What changed in this filing

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Item 1. Business

2022-02-25 compared with 2021-02-19 · 106 added, 97 removed, 229 unchanged (47% of the section changed)

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Some of the information in this Annual Report on Form 10-K may contain “forward-looking statements” within the meaning of and intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements typically are identified with use of terms such as “may,” “might,” “will, “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “could,” “continue” and the negative of these terms and similar words, although some forward-looking statements may be expressed differently.

Such forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company, and include, without limitation, statements about the Company’s plans, strategies, goals, objectives, expectations, or consequences of statements about the future performance, operations, products and services of the Company and its subsidiaries, as well as statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, products and services, shareholder value creation and the impact of the Seacoast and First Choice acquisitions and other acquisitions.

Forward-looking statements typically are identified with use of terms such as “may,” “might,” “will, “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “could,” “continue” and the negative and other variations of these terms and similar words, although some forward-looking statements may be expressed differently.

Forward-looking statements also include, but are not limited to, statements regarding plans, objectives, expectations or consequences of announced transactions, known trends, and statements about future performance, operations, products and services.

The ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain.

Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance.

Further, the ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

The COVID-19 pandemic is continuing to adversely affect us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects remain uncertain.

Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility.

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Other factors that could cause or contribute to such differences include, but are not limited to:

the ability to efficiently integrate acquisitions, including the Seacoast acquisition, into our operations, retain the customers of these businesses and grow the acquired operations;

our ability to efficiently integrate acquisitions, including the Seacoast and First Choice acquisitions, into our operations, retain the customers of these businesses and grow the acquired operations;

changes in the appraised valuation of real estate securing impaired loans;

our ability to recover our investment in loans;

fluctuations in the fair value of collateral underlying loans;

outcomes of litigation and other contingencies;

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risks associated with rapid increases or decreases in prevailing interest rates;

changes in business prospects that could impact goodwill estimates and assumptions;

consolidation within the banking industry;

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changes in regulatory requirements;

changes in accounting regulation or standards applicable to banks, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model, which we adopted on January 1, 2020 and which changed how we estimate credit losses and may increase the required level of our allowance for credit losses in future periods;

uncertainty regarding the future of LIBOR;

changes in accounting regulation or standards applicable to banks, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the CECL model, which we adopted on January 1, 2020 and which changed how we estimate credit losses and may increase the required level of our allowance for credit losses in future periods;

changes in the method of determining LIBOR and the phase-out of LIBOR;

natural disasters;

war or terrorist activities, or pandemics, or the outbreak of COVID-19 or similar outbreaks, and their effects on economic and business environments in which we operate;

war or terrorist activities, or pandemics, including the COVID-19 pandemic, and their effects on economic and business environments in which we operate, including the ongoing disruption to the financial market and other economic activity caused by the COVID-19 pandemic;

and other risks discussed under the caption “Risk Factors” in Item 1A of this Annual Report on Form 10-K, all of which could cause actual results to differ from those set forth in the forward-looking statements.

Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s analysis and expectations only as of the date of such statements.

Forward-looking statements speak only as of the date they are made, and the Company does not intend, and undertakes no obligation, to publicly revise or update forward-looking statements after the date of this report, whether as a result of new information, future events or otherwise, except as required by federal securities law.

otherwise, except as required by federal securities law.

You should understand that it is not possible to predict or identify all risk factors.

Readers should carefully review all disclosures we file from time to time with the Securities and Exchange Commission which are available on the Company’s website at www.enterprisebank.com under “Investor Relations.”

Readers should carefully review all disclosures we file from time to time with the SEC which are available on the Company’s website at www.enterprisebank.com under “Investor Relations.”

General Development and Description of Our Business

Enterprise Financial Services Corp (“we,” “us,” or “our”), a Delaware corporation, is a financial holding company headquartered in Clayton, Missouri incorporated in December 1994.

We are the holding company for Enterprise Bank & Trust, a full-service financial institution offering banking and wealth management services to individuals and corporate customers primarily located in Arizona, California, Kansas, Missouri, Nevada, and New Mexico.

executive offices are located at 150 North Meramec Avenue, Clayton, Missouri 63105, and our telephone number is (314) 725-5500.

Enterprise Financial Services Corp (“Company,” “we,” “us,” or “our”), headquartered in Clayton, Missouri, is a financial holding company incorporated under Delaware law in December 1994.

