Loans | Loans Loans held for investment are categorized into the following segments: • Construction and land development: Loans are extended to both commercial and consumer customers which are collateralized by and for the purpose of funding land development and construction projects, including 1-4 family residential construction, multi-family property, non-farm residential property, and various commercial purpose properties where the primary source of repayment is from proceeds of the sale, refinancing or permanent financing of the property. • Commercial real estate - owner-occupied: Loans are extended to commercial customers for the purpose of acquiring real estate to be occupied by the borrower's business. These loans are collateralized by the subject property and the repayment of these loans is largely dependent on the performance of the company occupying the property. • Commercial real estate - non owner-occupied: Loans are extended to commercial customers for the purpose of acquiring commercial property where occupancy by the borrower is not their primary intent. These loans are viewed primarily as cash flow loans, collateralized by the subject property, and the repayment of these loans is largely dependent on rental income from the successful operation of the property. • Residential real estate: Loans are extended to consumer customers and collateralized primarily by 1-4 family residential properties and include fixed and variable rate mortgages, home equity mortgages, and home equity lines of credit. Loans are primarily written based on conventional loan agency guidelines, including loans that exceed agency value limitations. Sources of repayment may be from the occupant of the residential property or from cash flows on rental income from the successful operation of the property. • Commercial and financial: Loans are extended to commercial customers. The purpose of the loans can be working capital, physical asset expansion, asset acquisition or other business purposes. Loans may be collateralized by assets owned by the borrower or the borrower's business. Commercial loans are based primarily on the historical and projected cash flow of the borrower's business and secondarily on the capacity of credit enhancements, guarantees and underlying collateral provided by the borrower. • Consumer: Loans are extended to consumer customers. The segment includes both installment loans and lines of credit which may be collateralized or non-collateralized. • Paycheck Protection Program (“PPP”): Loans originated under a temporary program established by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and extended by the Economic Aid Act. Under the terms of the program, balances may be forgiven if the borrower uses the funds in a manner consistent with the program guidelines, and repayment is guaranteed by the U.S. government. The following tables present net loan balances by segment as of: December 31, 2021 (In thousands) Portfolio Loans Acquired Non-PCD Loans PCD Loans Total Construction and land development $ 199,341 $ 31,438 $ 45 $ 230,824 Commercial real estate - owner occupied 983,517 186,812 27,445 1,197,774 Commercial real estate - non-owner occupied 1,278,180 382,554 75,705 1,736,439 Residential real estate 1,261,306 156,957 7,091 1,425,354 Commercial and financial 968,318 84,395 16,643 1,069,356 Consumer 169,507 4,658 10 174,175 Paycheck Protection Program 69,503 21,604 — 91,107 Totals $ 4,929,672 $ 868,418 $ 126,939 $ 5,925,029 December 31, 2020 (In thousands) Portfolio Loans Acquired Non-PCD Loans PCD Loans Total Construction and land development $ 216,420 $ 26,250 $ 2,438 $ 245,108 Commercial real estate - owner occupied 854,769 247,090 39,451 1,141,310 Commercial real estate - non-owner occupied 1,043,459 323,273 29,122 1,395,854 Residential real estate 1,155,914 176,105 10,609 1,342,628 Commercial and financial 743,846 94,627 16,280 854,753 Consumer 181,797 6,660 278 188,735 Paycheck Protection Program 515,532 51,429 — 566,961 Totals $ 4,711,737 $ 925,434 $ 98,178 $ 5,735,349 The amortized cost basis of loans at December 31, 2021 included net deferred