,751 3 % $ 4,920 5 % Commercial real estate - owner occupied 6,051 5 8,579 10 9,868 11 Commercial real estate - non-owner occupied 43,258 38 36,617 44 38,266 41 Residential real estate 29,605 26 12,811 16 17,500 19 Commercial and financial 15,648 14 19,744 24 18,690 20 Consumer 12,869 11 2,813 3 3,489 4 Paycheck Protection Program — — — — — — Total Allowance for Credit Losses on Loans $ 113,895 100 % $ 83,315 100 % $ 92,733 100% 65 Table 6 - Nonperforming Assets December 31, (In thousands, except percentages) 2022 2021 2020 Nonaccrual loans 1,2 Construction and land development $ 549 $ 259 $ 167 Commercial real estate loans - owner occupied 2,340 3,966 8,181 Commercial real estate loans - non-owner occupied 4,483 5,905 8,084 Residential real estate loans 9,457 13,045 12,492 Commercial and financial loans 11,672 6,869 6,604 Consumer loans 342 554 582 Total Nonaccrual Loans $ 28,843 $ 30,598 $ 36,110 Other real estate owned Construction and land development $ 109 $ 8,828 $ 6,715 Commercial real estate loans - non-owner occupied 221 3,395 5,963 Residential real estate loans 200 — 72 Bank branches closed 1,771 1,395 — Total Other Real Estate Owned $ 2,301 $ 13,618 $ 12,750 Total Nonperforming Assets $ 31,144 $ 44,216 $ 48,860 Amount of loans outstanding at end of year 2 $ 8,144,724 $ 5,925,029 $ 5,735,349 Ratio of total nonperforming assets to loans outstanding and other real estate owned at end of period 0.38 % 0.74 % 0.85 % Ratio of total nonaccrual loans to loans outstanding at end of period 0.35 0.52 0.63 Ratio of allowance for credit losses on loans to total nonaccrual loans 395 272 257 Accruing loans past due 90 days or more $ 1,848 $ 121 $ 63 Loans restructured and in compliance with modified terms 3 4,032 3,917 4,182 1 Interest income that could have been recorded during 2022, 2021, and 2020 related to nonaccrual loans was $1.6 million, $0.9 million, and $1.1 million, respectively, none of which was included in interest income or net income. 2 Net of unearned income. 3 Interest income that would have been recorded based on original contractual terms was $0.3 million, $0.2 million, and $0.2 million, respectively, for 2022, 2021, and 2020.
Table 5 - Allowance for Credit Losses on Loans December 31, (In thousands, except percentages) 2023 2022 Allocation by Loan Type Amount % of Total Allowance Amount % of Total Allowance Construction and land development $ 8,637 6 % $ 6,464 6 % Commercial real estate - owner occupied 5,529 4 6,051 5 Commercial real estate - non-owner occupied 48,288 32 43,258 38 Residential real estate 39,016 26 29,605 26 Commercial and financial 34,343 23 15,648 14 Consumer 13,118 9 12,869 11 Total Allowance for Credit Losses on Loans $ 148,931 100 % $ 113,895 100 % 58 Table 6 - Nonperforming Assets December 31, (In thousands, except percentages) 2023 2022 Nonaccrual loans 1,2 Construction and land development $ 824 $ 549 Commercial real estate loans - owner occupied 9,684 2,340 Commercial real estate loans - non-owner occupied 8,735 4,483 Residential real estate loans 9,986 9,457 Commercial and financial loans 34,693 11,672 Consumer loans 1,182 342 Total Nonaccrual Loans $ 65,104 $ 28,843 Other real estate owned Construction and land development $ — $ 109 Commercial real estate loans - non-owner occupied 221 221 Residential real estate loans — 200 Bank branches closed 7,339 1,771 Total Other Real Estate Owned $ 7,560 $ 2,301 Total Nonperforming Assets $ 72,664 $ 31,144 Amount of loans outstanding at end of year 2 $ 10,062,940 $ 8,144,724 Ratio of total nonperforming assets to loans outstanding and other real estate owned at end of period 0.72 % 0.38 % Ratio of total nonaccrual loans to loans outstanding at end of period 0.65 0.35 Ratio of allowance for credit losses on loans to total nonaccrual loans 229 395 Accruing loans past due 90 days or more $ 1,179 $ 1,848 1 Interest income that could have been recorded during 2023 and 2022 related to nonaccrual loans was $0.5 million and $1.6 million, respectively, none of which was included in interest income or net income. 2 Net of unearned income. 59 Table 7 - Maturity Distribution of Available-For-Sale Debt Securities December 31, 2023 (In thousands) Less than 1 Year After 1-5 Years After 5-10 Years After 10 Years Total Amortized Cost U.S.