EFSC is the holding company for Enterprise Bank & Trust, a full-service financial institution offering banking and wealth management services to individuals and corporate customers primarily located in Arizona, California, Kansas, Missouri, Nevada, and New Mexico.

Our executive offices are located at 150 North Meramec Avenue, Clayton, Missouri 63105, and our telephone number is (314) 725-5500.

Our stated mission is “Guiding people to a lifetime of financial success.” We have established an accompanying corporate vision, “To be a company where our associates are proud to work, that delivers ease of navigation to our customers and value to our investors, while helping our communities flourish.” These tenets are fundamental to our business strategies and operations.

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In prior years, we were selected to distribute New Markets Tax Credits, and we continue to participate in the application process, as well as serve as a secured lender to other allocatees.

the third quarter 2021, the Company received a $60.0 million allocation from the New Market Tax Credit Program.

• Tax Credit Brokerage .

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We lend the partnership money with 6 - 12 year terms and receive interest income and fee income when projects close and when credits are sold.

We have a team of experienced bankers in production offices across 13 states that originate loans through the SBA 7(a) program.

We have a team of experienced bankers in production offices across the country that originate loans through the SBA 7(a) program.

These loans are primarily owner-occupied, commercial real estate loans secured by a 1st lien.

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By focusing on this specific product type, we have developed an expertise that allows for speed and reliability of execution.

Specialty deposits – In addition to commercial operating accounts for our C&I customers, we offer specialty deposit accounts to customers in certain industries with complex account needs.

Our focus areas include community associations, property management, third party escrow, and trust services.

In addition, we service deposit accounts for customers in our specialized lending niches, including sponsor finance, tax credit and life insurance premium financing.

These accounts are primarily demand accounts and have a low overall interest cost.

Fee income business – We offer a broad range of treasury management products and services that benefit businesses ranging from large national clients to local merchants.

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Enterprise Trust offers a wide range of fiduciary, investment management, and financial advisory services to facilitate our providing these services.

We also offer international banking, and tax credit businesses that generate fee income.

We also offer international banking, card services and tax credit businesses that generate fee income.

Use of technology – Our client technology product offerings include, but are not limited to, internet banking, mobile banking, cash management products, remote deposit capture, positive pay services, fraud detection and prevention, automated payables, check image, and statement and document imaging.

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The efficiency ratio is equal to noninterest expense divided by total revenue (net interest income plus noninterest income).

Growth through Acquisitions – Disciplined strategic acquisitions have contributed significantly to the Corporation’s growth and expansion over the past five years.

Most recently, on November 12, 2020, the Company closed its acquisition of 100% of Seacoast and its wholly-owned subsidiary, Seacoast Commerce Bank.

Seacoast operated five full-service retail and commercial banking offices in California and Nevada, as well as SBA loan production and deposit production offices in Arizona, California, Colorado, Illinois, Indiana, Massachusetts, Michigan, Nevada, Ohio, Oregon, Texas, Utah, and Washington.

Seacoast shareholders received 0.5061 shares of EFSC common stock for each Seacoast common share and cash in lieu of any fractional shares.

In connection with the merger, Enterprise issued approximately 5.0 million shares of EFSC common stock valued at $33.56 per share, which was the closing price of Enterprise common stock on November 12, 2020.

The value of the transaction consideration was approximately $169 million.

The Seacoast acquisition enhanced the Company’s commercial and specialty lending verticals, while enhancing the Company’s funding profile with deposit expertise in property management, homeowners’ associations, and escrow services, and materially expanding the Company’s geographic footprint.

On March 8, 2019, the Company closed its acquisition of 100% of Trinity and its wholly-owned subsidiary, LANB.

Trinity operated six full-service retail and commercial banking offices in Los Alamos, Santa Fe, and Albuquerque, New Mexico.

Trinity shareholders received cash consideration of $1.84 per share of Trinity common stock and 0.1972 shares of EFSC common stock per share of Trinity common stock with cash in lieu of fractional shares.

Aggregate consideration at closing was approximately 4.0 million shares of EFSC common stock and $37.3 million cash paid to Trinity shareholders.

Based on EFSC’s closing stock price of $43.07 on March 7, 2019, the overall transaction had a value of $209.2 million.