costs of $31.0 million on non-PPP portfolio loans and net deferred fees of $2.4 million on PPP loans. At December 31, 2020, the amortized cost basis included net deferred costs of $22.6 million on non-PPP portfolio loans and net deferred fees of $9.5 million on PPP loans. At December 31, 2021, the remaining fair value adjustments on acquired loans were $23.1 million, or 2.3% of the outstanding acquired loan balances, compared to $30.2 million, or 2.9% of the acquired loan balances at December 31, 2020. These amounts are accreted into interest income over the remaining lives of the related loans on a level yield basis. Accrued interest receivable is included within Other Assets and was $14.7 million and $25.8 million at December 31, 2021 and December 31, 2020, respectively. Loans to directors and executive officers totaled $0.6 million and $1.1 million at December 31, 2021 and 2020, respectively. Two new loans were originated to directors or officers in 2021. The following table presents the status of net loan balances as of December 31, 2021 and December 31, 2020. Loans on short-term payment deferral at the reporting date are reported as current. December 31, 2021 (In thousands) Current Accruing Accruing Accruing Nonaccrual Total Portfolio Loans Construction and land development $ 199,087 $ — $ — $ — $ 254 $ 199,341 Commercial real estate - owner occupied 982,804 — — — 713 983,517 Commercial real estate - non-owner occupied 1,276,582 — — — 1,598 1,278,180 Residential real estate 1,248,160 3,457 143 — 9,546 1,261,306 Commercial and financial 963,828 851 41 — 3,598 968,318 Consumer 168,791 565 23 15 113 169,507 Paycheck Protection Program 1 69,434 — — 69 — 69,503 Total Portfolio Loans 4,908,686 4,873 207 84 15,822 4,929,672 Acquired Non-PCD Loans Construction and land development 31,438 — — — — 31,438 Commercial real estate - owner occupied 186,652 — 160 — — 186,812 Commercial real estate - non-owner occupied 381,510 — — — 1,044 382,554 Residential real estate 154,981 182 — — 1,794 156,957 Commercial and financial 84,180 — 40 — 175 84,395 Consumer 4,082 135 — — 441 4,658 Paycheck Protection Program 1 21,567 — — 37 — 21,604 Total Acquired Non-PCD Loans 864,410 317 200 37 3,454 868,418 PCD Loans Construction and land development 40 — — — 5 45 Commercial real estate - owner occupied 24,192 — — — 3,253 27,445 Commercial real estate - non-owner occupied 72,442 — — — 3,263 75,705 Residential real estate 5,386 — — — 1,705 7,091 Commercial and financial 13,547 — — — 3,096 16,643 Consumer 10 — — — — 10 Total PCD Loans 115,617 — — — 11,322 126,939 Total Loans $ 5,888,713 $ 5,190 $ 407 $ 121 $ 30,598 $ 5,925,029 1 Paycheck Protection Program loans are not reflected as past due when forgiveness applications are being processed by the SBA. Repayment of principal and interest is fully guaranteed by the U.S. government. December 31, 2020 (In thousands) Current Accruing Accruing Accruing Nonaccrual Total Portfolio Loans Construction and land development $ 216,262 $ — $ — $ — $ 158 $ 216,420 Commercial real estate - owner occupied 851,222 1,076 — — 2,471 854,769 Commercial real estate - non-owner occupied 1,041,306 — — — 2,153 1,043,459 Residential real estate 1,142,893 3,002 1,427 61 8,531 1,155,914 Commercial and financial 737,362 135 1,967 — 4,382 743,846 Consumer 180,879 203 138 2 575 181,797 Paycheck Protection Program 515,532 — — — — 515,532 Total Portfolio Loans 4,685,456 4,416 3,532 63 18,270 4,711,737 Acquired Non-PCD Loans Construction and land development 26,250 — — — — 26,250 Commercial real estate - owner occupied 244,486 — — — 2,604 247,090 Commercial real estate - non-owner occupied 322,264 — — — 1,009 323,273 Residential real estate 171,507 1,605 104 — 2,889 176,105 Commercial and financial 93,223 216 — — 1,188 94,627 Consumer 6,640 20 — — — 6,660 Paycheck Protection Program 51,429 — — — — 51,429 Total Acquired Non-PCD Loans 915,799 1,841 104 — 7,690 925,434 PCD Loans Construction and land development 2,429 — — — 9 2,438 Commercial real estate - owner occupied 36,345 — — — 3,106 39,451 Commercial real estate - non-owner occupied 24,200 — — — 4,922 29,122 Residential