SEACOAST BANKING CORP OF FLORIDA (SBCF) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

The emphasis of this discussion will be on the years ended December 31, 2024 and 2023. Additional information about the Company’s financial condition and results of operations in 2022 and changes in the Company’s financial condition and results of operations from 2022 to 2023 may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

This discussion and analysis contains statements that may be considered “forward-looking statements” as defined in, and subject to the protections of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. See the “Special Cautionary Notice Regarding Forward-Looking Statements” for additional information regarding forward-looking statements.

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

Overview – Strategy and Results

Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”), a financial holding company registered under the BHC Act of 1956, is one of the largest banks in Florida, with $15.2 billion in assets and $12.2 billion in deposits as of December 31, 2024. Its principal subsidiary is Seacoast National Bank (“Seacoast Bank”), a wholly owned national banking association. The Company provides integrated financial services including commercial and consumer banking, wealth management, mortgage and insurance services to customers through advanced online and mobile banking solutions, and Seacoast Bank's network of 77 full-service branches across Florida.

Seacoast is executing a balanced growth strategy, combining organic growth with strategic acquisitions in Florida's most attractive growing markets. The Company has expanded its presence across the state with 16 acquisitions since 2014, strengthening market share, increasing the customer base and lowering operating costs through economies of scale. The acquisition of Professional Holding Corp., parent company of Professional Bank, was completed on January 31, 2023. The transaction further expanded Seacoast’s presence in the tri-county South Florida market, which includes Miami-Dade, Broward, and Palm Beach counties, Florida’s largest MSA and the 8th largest in the nation. The Company's acquisition strategy has not only increased customer households and been accretive to earnings, but has also opened markets and expanded Seacoast's customer base.

Results of Operations

2024 Financial Performance Highlights

•Net income of $121.0 million, an increase of $17.0 million, or 16%, compared to 2023, and adjusted net income1 of $132.5 million, a decrease of $0.8 million, or 1%, compared to 2023.

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

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

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

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

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

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

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

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

Net Interest Income and Margin

Net interest income for the year ended December 31, 2024, totaled $432.0 million, decreasing $56.3 million, or 12%, compared to the year ended December 31, 2023. Higher interest expense on deposits resulting from higher short term rates and higher balances was partially offset by higher yields and higher balances on loans and securities. Net interest income (on a fully taxable equivalent basis)1 for the year ended December 31, 2024, was $433.0 million, decreasing $56.0 million, or 11%, compared to the year ended December 31, 2023. Accretion of purchase discount on acquired loans added $41.7 million in interest income for the year ended December 31, 2024, compared to $56.7 million for the year ended December 31, 2023. Purchase marks from bank acquisitions in previous years are expected to continue to decline.

Net interest margin (on a fully taxable equivalent basis)1 decreased 53 basis points to 3.24% in 2024 compared to 3.77% in 2023. Average interest-earning assets increased $379.9 million, or 3%, during 2024 to $13.4 billion compared to $13.0 billion in 2023. During 2024, yields on interest-earning assets increased to 5.44% from 5.32% in 2023 due to the higher interest rate environment. Average interest-bearing liabilities increased $797.6 million, or 10%, during 2024 to $9.2 billion, including a $788.2 million, or 10%, increase in interest-bearing deposits. The cost of average interest-bearing liabilities in 2024 increased 80 basis points to 3.20% from 2.40% in 2023, reflecting the impact of higher interest rates.

In the fourth quarter of 2024, net interest income and net interest margin began to improve, with a decline in deposit costs following cuts to the Federal Funds rate. The Company expects a continued increase in net interest income and expansion of net interest margin into 2025 if short term interest rates remain flat or continue to decline.

During 2024, average securities increased $83.4 million to $2.7 billion. Yields on securities increased 50 basis points from 3.18% in 2023 to 3.68% in 2024, benefiting from higher rates on new purchases and favorable repricing on variable rate bonds.

Average loans totaled $10.1 billion for the year ended December 31, 2024, increasing $207.1 million, or 2%, compared to $9.9 billion for the year ended December 31, 2023. Yields on loans increased five basis points from 5.88% in 2023 to 5.93% in 2024, benefiting from higher rates on new production and increasing rates on variable rate loans. Accretion of purchase discounts on acquired loans added 42 basis points to loan yields in 2024, compared to 57 basis points in 2023.