The Trinity acquisition expanded the Company’s geographic footprint into New Mexico.

Growth through Acquisitions – Disciplined strategic acquisitions have contributed significantly to the Company’s growth and expansion.

Most recently, on July 21, 2021, the Company closed its acquisition of First Choice and its wholly-owned bank subsidiary, FCB.

First Choice operated eight full service branches in Southern California with total assets of $2.3 billion.

The First Choice acquisition strengthened the Company’s commercial banking presence in the California market.

On November 12, 2020, the Company closed its acquisition of Seacoast and its wholly-owned bank subsidiary, Seacoast Commerce Bank.

Seacoast operated five full-service retail and commercial banking offices in California and Nevada, as well as SBA loan production and deposit production offices in various states.

Seacoast had total

assets of $1.3 billion.

The Seacoast acquisition enhanced the Company’s commercial and specialty lending verticals, while enhancing the Company’s funding profile with deposit expertise in certain specialty deposit areas.

The Company and its subsidiaries operate in highly competitive markets.

Our geographic markets are served by multiple large financial and bank holding companies with substantial capital resources and lending capacity.

We face competition not only from other financial holding companies and commercial banks, but also from credit

unions, investment managers, insurers, brokerage firms, technology companies, and other providers of financial services and products.

We face competition not only from other financial holding companies and commercial banks, but also from credit unions, investment managers, insurers, brokerage firms, financial technology companies, and other providers of financial services and products.

Strong competition for deposit and loan products affects the rates of those products, as well as the terms on which they are offered to customers.

Available Information

Various reports provided to the SEC, including our annual reports, quarterly reports, current reports, proxy statements, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website at www.enterprisebank.com under the “Investor Relations” link.

These reports are made available as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

Our filings with the SEC are also available on the SEC’s website at www.sec.gov.

All website addresses given in this document are for information only and are not intended to be an active link or to incorporate any website information into this document.

Supervision and Regulation

The following is a summary description of the relevant laws, rules, and regulations governing banks and financial holding companies.

The following is a summary description of the relevant laws, rules, and regulations governing banks and financial holding companies, including the Company.

The description of, and references to, the statutes and regulations below are brief summaries and do not purport to be complete.

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The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies concerning the establishment of deposit insurance assessment fees, classification of assets and establishment of adequate loan loss reserves for regulatory purposes.

Various legislation is from time to time introduced in Congress and Missouri’s legislature.

Various legislation is from time to time introduced in Congress and state legislatures where we operate.

Such legislation may change applicable statutes and the operating environment in substantial and unpredictable ways.

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Some of the changes brought about by the Dodd-Frank Act have been modified by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (the “Regulatory Relief Act”), signed into law on May 24, 2018.

The Dodd-Frank Act has increased the regulatory burden and compliance costs of the Company.

Legislative and Regulatory Actions in Connection with Global Pandemic .

On January 31, 2020, the Secretary of Health and Human Services declared a public health emergency due to the global outbreak of a new strain of coronavirus (COVID-19).

On March 13, 2020, the President of the United States proclaimed the COVID-19 as a national emergency, following the World Health Organization’s categorization of the outbreak as a pandemic.

COVID-19 continues to aggressively spread globally, including throughout the United States.

On March 13, 2020, the President of the United States proclaimed COVID-19 as a national emergency, following the World Health Organization’s categorization of the outbreak as a pandemic.

Variants of COVID-19 continue to aggressively spread globally, including throughout the United States.

The pandemic and resulting travel bans, closure of non-essential businesses, social distancing measures and government responses across the country have had a profound impact on the global economy, financial markets and how business has been conducted across all industries and have affected many of the Company’s customers and clients.

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The PPP provided $349 billion in guaranteed loans that are forgivable if certain requirements are met.

On April 24, 2020 and December 27, 2020 an additional $310 billion and $284 billion, respectively, was added to the PPP.

Subsequent legislation increased the overall PPP authorization to $813.7 million through the end of the program on May 31, 2021.

The CARES Act also provides certain temporary regulatory relief for financial institutions.

The act permits

financial institutions to temporarily suspend any determination of a loan modified as a result of the effects of the COVID-19 pandemic as being a troubled debt restructuring (“TDR”), including impairment for accounting purposes.

We elected to apply the CARES Act relief to certain loan modifications that relate primarily to short-term payment deferrals and have not classified such modifications as TDRs.