Index December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Seacoast Banking Corporation of Florida 100.00 103.21 121.26 116.82 142.04 127.69 NASDAQ Composite Index 100.00 97.16 132.81 192.47 235.15 158.65 S&P U.S.
Index December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Seacoast Banking Corporation of Florida 100.00 117.49 113.18 137.62 123.72 116.33 NASDAQ Composite Index 100.00 136.69 198.10 242.03 163.28 236.17 S&P U.S.
Removed
The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to assess the impact of market interest rate swings.
Added
This may include specific efforts to change the size of the balance sheet or the relative composition of fixed versus variable rate assets and liabilities as well as qualitative changes that could impact quantitative performance.
Removed
This may include specific efforts to change the size of the balance sheet or the relative composition of fixed versus variable rate assets and liabilities as well as qualitative changes that could impact quantitative performance. 59 Interest Rate Sensitivity Analysis 1 December 31, 2022 (In thousands) 0-3 Months 4-12 Months 1-5 Years Over 5 Years Total Federal funds sold and interest bearing deposits $ 84,428 $ — $ — $ — $ 84,428 Debt securities 2 495,159 152,874 712,462 1,258,655 2,619,150 Loans 3 2,213,822 1,151,747 3,572,948 1,209,358 8,147,875 Other assets 47,879 — — 8,220 56,099 Earning assets $ 2,841,288 $ 1,304,621 $ 4,285,410 $ 2,476,233 $ 10,907,552 Non-maturity deposits 107,130 137,817 1,188,713 3,954,296 5,387,956 Time deposits 126,239 341,418 54,381 628 522,666 Borrowings 319,291 — 12,250 75,021 406,562 Interest bearing liabilities $ 552,660 $ 479,235 $ 1,255,344 $ 4,029,945 $ 6,317,184 Interest rate swaps 300,000 — — — 300,000 Interest sensitivity gap $ 1,988,628 $ 825,386 $ 3,030,066 $ (1,553,712) $ 4,290,368 Cumulative gap $ 1,988,628 $ 2,814,014 $ 5,844,080 $ 4,290,368 Cumulative gap to total earning assets 18 % 26 % 54 % 39 % Earning assets to interest bearing liabilities 514 % 272 % 341 % 61 % 1 The repricing dates may differ from contractual maturity dates for certain assets due to prepayment assumptions. 2 Securities are stated at carrying value. 3 Includes loans available-for-sale.
Added
Interest Rate Sensitivity Analysis 1 December 31, 2023 (In thousands) 0-3 Months 4-12 Months 1-5 Years Over 5 Years Total Federal funds sold and interest bearing deposits $ 285,528 $ — $ — $ — $ 285,528 Debt securities 2 424,938 178,038 791,899 1,121,458 2,516,333 Loans 3 2,699,669 1,289,320 4,234,040 1,844,302 10,067,331 Other Assets — — — 83,621 83,621 Earning assets $ 3,410,135 $ 1,467,358 $ 5,025,939 $ 3,049,381 $ 12,952,813 Non-maturity deposits 4,401,164 321,812 266,291 1,766,685 6,755,952 Time deposits 782,833 661,788 30,822 559 1,476,002 Borrowings 449,936 — 62,561 18,378 530,875 Interest bearing liabilities $ 5,633,933 $ 983,600 $ 359,674 $ 1,785,622 $ 8,762,829 Interest rate swaps 600,000 — (600,000) — — Interest sensitivity gap $ (1,623,798) $ 483,758 $ 4,066,265 $ 1,263,759 $ 4,189,984 Cumulative gap $ (1,623,798) $ (1,140,040) $ 2,926,225 $ 4,189,984 Cumulative gap to total earning assets (13 %) (9 %) 23 % 32 % Earning assets to interest bearing liabilities 61 % 149 % 1397 % 171 % 1 The repricing dates may differ from contractual maturity dates for certain assets due to prepayment assumptions. 2 Securities are stated at carrying value. 3 Includes loans held for sale.