During 2024, average transaction deposits (noninterest and interest-bearing demand deposits) decreased $703.5 million, or 10%, compared to 2023, as customers favored money market accounts, which increased $833.4 million, or 28% from 2023. The Company’s deposit mix remains favorable, with 86% of average deposit balances comprised of savings, money market, and demand deposits in 2024. The cost of average total deposits (including noninterest-bearing demand deposits) increased by 73 basis points to 2.23% in 2024, compared to 1.50% in 2023, primarily the result of higher short-term interest rates and an increasingly competitive deposit market.

Sweep repurchase agreements with customers averaged $269.3 million for the year ended December 31, 2024, a decrease of $1.7 million, or 1%, compared to $271.0 million for the year ended December 31, 2023. The average rate on customer repurchase accounts was 3.49% in 2024, compared to 3.07% in 2023.

The Company had an average balance of $184.0 million in FHLB borrowings outstanding for the year ended December 31, 2024, with an average interest rate of 4.20%. The average balance of FHLB borrowings was $175.2 million at 3.64% in 2023.

In 2024, average long-term debt of $106.6 million had an average rate of 7.02%. In 2023, average long-term debt of $104.2 million had an average rate of 6.96%.

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The following table details the Company’s average balance sheets, interest income and expenses, and yields and rates1, for the past three years:

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The following table shows the impact of changes in volume and rate on interest-earning assets and interest-bearing liabilities1:

Provision for Credit Losses

The provision for credit losses was $16.3 million in 2024 compared to $37.5 million in 2023. In 2024, the provision reflects additions to the allowance for credit losses in keeping with higher loan balances, partially offset by lower overall allowance coverage on total loans, consistent with generally stabilizing economic trends. Included in 2023 is $26.6 million of day-1 provision for credit losses on loans added through the acquisition of Professional.

Noninterest Income

Noninterest income (excluding securities gains and losses) totaled $91.4 million in 2024, an increase of $9.4 million, or 11%, compared to 2023. Noninterest income accounted for 17% of total revenue in 2024 and 14% in 2023 (net interest income plus noninterest income, excluding securities gains and losses).

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Noninterest income is detailed as follows:

Service charges on deposits for the year ended December 31, 2024 increased $2.6 million, or 14%, compared to the prior year to $20.9 million. This increase primarily reflects the Company's investments in talent and market expansion across the state, which have resulted in continued growth, particularly in treasury management services to commercial customers. Overdraft-related fees for both consumer and commercial accounts represented 32% of total service charges on deposits in 2024 compared to 35% in 2023.

Interchange revenue totaled $7.6 million in 2024, a decrease of 45% from $13.9 million in 2023. The decrease in interchange income was primarily due to the impact of the Durbin amendment, which became effective for the first time for the Company on July 1, 2023, limiting network interchange fees earned on debit card transactions.

Wealth management revenues, including brokerage commissions and fees and trust income, increased $2.4 million, or 19%, to $15.2 million for the year ended December 31, 2024. The wealth management team continued to demonstrate notable success in building relationships, contributing to a 20% increase in assets under management year-over-year to $2.1 billion as of December 31, 2024.

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

Mortgage banking fees remained flat at $1.8 million for the year ended December 31, 2024 compared to 2023. The impact on demand of higher interest rates and limited housing inventory have continued to result in lower saleable production.

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

Other income totaled $30.8 million in 2024, reflecting an increase of $8.4 million, or 37%, year-over-year. The increase reflects variability in income from SBIC investments, loan swap-related fees, gains on the strategic sales of nonperforming commercial real estate loans, and other fees correlating with growth in customers and accounts.

Securities losses in 2024 totaled $8.0 million compared to securities losses in 2023 of $2.9 million. In 2024, the Company sold approximately $217.0 million in available-for-sale securities, resulting in losses of $12.0 million, allowing for reinvestment at higher yields. These losses were partially offset by gains of $4.1 million on the sale of the Company’s holdings of Visa Class B stock.

Noninterest Expense

The Company has demonstrated its commitment to efficiency through disciplined, proactive management of its cost structure. Noninterest expenses in 2024 totaled $343.3 million, including $7.1 million related to branch consolidation and other expense reduction initiatives, and $0.3 million in costs to prepare for and recover from hurricane events. In 2023, noninterest expenses totaled $395.6 million, including $33.2 million in acquisition-related expenses and $5.2 million in expense reduction initiatives.