The CARES Act included a provision that allowed depository institutions the option to defer adoption of the CECL standard to the earlier of (1) the end of the COVID-19 national emergency or (2) December 31, 2020.

The Company did not elect the deferral option.

The act permits financial institutions to temporarily suspend any determination of a loan modified as a result of the effects of the COVID-19 pandemic as being a troubled debt restructuring (“TDR”), including impairment for accounting

We elected to apply the CARES Act relief to certain loan modifications that relate primarily to short-term payment deferrals and have not classified such modifications as TDRs through the end of 2021.

The CARES Act grants potential tax relief and liquidity to businesses, including corporate tax provisions that:

temporarily allow for the carryback of net operating losses and remove limitations on the use of loss carryforwards, increase interest expense deduction limitations, and allow accelerated depreciation deductions on certain asset improvements.

On March 11, 2021, the American Rescue Plan of 2021 (“ARA”) was signed into law.

The ARA provided additional support to the economy through direct support to individuals, families and small businesses.

Financial Holding Company

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In order to remain a financial holding company, the Company must continue to be considered well-managed and well-capitalized by the Federal Reserve, and the Bank must continue to be considered well-managed and well-capitalized by the FDIC, and have at least a “satisfactory” rating under the Community Reinvestment Act.

See “Liquidity and Capital Resources” in the Management Discussion and Analysis for more information on our capital adequacy, and “Bank Subsidiary - Community Reinvestment Act” below for more information on the Community Reinvestment Act.

Stock Repurchase Plans:

From time to time the Company may engage in stock repurchases.

The Federal Reserve requires that bank and financial holding companies, where certain conditions are triggered, provide prior notice to, consult with, and in certain circumstances seek the approval of, the Federal Reserve or reserve bank staff prior to implementing a stock repurchase plan.

In addition to the formal guidance, the Federal Reserve appears to have adopted an informal policy of requiring bank and financial holding companies to seek a safety and soundness “non-objection” from the appropriate regulatory staff prior to implementing a stock repurchase plan, regardless of the financial or capital position of the holding company.

In some cases, examiners following this informal policy have required the holding company to produce additional information and materials for review.

See “Liquidity and Capital Resources” in the MD&A for more information on our capital adequacy, and “Bank Subsidiary - Community Reinvestment Act” below for more information on the Community Reinvestment Act.

Acquisitions:

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Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the Company or controls a majority of the board of directors.

In certain circumstances, control is rebuttably presumed to exist if a person or company acquires 10% or more, but less

than 25%, of any class of voting securities of the Company.

In certain circumstances, control is rebuttably presumed to exist if a person or company acquires 10% or more, but less than 25%, of any class of voting securities of the Company.

The regulations provide a procedure for challenging rebuttable presumptions of control.

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Those activities include, among other activities, certain insurance, advisory and securities activities.

Support of Bank Subsidiaries:

Support of Bank Subsidiary:

Under Federal Reserve policy, the Company is expected to act as a source of financial strength for the Bank and to commit resources to support the Bank.

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The Company is also subject to capital requirements applied on a consolidated basis, which are substantially similar to those required of the Bank (summarized below).

Dividend Restrictions:

Dividend Restrictions and Stock Repurchases:

From time to time the Company may engage in stock repurchases.

Under Federal Reserve policies, financial holding companies may pay cash dividends on common stock only out of income available over the past year if prospective earnings retention is consistent with the organization’s expected future needs and financial condition and if the organization is not in danger of not meeting its minimum regulatory capital requirements.

Federal Reserve policy also provides that financial holding companies should not maintain a level of cash dividends that undermines the financial holding company’s ability to serve as a source of strength to its banking subsidiaries.

Dividends, repurchases and redemptions on the Company’s capital stock (common and preferred) are prohibited under the terms of the junior subordinated debenture agreements (see Note 11-Subordinated Debentures) if the Company is in continuous default on its payment obligations, has elected to defer interest payments or extends the interest payment period.

Furthermore, unless dividends on all outstanding shares of the Series A Preferred Stock for the most recently completed dividend period have been paid or declared, dividends on, and repurchases of, common stock is prohibited.

Bank Subsidiary

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regulatory capital framework required by the Dodd-Frank Act.