real estate 9,537 — — — 1,072 10,609 Commercial and financial 15,121 125 — — 1,034 16,280 Consumer 271 — — — 7 278 Total PCD Loans 87,903 125 — — 10,150 98,178 Total Loans $ 5,689,158 $ 6,382 $ 3,636 $ 63 $ 36,110 $ 5,735,349 All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest subsequently received on such loans is accounted for under the cost-recovery method, whereby interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, and future payments are reasonably assured. The Company recognized $1.2 million, $0.9 million, and $1.3 million in interest income on nonaccrual loans during the years ended December 31, 2021, 2020, and 2019, respectively. The following tables present net balances of loans on nonaccrual status and the related allowance for credit losses, if any, as of: December 31, 2021 (In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans Allowance for Credit Losses Construction and land development $ 37 $ 222 $ 259 $ 92 Commercial real estate - owner-occupied 2,976 990 3,966 419 Commercial real estate - non-owner occupied 4,490 1,415 5,905 27 Residential real estate 12,358 687 13,045 357 Commercial and financial 2,676 4,193 6,869 2,384 Consumer 29 525 554 525 Totals $ 22,566 $ 8,032 $ 30,598 $ 3,804 December 31, 2020 (In thousands) Nonaccrual Loans With No Related Allowance Nonaccrual Loans With an Allowance Total Nonaccrual Loans Allowance for Credit Losses Construction and land development $ 148 $ 19 $ 167 $ 8 Commercial real estate - owner-occupied 7,893 288 8,181 287 Commercial real estate - non-owner occupied 5,666 2,418 8,084 1,640 Residential real estate 9,520 2,972 12,492 1,587 Commercial and financial 3,175 3,429 6,604 2,235 Consumer 222 360 582 75 Totals $ 26,624 $ 9,486 $ 36,110 $ 5,832 Collateral-Dependent Loans Loans are considered collateral-dependent when the repayment, based on the Company's assessment as of the reporting date, is expected to be provided substantially through the operation or sale of the underlying collateral and there are no other available and reliable sources of repayment. The following table presents collateral-dependent loans as of: (In thousands) December 31, 2021 December 31, 2020 Construction and land development $ 271 $ 189 Commercial real estate - owner-occupied 4,706 11,992 Commercial real estate - non-owner occupied 4,923 7,285 Residential real estate 16,334 16,652 Commercial and financial 8,741 11,198 Consumer 741 586 Totals $ 35,716 $ 47,902 Loans by Risk Rating The Company utilizes an internal asset classification system as a means of identifying problem and potential problem loans. The following classifications are used to categorize loans under the internal classification system: • Pass: Loans that are not problem loans or potential problem loans are considered to be pass-rated. • Special Mention: Loans that do not currently expose the Company to sufficient risk to warrant classification in the Substandard or Doubtful categories, but possess weaknesses that deserve management’s close attention are deemed to be Special Mention. • Substandard: Loans with the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. • Substandard Impaired: Loans typically placed on nonaccrual and considered to be collateral-dependent or accruing TDRs. • Doubtful: Loans that have all the weaknesses inherent in those classified Substandard with the added characteristic that the weakness present makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Some portion of the principal balance of loans classified as doubtful are likely to be charged off. The following tables present the risk rating of loans by year of origination as of: December 31, 2021 (In thousands) 2021 2020 2019 2018 2017 Prior Revolving Total Construction and Land Development Risk Ratings: Pass $ 94,318 $ 23,860 $ 38,058 $ 25,507 $ 3,995 $ 15,466 $ 29,349 $ 230,553 Special Mention — — — — — — — — Substandard — — — — — — — — Substandard Impaired — — — 222 — 49 — 271 Doubtful — — — — — — — — Total 94,318 23,860 38,058 25,729 3,995 15,515 29,349 230,824 Commercial real estate - owner occupied Risk Ratings: Pass 205,404 154,432 179,786 132,353 125,763 