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Adjusted noninterest expense1 in 2024 totaled $335.9 million, a decrease of 6% from 2023, reflecting the success of strategic expense reduction initiatives executed in late 2023 and early 2024.

Salaries and wages totaled $162.3 million in 2024, a decrease of $15.3 million, or 9%, compared to 2023. The decline in 2024 reflects workforce reductions implemented in late 2023 and early 2024 to reduce overhead and offset revenue compression associated with higher interest rates. Results in 2023 also included $5.8 million in merger-related costs.

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

The Company utilizes third parties for core data processing systems. Ongoing data processing costs are directly related to the number of transactions processed and the negotiated rates associated with those transactions. Outsourced data processing costs totaled $36.6 million in 2024, a decrease of $15.5 million, or 30%, compared to 2023. Results in 2023 included $17.4 million in merger-related costs.

Total occupancy, furniture and equipment expenses in 2024 totaled $37.6 million, a decrease of $3.0 million, or 7%, compared to 2023. Lower costs in 2024 were achieved through consolidation of locations as part of the Company's expense reduction initiatives.

During 2024, marketing expenses totaled $10.8 million, an increase of $1.6 million, or 18%, compared to $9.2 million in 2023. Planned investments in branding and in marketing campaigns across the state led to higher marketing expenses in 2024.

Legal and professional fees decreased by $7.9 million in 2024, or 45%, to $9.6 million. Results in 2023 included $6.5 million in merger-related costs.

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

Amortization of intangibles decreased $4.8 million, or 17%, to $23.9 million during 2024 from $28.7 million in 2023. The acquisition of Professional in 2023 added $48.9 million in core deposit intangible assets, which are amortized using an accelerated amortization method.

Other real estate owned expense and net loss (gain) on sale was a net loss of $0.4 million in 2024, compared to a net loss of $1.0 million in 2023. Charges in each year primarily relate to valuation adjustments on former branch properties.

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

Other expense totaled $24.3 million and $29.2 million in 2024 and 2023, respectively. The decrease of $4.8 million, or 17%, reflects the Company's achievement of expense reduction initiatives in late 2023 and early 2024.

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Income Taxes

In 2024, the provision for income taxes totaled $34.9 million, compared to $30.2 million in 2023. The increase reflects higher pre-tax income in 2024. Discrete taxes related to share-based compensation resulted in a net expense of $0.2 million and a benefit of $0.5 million in 2024 and 2023, respectively.

Fourth Quarter Results and Analysis

Net income totaled $34.1 million in the fourth quarter of 2024, an increase of $3.4 million, or 11%, from the third quarter of 2024, and an increase of $4.5 million, or 15%, compared to the fourth quarter of 2023. Adjusted net income1 totaled $40.6 million, an increase of $10.0 million, or 33%, from the third quarter of 2024, and an increase of $9.2 million, or 29%, compared to the fourth quarter of 2023. Diluted earnings per share was $0.40 and adjusted diluted EPS12was $0.48 in the fourth quarter of 2024, compared to diluted EPS of $0.36 and adjusted diluted EPS1 of $0.36 in the third quarter of 2024 and compared to diluted EPS of $0.35 and adjusted diluted EPS1 of $0.37 in the fourth quarter of 2023.

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

Net interest income totaled $115.8 million in the fourth quarter of 2024, an increase of $9.1 million, or 9%, from the third quarter of 2024 and an increase of $5.0 million, or 4%, compared to the fourth quarter of 2023. The increase in the fourth quarter of 2024 was largely driven by a 26 basis point decline in the cost of deposits. Accretion on acquired loans totaled $11.7 million in the fourth quarter of 2024, $9.2 million in the third quarter of 2024, and $11.3 million in the fourth quarter of 2023.

Net interest margin increased 22 basis points to 3.39% in the fourth quarter of 2024, compared to 3.17% in the third quarter of 2024. Excluding the effects of accretion on acquired loans, net interest margin expanded 15 basis points to 3.05% in the fourth quarter of 2024, compared to 2.90% in the third quarter of 2024. Loan yields decreased one basis point from the prior quarter to 5.93%. Excluding the effects of accretion on acquired loans, loan yields decreased 10 basis points, from 5.58% in the third quarter of 2024 to 5.48% in the fourth quarter of 2024. Securities yields increased two basis points to 3.77%, compared to 3.75% in the prior quarter. The cost of deposits declined 26 basis points, from 2.34% in the prior quarter, to 2.08% in the fourth quarter of 2024. Lower interest expense on deposits reflects the impact of recent cuts to the Federal Funds rate.

