Loans

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

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 and non-farm residential property where the primary source of repayment is from proceeds of the sale, refinancing or permanent financing of the property.

•Commercial real estate - owner-occupied: 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 CARES 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.

With the adoption of ASC Topic 326 -Financial Instruments - Credit Losses on January 1, 2020, the Company re-evaluated the aggregation of loans into segments, and separated Commercial Real Estate - Owner Occupied from Commercial Real Estate - Non Owner Occupied. In prior years, all Commercial Real Estate loans were considered a single segment. The following tables present net loan balances by segment as of:

	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

	December 31, 2019
(In thousands)	Portfolio Loans		PULs		PCI Loans		Total
Construction and land development	$	281,335	$	43,618	$	160	$	325,113
Commercial real estate1	1,834,811		533,943		10,217		2,378,971
Residential real estate	1,304,305		201,848		1,710		1,507,863
Commercial and financial	697,301		80,372		579		778,252
Consumer	200,166		8,039		—		208,205
Totals	$	4,317,918	$	867,820	$	12,666	$	5,198,404
1Commerical real estate includes owner-occupied balances of $1 billion for December 31, 2019.

The amortized cost basis of loans at December 31, 2020 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, 2019, the amortized cost basis included net deferred costs of $19.9 million. At December 31, 2020, the remaining fair value adjustments on acquired loans was $30.2 million, or 2.86% of the outstanding acquired loan balances. At December 31, 2019, the remaining fair value adjustments on acquired loans was $34.9 million, or 3.8% of the acquired loan balances. 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 $25.8 million and $14.9 million at December 31, 2020 and December 31, 2019, respectively.

Loans to directors and executive officers totaled $1.1 million and $1.7 million at December 31, 2020 and 2019, respectively. No new loans were originated to directors or officers in 2020.

The following table presents the status of net loan balances as of December 31, 2020 and December 31, 2019. Loans on short-term payment deferral at the reporting date are reported as current. 

	December 31, 2020
(In thousands)	Current		Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing Greater Than 90 Days		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

	December 31, 2019
(In thousands)	Current		Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing Greater Than 90 Days		Nonaccrual		Total
Portfolio Loans
Construction and land development	$	276,984	$	—	$	—	$	—	$	4,351	$	281,335
Commercial real estate	1,828,629		1,606		220		—		4,356		1,834,811
Residential real estate	1,294,778		1,564		18		—		7,945		1,304,305
Commercial and financial	690,412		2,553		—		108		4,228		697,301
Consumer	199,424		317		315		—		110		200,166
Total Portfolio Loans	4,290,227		6,040		553		108		20,990		4,317,918
Purchased Unimpaired Loans
Construction and land development	43,044		—		—		—		574		43,618
Commercial real estate	531,325		942		431		—		1,245		533,943
Residential real estate	201,159		277		—		—		412		201,848
Commercial and financial	78,705		—		—		—		1,667		80,372
Consumer	8,039		—		—		—		—		8,039
Total PULs	862,272		1,219		431		—		3,898		867,820
PCI Loans
Construction and land development	148		—		—		—		12		160
Commercial real estate	9,298		—		—		—		919		10,217
Residential real estate	587		—		—		—		1,123		1,710
Commercial and financial	566		—		—		—		13		579
Consumer	—		—		—		—		—		—
Total PCI Loans	10,599		—		—		—		2,067		12,666
Total Loans	$	5,163,098	$	7,259	$	984	$	108	$	26,955	$	5,198,404

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest subsequently received on such loans is accounted for under the cost-recovery method, whereby interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, and future payments are reasonably assured. The Company recognized $0.9 million, $1.3 million, and $0.4 million in interest income on nonaccrual loans during the years ended December 31, 2020, 2019, and 2018, 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, 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

	December 31, 2019
(In thousands)	Nonaccrual Loans With No Related Allowance		Nonaccrual Loans With an Allowance		Total Nonaccrual Loans		Allowance for Credit Losses
Construction and land development	$	4,914	$	23	$	4,937	$	12
Commercial real estate	6,200		320		6,520		149
Residential real estate	8,700		780		9,480		564
Commercial and financial	3,448		2,460		5,908		1,622
Consumer	39		71		110		37
Totals	$	23,301	$	3,654	$	26,955	$	2,384