Removed
December 31, 2022 After one year but within five years: After five year but within fifteen years: After fifteen years: (In thousands) In one year or less Floating or adjustable Fixed Floating or adjustable Fixed Floating or adjustable Fixed Total Construction and Land Development $ 151,992 $ 139,698 $ 32,183 $ 97,990 $ 40,741 $ 87,523 $ 37,205 $ 587,332 Commercial Real Estate - Owner Occupied 64,654 62,224 361,710 187,816 727,611 45,477 28,810 1,478,302 Commercial Real Estate - Non-owner Occupied 257,633 242,083 800,769 593,525 674,069 13,181 8,514 2,589,774 Residential Real Estate 47,818 16,584 19,830 323,501 123,987 406,034 911,749 1,849,503 Commercial and Financial 248,248 151,449 419,128 118,141 195,336 165,318 51,016 1,348,636 Consumer 56,843 21,152 77,955 13,274 58,905 27,512 30,946 286,587 Paycheck Protection Program 54 — 4,536 — — — — 4,590 Total $ 827,242 $ 633,190 $ 1,716,111 $ 1,334,247 $ 1,820,649 $ 745,045 $ 1,068,240 $ 8,144,724 64 Table 4 - Select Credit Ratios For the Year Ended December 31, (In thousands, except percentages) 2022 2021 2020 Daily average loans outstanding 1 $ 6,838,266 $ 5,751,064 $ 5,678,807 Ratio of allowance for credit losses on loans to loans outstanding at end of year 1.40 % 1.41 % 1.62 % Ratio of net charge-offs (recoveries) to average loans outstanding Construction and land development — % — % — % Commercial real estate - owner occupied — % — % — % Commercial real estate - non-owner occupied — % 0.02 % — % Residential real estate — % (0.02) % — % Commercial and financial — % 0.05 % 0.10 % Consumer 0.01 % — % 0.03 % Paycheck Protection Program — % — % — % Total ratio of net charge-offs to average loans outstanding 0.01 % 0.05 % 0.13 % 1 Net of unearned income.
Added
December 31, 2023 After one year but within five years: After five years but within fifteen years: After fifteen years: (In thousands) In one year or less Floating or adjustable Fixed Floating or adjustable Fixed Floating or adjustable Fixed Total Construction and Land Development $ 197,008 $ 153,313 $ 67,833 $ 98,822 $ 46,411 $ 160,549 $ 43,686 $ 767,622 Commercial Real Estate - Owner Occupied 87,415 91,503 490,522 254,293 679,573 54,870 12,105 1,670,281 Commercial Real Estate - Non-owner Occupied 359,080 239,473 1,147,472 514,861 1,018,529 32,924 7,551 3,319,890 Residential Real Estate 10,571 20,400 13,303 322,655 144,353 1,004,145 930,265 2,445,692 Commercial and Financial 346,281 135,645 504,206 97,224 270,603 179,926 74,003 1,607,888 Consumer 11,568 35,957 79,469 12,325 58,870 24,284 29,094 251,567 Total $ 1,011,923 $ 676,291 $ 2,302,805 $ 1,300,180 $ 2,218,339 $ 1,456,698 $ 1,096,704 $ 10,062,940 Table 4 - Select Credit Ratios For the Year Ended December 31, (In thousands, except percentages) 2023 2022 2021 Daily average loans outstanding 1 $ 9,889,070 $ 6,838,266 $ 5,751,064 Ratio of allowance for credit losses on loans to loans outstanding at end of year 1.48 % 1.40 % 1.41 % Ratio of net charge-offs (recoveries) to average loans outstanding Construction and land development — % — % — % Commercial real estate - owner occupied — — — Commercial real estate - non-owner occupied — — 0.02 Residential real estate — — (0.02) Commercial and financial 0.17 — 0.05 Consumer 0.05 0.01 — Total ratio of net charge-offs to average loans outstanding 0.22 % 0.01 % 0.05 % 1 Net of unearned income.