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

Noninterest income, excluding securities gains and losses, totaled $25.5 million for the fourth quarter of 2024, an increase of $2.0 million, or 8%, when compared to the third quarter of 2024, and an increase of $5.7 million, or 29%, compared to the fourth quarter of 2023. Results for the fourth quarter of 2024 included an $8.0 million loss on the repositioning of a portion of the available-for-sale securities portfolio. Securities with an average book yield of 2.8% were sold, and the proceeds of approximately $113 million were reinvested in agency mortgage-backed securities with an average book yield of 5.4%, for an estimated earnback of less than three years. Other changes compared to the third quarter of 2024 included the following:

•Service charges on deposits totaled $5.1 million, a decrease of $0.3 million, or 5%, from the prior quarter and an increase of $0.3 million, or 6%, from the prior year quarter. The fourth quarter of 2024 was modestly impacted by hurricane-related fee waivers, while our investments in talent and significant market expansion across the state resulted in continued growth in treasury management services to commercial customers compared to the prior year.

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

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

•Other income totaled $10.3 million, an increase of $2.5 million, or 31%, from the prior quarter and an increase of $4.7 million, or 85% from the prior year quarter. Fourth quarter 2024 results include gains on SBIC investments and gains on the sale of two nonperforming commercial real estate loans.

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

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

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

•Employee benefits totaled $6.5 million, a decrease of $0.4 million, or 6%, compared to the prior quarter and a decrease of $0.1 million, or 2%, from the prior year quarter. The decrease from the prior quarter is due to seasonally lower 401(k) and payroll tax expense.

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

•Occupancy costs totaled $7.2 million, an increase of $0.1 million, or 2%, compared to the prior quarter and a decrease of $0.3 million, or 4%, from the prior year quarter. The fourth quarter of 2024 included $0.2 million in preparation and recovery costs related to Hurricane Milton.

•Marketing expenses totaled $2.1 million, reflecting a decrease of $0.6 million, or 22%, compared to the prior quarter and a decrease of $0.9 million, or 29%, from the prior year quarter, primarily associated with the timing of various marketing campaigns. We will continue to invest in marketing and branding supporting customer growth initiatives.

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

Explanation of Certain Unaudited Non-GAAP Financial Measures

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

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

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Financial Condition

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

Securities

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

At December 31, 2024, the Company had $2.4 billion in securities available-for-sale, and $635.2 million in securities held-to-maturity. The Company's total debt securities portfolio increased $340.0 million, or 12%, from December 31, 2023.

During the year ended December 31, 2024, there were $993.9 million of debt securities purchased and $428.0 million in paydowns and maturities. Debt securities with a fair value of $217.0 million were sold in 2024, resulting in $12.0 million in realized losses. The Company took advantage of favorable market conditions to reposition a portion of its AFS portfolio and reinvest the proceeds in debt securities at higher yields. During the year ended December 31, 2023, there were $100.9 million of debt securities purchased, $167.1 million acquired through the acquisition of Professional and $287.9 million in paydowns and maturities over the same period. $82.9 million of securities were sold in 2023, with $2.9 million in realized losses.

Debt securities generally return principal and interest monthly. The modified duration of the available-for-sale securities portfolio and the total portfolio was 4.7 and 4.9, respectively, at December 31, 2024, compared to 4.5 and 4.9, respectively, at December 31, 2023.

At December 31, 2024, available-for-sale securities had gross unrealized losses of $211.3 million and gross unrealized gains of $3.5 million, compared to gross unrealized losses of $217.7 million and gross unrealized gains of $4.4 million at December 31, 2023.

The credit quality of the Company’s securities holdings is primarily investment grade. U.S. Treasury securities, obligations of U.S. government agencies, and obligations of U.S. government sponsored entities totaled $2.4 billion, or 82%, of the total portfolio at December 31, 2024.

The portfolio includes $129.5 million, with a fair value of $121.2 million, in private label residential and commercial mortgage-backed securities and collateralized mortgage obligations. Included are $119.8 million, with a fair value of $111.8 million, in private label residential securities with weighted-average credit support of 22%. The collateral underlying these mortgage investments includes both fixed-rate and adjustable-rate residential mortgage loans. Commercial securities totaled $9.6 million, with a fair value of $9.4 million. These securities have weighted-average credit support of 27%. The collateral underlying these mortgages are primarily pooled multifamily loans.