363,986 10,005 1,171,729 Special Mention — 6,527 5,370 649 218 3,250 — 16,014 Substandard — — — — 3,290 1,610 — 4,900 Substandard Impaired — — 2,742 310 596 1,483 — 5,131 Doubtful — — — — — — — — Total 205,404 160,959 187,898 133,312 129,867 370,329 10,005 1,197,774 Commercial real estate - non-owner occupied Risk Ratings: Pass 395,308 207,824 298,021 186,339 110,990 460,435 6,477 1,665,394 Special Mention — — 844 — 289 13,850 — 14,983 Substandard — 4,776 3,009 23,206 1,900 17,266 — 50,157 Substandard Impaired — 1,044 1,849 — 326 2,686 — 5,905 Doubtful — — — — — — — — Total 395,308 213,644 303,723 209,545 113,505 494,237 6,477 1,736,439 Residential real estate Risk Ratings: Pass 394,547 114,364 90,566 119,836 118,556 213,950 354,439 1,406,258 Special Mention — — — 70 — 1,243 532 1,845 Substandard — 340 — — 58 422 86 906 Substandard Impaired — 149 724 39 4,415 8,507 2,511 16,345 Doubtful — — — — — — — — Total 394,547 114,853 91,290 119,945 123,029 224,122 357,568 1,425,354 Commercial and financial Risk Ratings: Pass 340,826 180,677 97,072 68,232 39,331 56,053 246,568 1,028,759 Special Mention 530 15,587 — 237 251 84 876 17,565 Substandard — 371 2,605 3,594 1,436 3,217 339 11,562 Substandard Impaired — 196 4,561 3,694 1,371 1,520 128 11,470 Doubtful — — — — — — — — Total 341,356 196,831 104,238 75,757 42,389 60,874 247,911 1,069,356 December 31, 2021 (In thousands) 2021 2020 2019 2018 2017 Prior Revolving Total Consumer Risk Ratings: Pass 45,063 31,342 26,194 17,300 9,979 16,019 25,418 171,315 Special Mention — 24 431 37 167 3 1,199 1,861 Substandard — — 18 — 17 — 223 258 Substandard Impaired — — 92 23 74 118 434 741 Doubtful — — — — — — — — Total 45,063 31,366 26,735 17,360 10,237 16,140 27,274 174,175 Paycheck Protection Program Risk Ratings: Pass 87,036 4,071 — — — — — 91,107 Total 87,036 4,071 — — — — — 91,107 Consolidated Risk Ratings: Pass 1,562,502 716,570 729,697 549,567 408,614 1,125,909 672,256 5,765,115 Special Mention 530 22,138 6,645 993 925 18,430 2,607 52,268 Substandard — 5,487 5,632 26,800 6,701 22,515 648 67,783 Substandard Impaired — 1,389 9,968 4,288 6,782 14,363 3,073 39,863 Doubtful — — — — — — — — Total $ 1,563,032 $ 745,584 $ 751,942 $ 581,648 $ 423,022 $ 1,181,217 $ 678,584 $ 5,925,029 December 31, 2020 (In thousands) 2020 2019 2018 2017 2016 Prior Revolving Total Construction and Land Development Risk Ratings: Pass $ 62,107 $ 52,384 $ 46,067 $ 15,873 $ 7,335 $ 17,873 $ 35,324 $ 236,963 Special Mention 206 245 5,918 — — 1,449 — 7,818 Substandard — — — — — 51 — 51 Substandard Impaired — — — 37 — 239 — 276 Doubtful — — — — — — — — Total 62,313 52,629 51,985 15,910 7,335 19,612 35,324 245,108 Commercial real estate - owner occupied Risk Ratings: Pass 155,953 198,559 156,276 138,341 148,389 287,772 14,255 1,099,545 Special Mention 5,773 1,858 3,305 — 4,471 4,050 2 19,459 Substandard — — 4,709 1,955 5,508 — 12,172 Substandard Impaired — 3,151 747 1,362 — 4,874 — 10,134 Doubtful — — — — — — — — Total 161,726 203,568 160,328 144,412 154,815 302,204 14,257 1,141,310 Commercial real estate - non-owner occupied Risk Ratings: Pass 159,299 313,287 201,112 123,357 175,623 356,943 8,596 1,338,217 Special Mention — 431 9,487 7,580 10,240 114 — 27,852 Substandard — — 9,709 — 8,311 3,682 — 21,702 Substandard Impaired — 2,418 — — 125 5,540 — 8,083 Doubtful — — — — — — — — Total 159,299 316,136 220,308 130,937 194,299 366,279 8,596 1,395,854 Residential real estate Risk Ratings: Pass 96,819 144,329 204,077 205,046 160,612 159,742 350,502 1,321,127 Special Mention — — 33 720 — 966 479 2,198 Substandard 350 — — 896 — 1,452 100 2,798 Substandard Impaired 109 726 1,520 1,762 715 9,671 2,002 16,505 Doubtful — — — — — — — — Total 97,278 145,055 205,630 208,424 161,327 171,831 353,083 1,342,628 Commercial and financial Risk Ratings: Pass 214,774 146,511 103,769 60,782 39,692 53,758 204,304 823,590 Special Mention 71 946 965 5,612 67 635 209 8,505 Substandard 154 41 3,016 1,609 553 3,239 764 9,376 Substandard Impaired 317 4,595 3,199 2,292 2,074 704 81 13,262 Doubtful 1 — — — — — — 20 20 Total 215,316 152,093 110,949 70,295 42,386 58,336 205,378 854,753 Consumer