Removed
The amount included in interest income under the modified terms for 2022, 2021, and 2020 was $0.1 million, $0.2 million, and $0.3 million respectively. 66 Table 7 - Maturity Distribution of Available-For-Sale Debt Securities December 31, 2022 (In thousands) Less than 1 Year After 1-5 Years After 5-10 Years After 10 Years Total Amortized Cost U.S.
Added
Treasury securities and obligations of U.S. government agencies $ 1,185 $ 6,066 $ 8,965 $ 21,502 $ 37,718 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 13 2,659 5,255 1,144,826 1,152,753 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 24,950 170,046 109,497 80,520 385,013 Private mortgage-backed securities and collateralized mortgage obligations — — 1,161 134,717 135,878 Collateralized loan obligations — 4,038 114,383 182,434 300,855 Obligations of state and political subdivisions 3,353 — 500 6,633 10,486 Other debt securities — 7,389 — 19,210 26,599 Total Available-For-Sale Debt Securities $ 29,501 $ 190,198 $ 239,761 $ 1,589,842 $ 2,049,302 Fair Value U.S.
Removed
Treasury securities and obligations of U.S. government agencies $ 89 $ 3,104 $ — $ 10,620 $ 13,813 Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities — 226,164 137,572 1,197,461 1,561,197 Private mortgage-backed securities and collateralized mortgage obligations — — — 179,148 179,148 Collateralized loan obligations — 7,999 122,722 182,434 313,155 Obligations of state and political subdivisions 1,901 14,405 3,123 9,921 29,350 Other debt securities — — — 22,640 22,640 Total Available-For-Sale Debt Securities $ 1,990 $ 251,672 $ 263,417 $ 1,602,224 $ 2,119,303 Fair Value U.S.
Added
Treasury securities and obligations of U.S. government agencies $ 1,172 $ 6,069 $ 8,929 $ 21,275 $ 37,445 Residential mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 13 2,619 5,065 961,684 969,381 Commercial mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities 24,465 163,673 101,636 78,498 368,272 Private mortgage-backed securities and collateralized mortgage obligations — — 1,086 123,917 125,003 Collateralized loan obligations — 4,028 113,880 181,547 299,455 Obligations of state and political subdivisions 3,332 — 433 5,625 9,390 Other debt securities — 7,382 — 19,692 27,074 Total Available-For-Sale Debt Securities $ 28,982 $ 183,771 $ 231,029 $ 1,392,238 $ 1,836,020 Weighted Average Yield 1 U.S.
Removed
Treasury securities and obligations of U.S. government agencies $ 89 $ 3,139 $ — $ 10,419 $ 13,647 Mortgage-backed securities and collateralized mortgage obligations of U.S. government-sponsored entities — 215,691 123,584 999,378 1,338,653 Private mortgage-backed securities and collateralized mortgage obligations — — — 166,387 166,387 Collateralized loan obligations — 7,796 119,591 175,517 302,904 Obligations of state and political subdivisions 1,998 14,280 3,030 8,433 27,741 Other debt securities — — — 22,410 22,410 Total Available-For-Sale Debt Securities $ 2,087 $ 240,906 $ 246,205 $ 1,382,544 $ 1,871,742 Weighted Average Yield 1 U.S.

Other SBCF 10-K year-over-year comparisons