The Company also has invested $278.3 million in floating rate collateralized loan obligations. Collateralized loan obligations are special purpose vehicles that purchase first lien broadly syndicated corporate loans while providing support to senior tranche investors. As of December 31, 2024, all of the Company's collateralized loan obligations were in AAA/AA tranches with weighted-average credit support of 36%. The Company utilizes credit models with assumptions of loan level defaults, recoveries, and prepayments to evaluate each security for potential credit losses. The result of this analysis did not indicate expected credit losses.

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

At December 31, 2024, the Company has determined that all debt securities in an unrealized loss position are the result of both broad investment type spreads and the current interest rate environment. Management believes that each investment will recover any price depreciation over its holding period as the debt securities move to maturity, and management has the intent and ability to hold these investments to maturity. Therefore, at December 31, 2024, no allowance for credit losses has been recorded.

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

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The following table details the maturity distribution of HTM securities.

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Loan Portfolio

The Company remains committed to sound risk management procedures. Portfolio diversification in terms of asset mix, industry, and loan type has been and continues to be an important element of the Company’s lending strategy. The average loan size is $383 thousand, and the average commercial loan size is $814 thousand at December 31, 2024, reflecting the Company’s longtime focus on granularity and on creating valuable customer relationships. Lending policies contain guardrails that pertain to lending by type of collateral and purpose, along with limits regarding loan concentrations and the principal amount of loans. The Company's exposure to commercial real estate lending remains well below regulatory limits (see “Loan Concentrations”).

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

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

The amortized cost basis of loans at December 31, 2024, and 2023 included net deferred costs of $43.9 million and $43.1 million, respectively. At December 31, 2024, the remaining fair value adjustments on acquired loans were $128.1 million, or 4.3% of the outstanding acquired loan balances, compared to $174.0 million, or 4.8% of the acquired loan balances at December 31, 2023. The discount is accreted into interest income over the remaining lives of the related loans on a level yield basis.

Construction and land development loans decreased $119.6 million, or 15.6%, totaling $648.1 million at December 31, 2024, compared to December 31, 2023. These loans, extended to both commercial and consumer customers, are collateralized by and for the purpose of funding land development and construction projects. Repayment is from the proceeds of the sale, refinancing or permanent financing of the property. In 2023, the Company acquired $151.0 million in construction and land development

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

Commercial real estate owner occupied loans totaled $1.7 billion at December 31, 2024, an increase of $16.3 million, or 1% compared to December 31, 2023. Commercial real estate owner occupied loans are extended to commercial customers for the purpose of acquiring or refinancing real estate to be occupied by the borrower's business. These loans are collateralized by the subject property and the repayment of these loans is largely dependent on the performance of the company occupying the property.

Commercial real estate non-owner occupied loans increased $183.9 million, or 6%, totaling $3.5 billion at December 31, 2024, compared to $3.3 billion December 31, 2023. Non-owner occupied CRE loans are collateralized by properties where the source of repayment is typically from the sale or lease of the property. Within the non-owner occupied CRE portfolio, the largest segment is Retail properties, which totaled approximately $1.2 billion at December 31, 2024, with an average loan size of $2.3 million. This segment targets grocery or credit tenant-anchored shopping plazas, single credit tenant retail buildings, smaller outparcels, and other small retail units. The second-largest segment in the non-owner occupied CRE portfolio is office properties, which totaled $568.3 million at December 31, 2024, with an average loan size of $1.7 million. This segment targets low to mid-rise suburban offices and is broadly diversified across many types of professional services, with limited exposure to central business districts. Other non-owner occupied CRE loans include $439.1 million in loans collateralized by industrial or warehouse properties, $375.7 million collateralized by multi-family residential properties, $336.2 million collateralized by hotels or motels, and $597.5 million collateralized by other property types, including restaurants, schools and recreation centers.

Residential real estate loans increased $171.1 million, or 7%, year-over-year to $2.6 billion as of December 31, 2024. Included in the balance as of December 31, 2024 were $1.0 billion of fixed rate mortgages, $970.2 million of ARMs, and $614.7 million in home equity loans and HELOCs, compared to $1.0 billion, $865.2 million and $488.2 million, respectively, as of December 31, 2023. Substantially all residential mortgage originations have been underwritten to conventional loan agency standards, including loans having balances that exceed agency value limitations. The average LTV of our HELOC portfolio is 64% with 31% of the portfolio being in the first lien position at December 31, 2024, compared to an average LTV of 63% with 35% of the portfolio being in the first lien position at December 31, 2023.