Risk Ratings: Pass 46,476 43,143 30,433 18,937 21,880 9,488 15,089 185,446 Special Mention 58 27 14 41 42 21 1,854 2,057 Substandard — — — 42 4 151 228 425 Substandard Impaired 7 50 193 24 329 183 21 807 Doubtful — — — — — — — — Total 46,541 43,220 30,640 19,044 22,255 9,843 17,192 188,735 Paycheck Protection Program Risk Ratings: Pass 566,961 — — — — — — 566,961 Total 566,961 — — — — — — 566,961 Consolidated Risk Ratings: Pass 1,302,389 898,213 741,734 562,336 553,531 885,576 628,070 5,571,849 Special Mention 6,108 3,507 19,722 13,953 14,820 7,235 2,544 67,889 Substandard 504 41 12,725 7,256 10,823 14,083 1,092 46,524 Substandard Impaired 433 10,940 5,659 5,477 3,243 21,211 2,104 49,067 Doubtful 1 — — — — — — 20 20 Total $ 1,309,434 $ 912,701 $ 779,840 $ 589,022 $ 582,417 $ 928,105 $ 633,830 $ 5,735,349 1 Loans classified as doubtful were fully reserved as of December 31, 2020. Loans Modified in Connection with COVID-19 Pandemic The CARES Act, which was signed into law on March 27, 2020 and amended by the Consolidated Appropriations Act on December 27, 2020, encouraged financial institutions to practice prudent efforts to work with borrowers financially impacted by the COVID-19 pandemic by providing an option to exclude from TDR consideration certain loan modifications that might otherwise be categorized as TDRs under ASC 310-40. This option was available for modifications that were deemed to be COVID-related, where the borrower was not more than 30 days past due on December 31, 2019, and the modification was executed between March 1, 2020 and the earlier of (i) January 1, 2022 or (ii) 60 days after the end of the COVID-19 national emergency. Federal banking regulators issued similar guidance that also allowed lenders to conclude that short-term modifications for borrowers affected by the pandemic should not be considered TDRs if the borrower was current at the time of modification. Seacoast provided financially impacted borrowers with loan accommodations, primarily consisting of payment deferrals of up to six months. At its peak on June 30, 2020, loans on deferral represented $1.1 billion, or 21% of total non-PPP loans. In the second half of 2020, the large majority of these borrowers successfully resumed making contractual payments, and the level of loans with accommodations decreased to $74.1 million, or 1% of total non-PPP loans at December 31, 2020, and to $1.2 million, or 0.02% of total non-PPP loans as of December 31, 2021. Troubled Debt Restructured Loans The Company’s TDR concessions granted to certain borrowers generally do not include forgiveness of principal balances, but may include interest rate reductions, an extension of the amortization period and/or converting the loan to interest only for a limited period of time. Loan modifications are not reported in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructuring agreements. The following table presents loans that were modified in a troubled debt restructuring during the years ended: (In thousands) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment At December 31, 2021: Construction and land development — $ — $ — Commercial real estate - owner-occupied — — — Commercial real estate - non owner-occupied — — — Residential real estate 5 261 261 Commercial and financial 3 457 457 Consumer 4 84 84 Totals 12 $ 802 $ 802 At December 31, 2020: Construction and land development — $ — $ — Commercial real estate - owner-occupied — — — Commercial real estate - non owner-occupied Residential real estate 2 150 150 Commercial and financial 4 437 437 Consumer 4 112 112 Totals 10 $ 699 $ 699 At December 31, 2019: Construction and land development — $ — $ — Commercial real estate 2 2,166 2,166 Commercial real estate - non owner-occupied — — — Residential real estate 3 1,193 1,193 Commercial and financial 3 1,326 1,326 Consumer 1 19 19 Totals 9 $ 4,704 $ 4,704 The TDRs described above resulted in a specific allowance for credit losses of $0.2 million as of December 31, 2021, and $0.2 million in specific allowance for credit losses as of December 31, 2020. During the year ended December 31, 2021 there |