The Basel III final rule, effective January 1, 2015, established a new CET1 requirement and increased the minimum tier 1 capital requirement to 6.0%.

The Basel III final rule established a new CET1 requirement and increased the minimum tier 1 capital requirement to 6.0%.

In addition, all banking organizations must maintain a CCB consisting of CET1 capital in an amount equal to 2.5% of risk-weighted assets in order to avoid restrictions on their ability to make capital distributions and to pay certain discretionary bonus payments to executive officers.

The CCB effectively increased the minimum CET1 capital, tier 1 capital, and total capital ratios for U.S.

banking organizations to 7.0%, 8.5%, and 10.5%, respectively, as of January 1, 2019.

banking organizations to 7.0%, 8.5%, and 10.5%, respectively.

As required by the Basel III final rule, capital instruments such as trust preferred securities and cumulative preferred shares have been phased out of tier 1 capital for banking organizations that had $15 billion or more in total consolidated assets as of December 31, 2009, and grandfathered as tier 1 capital such instruments issued by smaller entities prior to May 19, 2010 (provided they do not exceed 25% of tier 1 capital).

The Company’s trust preferred securities currently are grandfathered under this provision.

However, if the Company has total assets of $15 billion and acquires another bank, or if an acquisition causes the Company to exceed $15 billion in total assets, the trust preferred securities will no longer qualify as Tier 1 instruments (but may be included in tier 2 capital).

Prompt Corrective Action:

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Consumer Financial Protection Bureau:

The Dodd-Frank Act centralized responsibility for consumer financial protection including implementing, examining and enforcing compliance with federal consumer financial laws with the CFPB.

Depository institutions with less than $10 billion in assets, such as our Bank, will be subject to rules

promulgated by the CFPB, but will continue to be examined and supervised by federal banking regulators for consumer compliance purposes.

The Dodd-Frank Act centralized responsibility for consumer financial protection including implementing, examining and enforcing compliance with federal consumer financial laws with

Depository institutions with more than $10 billion in assets, such as the Bank, are subject to rules promulgated by the CFPB.

The CFPB has broad rule-making authority for a wide range of consumer protection laws that apply to all banks, including the authority to prohibit unfair, deceptive or abusive acts and practices.

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The CFPB has adopted final rules implementing minimum standards for the origination of residential mortgages, including standards regarding a customer’s ability to repay, restricting variable-rate lending by requiring the ability to repay variable-rate loans be determined by using the maximum rate that will apply during the first five years of a variable-rate loan term, and making more loans subject to provisions for higher cost loans, new disclosures, and certain other revisions.

While the Dodd-Frank Act allows borrowers to raise certain defenses to foreclosure if they receive any loan other than a “qualified mortgage” as defined by the CFPB, the Regulatory Relief Act provides certain presumptions of qualified mortgage status for banks with assets of less than $10 billion, subject to certain documentation and product issues.

The Dodd-Frank Act allows borrowers to raise certain defenses to foreclosure if they receive any loan other than a “qualified mortgage” as defined by the CFPB.

Dividends by the Bank Subsidiary:

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The Bank is subject to the provisions of Regulation W promulgated by the Federal Reserve, which encompasses Sections 23A and 23B of the Federal Reserve Act.

Regulation W places limits and conditions on the amount of loans or extensions of credit to, investments in, or certain other transactions with, affiliates and on the amount of advances to third parties collateralized by the securities or obligations of

Regulation W also prohibits, among other things, an institution from engaging in certain transactions with certain affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

Federal law also places restrictions on the Bank’s ability to extend credit to its executive officers, directors, principal shareholders and their related interests.

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These factors are also considered in evaluating mergers, acquisitions, and applications to open a branch or facility.

The Bank has a satisfactory rating under CRA.

In April 2018, the U.S.

Department of Treasury issued a memorandum to the federal banking regulators recommending changes to the CRA’s regulations to reduce their complexity and associated burden on banks, and in December 2019, the FDIC and the Office of the Comptroller of the Currency proposed for public comment rules to modernize the agencies' regulations under the CRA.

In September 2020, the Federal Reserve Board released for public comment its proposed rules to modernize CRA regulations.

We will continue to evaluate the impact of any changes to the CRA regulations.

The Bank has an outstanding rating under CRA.

USA PATRIOT Act:

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Revisions to the Volcker Rule in 2019, that become effective in 2020, simplifies and streamlines the compliance requirements for banks that do not have significant trading activities.