Commercial and financial loans increased year-over-year by $43.5 million, or 3%, totaling $1.7 billion at December 31, 2024. The purpose of these loans may be to provide working capital, asset acquisition or for other business purposes, and are generally supported by projected cash flows of the business, collateralized by business assets, and/or guaranteed by the business owners. The Company continues to exercise a disciplined approach to lending and is benefiting from the investments made in recent years to attract talent from large regional banks across its markets. This talent is onboarding significant new relationships, resulting in increased loan production.

The Company also provides consumer loans, which include installment loans, auto loans, marine loans and other consumer loans, which decreased $58.2 million, or 23%, year-over-year to a total of $193.3 million at December 31, 2024, compared to $251.6 million at December 31, 2023. The decrease is partly due to the transfer to held-for-sale of $20.0 million in consumer loans previously acquired through bank acquisitions.

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

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

Commercial and commercial real estate originations in 2024 totaled $1.9 billion, compared to $1.1 billion in 2023. Higher originations are the result of investments made in recent years to attract commercial banking talent. This talent is onboarding significant new relationships, resulting in increased loan production. Commercial and commercial real estate pipelines were $605.4 million as of December 31, 2024, an increase of 97% from $306.5 million at December 31, 2023.

SBA originations totaled $82.4 million in 2024, an increase of $33.5 million, or 68%, from 2023. The SBA pipeline increased 40% to $28.8 million at December 31, 2024 from $20.6 million at December 31, 2023.

Residential loans originated for sale in the secondary market totaled $71.7 million in 2024, an increase of 8% compared to $66.3 million in 2023. Residential saleable pipelines were $6.7 million as of December 31, 2024, compared to $2.7 million as of December 31, 2023.

Residential loan production retained in the portfolio for 2024 was $245.3 million, compared to $260.5 million in 2023. The pipeline of residential loans intended to be retained in the portfolio was $35.1 million as of December 31, 2024, compared to $44.4 million as of December 31, 2023.

Consumer originations, which includes HELOCs, totaled $216.0 million during 2024, compared to $346.2 million during 2023, reflecting a decrease of $130.2 million, or 38%. The consumer pipeline was $17.4 million as of December 31, 2024, compared to $18.7 million as of December 31, 2023.

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

Loan Concentrations

The Company has developed prudent guardrails to manage loan types that are most impacted by stressed market conditions in order to minimize credit risk concentration to capital. Outstanding balances for commercial and commercial real estate loan relationships greater than $10 million totaled $2.7 billion, representing 26% of the total portfolio at December 31, 2024, compared to $2.3 billion, or 23%, at December 31, 2023. The Company’s ten largest commercial and commercial real estate funded and unfunded relationships at December 31, 2024 aggregated to $547.5 million, of which $433.0 million was funded, compared to $505.7 million at December 31, 2023, of which $348.3 million was funded.

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 38% and 237%, respectively, at December 31, 2024, compared to 48% and 244% as of December 31, 2023. Regulatory guidance suggests limits of 100% and 300%, respectively. On a consolidated basis, construction and land development and commercial real estate loans represent 36% and 224%, respectively, of total consolidated risk-based capital. To determine these ratios, the Company defines commercial real estate in accordance with the guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) issued by the federal bank regulatory agencies in 2006 (and reinforced in 2015), which defines commercial real estate loans as exposures secured by land development and construction, including 1-4 family residential construction, multifamily property, and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property (i.e. loans for which 50 percent or more of the source of repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. Loans to real estate investment trusts 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. In addition, the Company is subject to a geographic concentration of credit because it primarily operates in Florida.

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

Nonperforming assets at December 31, 2024 totaled $98.9 million, an increase of $26.2 million, or 36%, compared to 2023, and were comprised of $92.4 million of nonaccrual loans, and $6.4 million of OREO, including $5.5 million of branches taken out of service. As of December 31, 2023, nonperforming assets included nonaccrual loans of $65.1 million and OREO of $7.6 million including $7.3 million of branches taken out of service. Approximately 69% of nonaccrual loans were secured with real estate at December 31, 2024. Nonperforming loans to total loans outstanding at December 31, 2024 increased to 0.90% from 0.65% at December 31, 2023. NPAs to total assets at December 31, 2024 increased to 0.65% from 0.50% at December 31,

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2023. A significant portion of nonaccrual loans have collateral values well in excess of balances outstanding, and therefore, no loss is expected.