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, 2020		December 31, 2019
Construction and land development	$	189	$	4,926
Commercial real estate - owner-occupied	11,992		2,571
Commercial real estate - non-owner occupied	7,285		3,152
Residential real estate	16,652		11,550
Commercial and financial	11,198		4,338
Consumer	586		141
Totals	$	47,902	$	26,678

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. 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, 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
Doubtful1	—		—		—		—		—		—		20		20
Total	215,316		152,093		110,949		70,295		42,386		58,336		205,378		854,753

	December 31, 2020
(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving		Total
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
Doubtful1	—		—		—		—		—		—		20		20
Total	$	1,309,434	$	912,701	$	779,840	$	589,022	$	582,417	$	928,105	$	633,830	$	5,735,349
1Loans classified as doubtful are fully reserved as of December 31, 2020.

The following table presents the risk rating of loans as of:

	December 31, 2019
(In thousands)	Pass		Special Mention		Substandard		Doubtful1		Total
Construction and land development	$	317,765	$	2,235	$	5,113	$	—	$	325,113
Commercial real estate	2,331,725		26,827		20,098		321		2,378,971
Residential real estate	1,482,278		7,364		18,221		—		1,507,863
Commercial and financial	755,957		11,925		9,496		874		778,252
Consumer	203,966		3,209		1,030		—		208,205
Totals	$	5,091,691	$	51,560	$	53,958	$	1,195	$	5,198,404
1Loans classified as doubtful are fully reserved as of December 31, 2019.

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, encourages 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 is available for modifications that are deemed to be COVID-related, where the borrower was not more than 30 days past due on December 31, 2019, and the modification is 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 allows 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, loans on deferral represented $1.1 billion, or 21% of total non-PPP loans. As the year progressed, the large majority of these borrowers successfully resumed making contractual payments, and the level of loans with accommodations dropped to $74.1 million, or 1% of total non-PPP loans, at December 31, 2020. Types of outstanding

accommodations at December 31, 2020 included a combination of one or more of the following: full payment deferral, partial payment deferral, reduction of interest rate, extension of the original maturity date, or re-amortization of the facility. The following table presents the balance of loans with active payment accommodations at the specified dates, excluding PPP loans:

(In thousands)	December 31, 2020		September 30, 2020		June 30, 2020
Construction and land development	$	1,032	$	9,359	$	14,488
Commercial real estate - owner-occupied	14,248		204,710		320,406
Commercial real estate - non-owner occupied	32,549		344,573		445,311
Residential real estate	12,839		75,885		148,035
Commercial and financial	11,915		61,308		130,877
Consumer	1,479		6,815		17,926
Totals	$	74,062	$	702,650	$	1,077,043

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, 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
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
At December 31, 2018:
Construction and land development	—	$	—	$	—
Commercial real estate	—	—		—
Residential real estate	—	—		—
Commercial and financial	1	98		98
Consumer	3	61		61
Totals	4	$	159	$	159

The TDRs described above resulted in a specific allowance for credit losses of $0.2 million as of December 31, 2020, no specific allowance for credit losses as of December 31, 2019, and $0.5 million in specific allowance for credit losses as of December 31, 2018. During the year ended December 31, 2020, there were no defaults on loans that had been modified in TDRs within the preceding twelve months. There were four defaults totaling $3.2 million of loans modified in TDRs within the twelve months preceding December 31, 2019. During the twelve months ended December 31, 2018, there were no defaults on loans modified in TDRs within the preceding twelve months. The Company considers a loan to have defaulted when it becomes 90 days or more delinquent under the modified terms, has been transferred to nonaccrual status, is charged off or has been transferred to other real estate owned. For loans measured based on the present value of expected future cash flows, $0.1 million, $0.1 million, and $0.2 million for the years ended December 31, 2020, 2019, and 2018, respectively, was included in interest income and represents the change in present value attributable to the passage of time.