The Regulatory Relief Act provided an exemption from the above restrictions for banks with less than $10 billion in assets.

In 2020, the OCC, Federal Reserve, FDIC, SEC and Commodity Futures Trading Commission finalized

further amendments to the Volcker Rule.

In 2020, the OCC, Federal Reserve, FDIC, SEC and Commodity Futures Trading Commission finalized further amendments to the Volcker Rule.

The amendments include new exclusions from the Volcker Rule’s general prohibitions on banking entities investing in and sponsoring private equity funds, hedge funds, and certain other investment vehicles (collectively “covered funds”).

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In particular, the Federal Reserve regulates monetary policy and interest rates in order to influence general economic conditions.

These policies have a significant influence on overall growth and distribution of loans, investments and deposits and affect interest rates charged on loans or paid for deposits.

These policies have a significant influence on overall growth and distribution of loans, investments and deposits and affect interest rates charged on loans or paid

for deposits.

Federal Reserve monetary policies have had a significant effect on the operating results of all financial institutions in the past and may continue to do so in the future.

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We value accountability because it is essential to our success, and we accept our responsibility to hold ourselves and others accountable for meeting shareholder commitments and achieving exceptional standards of performance.

We also believe in work/life balance for our associates.

Because quality of life is important to the health of our Company and associates, we are committed to creating a culture that emphasizes and encourages wellness.

We also believe in supporting our associates to achieve a work/life balance.

Attracting and Retaining Talent.

Our goal is to offer careers to our associates;

not just jobs.

At December 31, 2021, we employed 1,032 regular full-time and 43 part-time associates.

We also employ a small number of seasonal/temporary associates and occasionally hire independent contractors for specific projects that require a highly specialized skill set or to provide additional resources during peak times, as needed.

Our performance measures and compensation determinations are designed to ensure the proper balance of risk and reward.

Performance evaluations facilitate our ongoing assessment of associates’ skills and improvements as needed.

We use annual talent reviews to identify high performing associates and future potential leaders, provide insight into critical development needs and retention risks, and identify business-critical talent needs, including anticipated workforce planning challenges.

Additionally, we have established succession plans to ensure continuation of critical roles and operations.

We are committed to offering a competitive total compensation package.

We regularly compare compensation and benefits with peer companies and market data, making adjustments as needed to ensure compensation stays competitive.

In 2021, we raised our internal minimum wage to $16 per hour to maintain a competitive total rewards package that attracts and retains top talent.

This decision was made after extensive research, including reviewing the current market landscape both inside and outside of banking and financial services, and with feedback from leadership.

We also offer a wide array of benefits for our associates and their families including 401(k), medical, dental and vision benefits as well as life insurance and short-term disability for all full-time associates.

Our wellness program is designed to help associates avoid illness while improving and maintaining their general health.

Each year, we provide a variety of information and promote health challenges to educate associates on proper diet, exercise, stress management and prevention strategies.

The program offers financial rewards to associates who adopt healthy habits and participate in wellness education and health screens.

Annual health screenings are provided to all associates at no charge.

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We conduct associate surveys to ensure that we understand what is important to our associates, including their opinions on a variety of topics.

We have made changes as a result of the survey results including the adoption of a volunteer time-off policy, a parental leave policy and improvements to internal communication processes.

We have made changes as a result of the survey results including the adoption of a volunteer time-off policy and improvements to internal communication processes.

Our efforts are being recognized.

For the past three years, the Bank was included in the “Best Banks to Work for” by American Banker magazine for our dedication to employee satisfaction.

In 2020, a significant portion of our associates responded to one or more surveys of our associates.

Staffing Model.

The majority of our employees are regular full-time associates.

We also employ regular part-time associates and some seasonal/temporary associates.

Diversity & Inclusion .

For the past four years, the Bank has been included in the “Best Banks to Work for” by American Banker magazine for our dedication to employee satisfaction.

In late 2021, we conducted a survey specifically directed at gaining a better understanding of our culture and our associates’ experiences.

We believe this is especially important to understand as we have grown into new markets and welcomed new associates.

The survey was designed to give management insight into our culture’s strengths and opportunities.

Additionally, we utilize small group setting programs, where management regularly meets with associates across the organization for informal discussion and open forum on topics that are top of mind for the attendees.