The table below sets forth details related to nonaccrual loans.

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

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

Allowance for Credit Losses on Loans

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

Net charge-offs for 2024 were $27.1 million, or 0.27% of average loans, compared to $21.4 million, or 0.22%, for 2023. The ratio of allowance to total loans decreased to 1.34% at December 31, 2024 from 1.48% at December 31, 2023.

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

Cash and Cash Equivalents, Liquidity Risk Management and Contractual Commitments

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

Funding sources include primarily customer-based deposits, collateral-backed borrowings, brokered deposits, cash flows from operations, cash flows from the loan and investment portfolios and asset sales, primarily secondary marketing for residential real estate mortgages. Cash flows from operations are a significant component of liquidity risk management and the Company

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considers both deposit maturities and the scheduled cash flows from loan and investment maturities and payments when managing risk.

Cash and cash equivalents, including interest-bearing deposits, totaled $476.6 million at December 31, 2024, compared to $447.2 million at December 31, 2023.

Deposits are a primary source of liquidity. The stability of this funding source is affected by numerous factors, including returns available to customers on alternative investments, the quality of customer service levels, perception of safety and competitive forces. Total uninsured deposits were estimated to be $4.4 billion at December 31, 2024, representing 36% of overall deposit accounts. This includes public funds under the Florida Qualified Public Depository program, which provides loss protection to depositors beyond FDIC insurance limits. Excluding such balances, the uninsured and uncollateralized deposits were 30% of total deposits. The Company has liquidity sources as discussed below, including cash and lines of credit with the FRB and FHLB, that represent 138% of uninsured deposits, and 167% of uninsured and uncollateralized deposits.

In addition to $476.6 million in cash and cash equivalents at December 31, 2024, the Company had $5.7 billion in available borrowing capacity, including $4.0 billion in available collateralized lines of credit, $1.3 billion of unpledged debt securities available as collateral for potential additional borrowings, and available unsecured lines of credit of $348.0 million. The Company may also access funding by acquiring brokered deposits. Brokered deposits at December 31, 2024 totaled $293.6 million compared to $122.3 million at December 31, 2023.

Contractual maturities for assets and liabilities are reviewed to meet current and expected future liquidity requirements. Sources of liquidity are maintained through a portfolio of high quality marketable assets, such as residential mortgage loans, debt securities available-for-sale and interest-bearing deposits. The Company is also able to provide short-term financing of its activities by selling, under an agreement to repurchase, United States Treasury and Government agency debt securities not pledged to secure public deposits or trust funds.

The Company has traditionally relied upon dividends from Seacoast Bank and securities offerings to provide funds to pay the Company’s expenses and to service the Company’s debt. During 2024, Seacoast Bank distributed $59.6 million to the Company and, at December 31, 2024, is eligible to distribute dividends to the Company of approximately $188.9 million without prior regulatory approval. At December 31, 2024, the Company had cash and cash equivalents at the parent of $95.8 million, compared to $101.7 million at December 31, 2023.

The following table presents contractual obligations by remaining 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.

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Deposits and Borrowings

The following table details the Company's customer relationship funding as of:

The Company benefits from a diverse and granular deposit base that serves as a significant source of strength. Total deposits increased $465.5 million, or 4%, to $12.2 billion at December 31, 2024 compared to December 31, 2023.

Noninterest demand deposits represented 27% of total deposits at December 31, 2024 compared to 30% at December 31, 2023 primarily driven by the higher interest rate environment driving a mix shift to money market products. Transaction account balances (noninterest demand and interest-bearing demand) represented 49% of total deposits at December 31, 2024, compared to 54% at December 31, 2023.

Time deposits over $250,000 were $549.9 million and $550.3 million at December 31, 2024 and December 31, 2023, respectively. The following table details the remaining maturities of time deposits of $250,000 and greater at December 31, 2024 and December 31, 2023:

Customer repurchase agreements totaled $232.1 million at December 31, 2024, decreasing $142.5 million, or 38%, from December 31, 2023. Repurchase agreements are offered by Seacoast to select customers who wish to sweep excess balances on a daily basis for investment purposes.

At December 31, 2024 and December 31, 2023, long-term debt included $72.5 million and $72.2 million, respectively, related to trust preferred securities issued by trusts organized or acquired by the Company. At December 31, 2024, the average interest rate in effect on our outstanding subordinated debt related to trust preferred securities was 6.34%, compared to 7.34% at December 31, 2023. The acquired junior subordinated debentures were recorded at fair value, which collectively was $2.8 million lower than face value at December 31, 2024. This amount is being amortized into interest expense over the acquired subordinated debts' remaining term to maturity. All trust preferred securities are guaranteed by the Company on a junior subordinated basis.

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Under Basel III and FRB rules, qualified trust preferred securities and other restricted capital elements can be included as Tier 1 capital, within limitations. The Company believes that its trust preferred securities qualify under these capital rules.

In 2022, the Company acquired $12.3 million in senior debt through the acquisition of Apollo. Contractual interest is paid on a semiannual basis at a fixed rate of 5.50% until October 30, 2025, at which point the rate converts to a floating rate of 3-month SOFR plus 533 basis points until maturity in 2030. The debt was recorded at fair value, resulting in a $0.4 million premium that is being amortized into interest expense over the remaining term to maturity.

In 2023, the Company acquired $25.0 million in subordinated debt through the acquisition of Professional that qualifies as Tier 2 Capital. Contractual interest is paid on a semiannual basis at a fixed interest rate of 3.375% until January 30, 2027, at which point the rate converts to a 3-month SOFR rate plus 203 basis points paid quarterly until maturity in 2032. 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.

FHLB advances totaled $245.0 million at December 31, 2024 with a weighted-average interest rate of 4.19%, compared to $50.0 million at December 31, 2023 with an interest rate of 3.23%.

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

Off-Balance Sheet Transactions

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

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

For commercial customers, loan commitments generally take the form of revolving credit arrangements. For retail customers, loan commitments generally are lines of credit secured by residential property. These instruments are not recorded on the balance sheet until funds are advanced under the commitment. Unfunded commitments to extend credit were $2.9 billion at December 31, 2024, and $2.7 billion at December 31, 2023 (see “Note 15 - Contingent Liabilities and Commitments with Off-Balance Sheet Risk” to the Company’s consolidated financial statements).

In the normal course of business, the Company and Seacoast Bank enter into agreements, or are subject to regulatory agreements that result in cash, debt and dividend restrictions. A summary of the most restrictive items follows:

Seacoast Bank may be required to maintain reserve balances with the Federal Reserve Bank. There was no reserve requirement at December 31, 2024 or December 31, 2023.

Under FRB regulation, Seacoast Bank is limited as to the amount it may loan to its affiliates, including the Company, unless such loans are collateralized by specified obligations. At December 31, 2024, the maximum amount available for transfer from Seacoast Bank to the Company in the form of loans approximated $185.2 million, if the Company has sufficient acceptable collateral. There were no loans made to affiliates during the periods ending December 31, 2024 and 2023.

Capital Resources and Management

The Company's equity capital at December 31, 2024 increased $75.2 million, or 3.6%, from December 31, 2023, to $2.2 billion. Changes in equity included increases from net income of $121.0 million, partially offset by the issuance of cash dividends on common stock totaling $61.6 million.

The ratio of shareholders’ equity to period end total assets was 14.39% and 14.46% at December 31, 2024 and December 31, 2023, respectively. The ratio of tangible shareholders’ equity to tangible assets was 9.60% and 9.31% at December 31, 2024 and December 31, 2023, respectively.

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

At December 31, 2024, capital ratios for Seacoast and Seacoast Bank are well above regulatory requirements for well-capitalized institutions. Management’s use of risk-based capital ratios in its analysis of the Company’s capital adequacy are not GAAP financial measures. Seacoast’s management uses these measures to assess the quality of capital and believes that investors may find it useful in their analysis of the Company. The capital measures are not necessarily comparable to similar capital measures that may be presented by other companies and Seacoast does not nor should investors consider such non-GAAP financial measures in isolation from, or as a substitute for GAAP financial information (see “Note 13 - Regulatory Capital”).

The Company’s total risk-based capital ratio was 16.18% at December 31, 2024, an increase from 15.92% at December 31, 2023. As of December 31, 2024, the Bank’s leverage ratio (Tier 1 capital to adjusted total assets) was 10.66%, compared to 10.32% at December 31, 2023, well above the minimum to be well-capitalized under regulatory guidelines.

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