Through our continued use of surveys and other forms of collecting associate feedback, we can continue to understand, grow and enhance our culture to facilitate a ‘best place to work’ environment.

Eighty-two percent of our associates responded to the culture survey.

Diversity, Equity & Inclusion .

We believe that diversity of thought and experiences results in better outcomes and empowers our associates to make more meaningful contributions within our company and communities.

We continue to learn and grow, and our current initiatives reflect our ongoing efforts around a more diverse, inclusive and equitable workplace.

In 2012, we formed a Diversity/Inclusion (DI) Council, designed to help educate and engage associates on a wide variety of inclusion topics — from ageism to race.

In 2020, the DI Council was renamed, refocused and refreshed resulting in the DEI (Diversity, Equity, Inclusion) Leadership Council.

As part of these focused efforts, we elevated the DEI Leadership Council to a formal internal leadership committee.

In addition, we have designed our associate development programs with a view towards helping to create a more inclusive environment by giving associates of all backgrounds additional opportunities to succeed and contribute.

Our Diversity, Equity & Inclusion Leadership Council and our Black Heritage Connections Group — are tasked with making recommendations on specific steps we can take to ensure we are driving positive change in our communities.

In addition, we have several associate development programs that help to create a more inclusive environment by giving associates and other individuals of all backgrounds additional opportunities to succeed and contribute.

These programs include:

• Career Acceleration Program - This program allows participants to experience a wide range of assignments by rotating through the various product partners and operational areas of the Company.

• Career Acceleration Program - This trainee program allows participants to experience a wide range of assignments by rotating through the various product partners and operational areas of the Company.

Upon successful completion of the program, the associate is placed in a role that aligns with their strengths and talents and helps meet the needs of our organization.

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• Business Resource Groups - These groups bring together associates with a shared identity, interest or goal to create community and opportunities for improvement and engagement.

We track the representation of women and racial/ethnic minorities because we believe that diversity helps us build more effective teams and improve our client experience, leading to greater success for the Company and our shareholders.

Our gender and race data is monitored by the Board.

We are proud of our progress in this area, but we continue to strive to further diversify our workforce and strengthen our culture of inclusion.

We are committed to offering a competitive total compensation package.

We regularly compare compensation and benefits with peer companies and market data, making adjustments as needed to ensure compensation stays competitive.

We also offer a wide array of benefits for our associates and their families including medical, dental and vision benefits as well as life insurance and short-term disability for all full-time associates.

We track the representation of women and underrepresented minorities because we believe that diversity helps us build more effective teams and improve our client experience, leading to greater success for the Company and our shareholders.

Our diversity data is monitored by the Board.

We have made progress in this area, but continue to strive to further diversify our workforce and strengthen our culture of inclusion.

Focusing on a Safe and Healthy Workplace .

We value our associates and are committed to providing a safe and healthy workplace.

Our formal Health & Safety (HS) Program consists of policies, procedures, and guidelines, and mandates all tasks be conducted in a safe and efficient manner, while complying with local, state and federal health and safety regulations, and special safety concerns.

The HS program encompasses all facilities and operations and addresses on-site emergencies, injuries and illnesses, evacuation procedures, cell phone usage and general safety rules.

Our employees are required to comply with company safety rules and expectations and are required to certify their understanding and compliance with company rules.

In response to the coronavirus pandemic, we created an oversight committee and established a resource center to provide updates on our action plans, policies, and safety training.

Our formal Health & Safety (HS) Policy mandates all tasks be conducted in a safe and efficient manner and comply with all local, state and federal health and safety regulations, and special safety concerns.

The HS Policy encompasses all facilities and operations and addresses on-site emergencies, injuries and illnesses, evacuation procedures, cell phone usage and general safety rules.

Our priority throughout the COVID-19 pandemic is to protect the health and safety of associates and clients while remaining operational.

We are abiding by federal, state and local governmental guidelines as we balance public health concerns with the needs of our business.

We continue to follow our Business Continuity Plan and Pandemic Plan and have been able to successfully navigate the pandemic with no significant interruptions.

Available Information

These reports are made available as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

Our filings with the SEC are also available on the SEC’s website at www.sec.gov.

All website addresses given in this document are for information only and are not intended to be an active link or to incorporate any website information into this document.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business