What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-03-01 · 67 added, 77 removed, 274 unchanged (34% of the section changed)

Seacoast Banking Corporation of Florida (“Seacoast” or the “Company”) is a financial holding company, incorporated in Florida in 1983, and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”).

Its principal subsidiary is Seacoast National Bank, a wholly-owned national banking association (“Seacoast Bank”), which commenced its operations in 1933.

As of December 31, 2020, the Company’s legal structure also included seven trusts formed for the purpose of issuing trust preferred securities.

Seacoast Bank has three wholly-owned subsidiaries.

Its principal

subsidiary is Seacoast National Bank, a wholly-owned national banking association (“Seacoast Bank”), which commenced its operations in 1933.

As of December 31, 2021, Seacoast had total consolidated assets of $9.7 billion, total deposits of $8.1 billion, total consolidated liabilities, including deposits, of $8.4 billion and consolidated shareholders’ equity of $1.3 billion.

Seacoast has grown to be one of the largest community banks headquartered in Florida, with concentrations in the state's fastest growing markets, each of which has unique characteristics and opportunities.

This growth has been achieved through a balanced strategy consisting of organic growth and opportunistic acquisitions.

The Company provides integrated financial services including commercial and retail banking, wealth management and mortgage services to customers through advanced online and mobile banking solutions, and through Seacoast Bank's network of 54 traditional branches.

The Company’s legal structure includes wholly-owned subsidiaries through which the Company manages investments and foreclosed properties.

Through one of these subsidiaries, Seacoast Bank has a controlling interest in a real estate investment trust (“REIT”).

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Seacoast Bank personnel managing the sale of these services are dual employees with LPL Financial, the company through which Seacoast Bank presently conducts brokerage and annuity services.

In 2018, the Company established Seacoast Insurance Services, Inc., providing customers with access to a range of insurance products.

As of December 31, 2020, Seacoast had total consolidated assets of $8.3 billion, total deposits of $6.9 billion, total consolidated liabilities, including deposits, of $7.2 billion and consolidated shareholders’ equity of $1.1 billion.

Operations are discussed in more detail under “Item 7.

Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations.”

Seacoast has grown to be one of the largest community banks headquartered in Florida.

This growth has been achieved through a balanced strategy consisting of organic growth and acquisitions in the state's most attractive markets.

The Company provides integrated financial services including commercial and retail banking, wealth management and mortgage services to customers through advanced banking solutions and Seacoast Bank's network of 51 traditional branches and stand-alone commercial banking centers.

Seacoast operates primarily in Florida, with concentrations in the state's fastest growing markets, each with unique characteristics and opportunities that support the Company's strategy of organic growth and attractive acquisitions.

Seacoast Bank customers can also access their account information and perform transactions online, through mobile applications, or through Seacoast Bank's telephone customer support center, which offers extended hours.

These options, combined with a traditional branch footprint, meet a broad range of customer needs.

Seacoast Insurance Services, Inc., a wholly owned subsidiary of Seacoast, facilitates access for the Company to provide customers with a range of insurance products.

The Company also operates seven trusts, formed for the purpose of issuing trust preferred securities, as described in Note 9 – “Borrowings” in Item 8 of this Form 10-K.

Available Information

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Seacoast has in recent years sought to complement organic growth with the acquisition of financial institutions that support the Company's strategy and expand its ability to serve customers in Florida's key markets.

Since 2014, Seacoast has acquired ten institutions that have enhanced the Company's presence in the strongest and fastest growing MSAs in Florida, including two acquisitions in 2020;

First Bank of the Palm Beaches (“FBPB”) in March 2020 and Fourth Street Banking Company (“Fourth Street”) and Fourth Street’s wholly owned subsidiary bank, Freedom Bank, in August 2020.

FBPB and Freedom Bank operated two branches in the Palm Beach market and two branches in the St.

Petersburg market, respectively.

The Company expects these acquisitions to enhance its presence in those markets, expand its customer base, leverage operating costs through economies of scale, and positively affect the Company’s operating results.

In 2020, the Company added business bankers across key markets, invested in technology to improve banker productivity in both office and remote environments, and enhanced customer self-service.

Seacoast has continued to expand digital offerings to provide an improved customer experience and lower the cost to serve, as well as to meet the ever-changing needs of its customer base during the COVID-19 pandemic, which has influenced how customers interact with Seacoast and accelerated the shift to digital banking for many customer segments.

Seacoast operates in a highly competitive market.

Competitors range in both size and geographic footprint.

Seacoast operates throughout Florida from the southeast, including Fort Lauderdale, Boca Raton and Palm Beach, north along the east coast to the Daytona area, into Orlando and Central Florida and the adjacent Tampa market, and west to Okeechobee and surrounding counties.

Seacoast Bank's competition includes not only other banks of comparable or larger size in the same markets, but also various other nonbank financial institutions, including savings and loan associations, credit unions, mortgage companies, personal and commercial financial companies, peer to peer lending businesses, investment brokerage and financial advisory firms and mutual fund companies.

Since 2014, Seacoast has acquired 13 institutions that have enhanced the Company's presence in the strongest and fastest growing markets in Florida, including Orlando, Tampa, and South Florida.

In 2021, the Company grew organically as well, adding 20 new commercial bankers across the state and key personnel across departments including treasury management, mortgage banking, credit operations, and loan operations as the Company seeks to complement its current and future growth.

The Company has also invested in its branch network, opening two new branches in South Florida, with additional new branches planned for 2022.

The Company continues to benefit from previous investments in technology to improve banker productivity and to enhance the banking experience for customers.

Seacoast operates in a highly competitive market, and Seacoast Bank's competition includes not only other banks of comparable or larger size in the same markets, but also various other nonbank financial institutions, including savings and loan associations, credit unions, mortgage companies, personal and commercial financial companies, peer to peer lending businesses, investment brokerage and financial advisory firms and mutual fund companies.

Seacoast Bank competes for deposits, commercial, fiduciary and investment services and various types of loans and other financial services.

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In addition, these institutions may be able to better afford and make broader use of media advertising, support services, and electronic and other technology.

To offset these potential competitive disadvantages, the Company depends on its reputation for superior service, ability to make credit and other business decisions quickly, and the delivery of an integrated distribution of traditional branches and bankers, with digital technology.

To offset these

potential competitive disadvantages, the Company depends on its reputation for superior service, ability to make credit and other business decisions quickly, and the delivery of an integrated distribution of traditional branches and bankers, with digital technology.

Human Capital

As of December 31, 2021, the Company and its subsidiaries employed 989 full time-equivalent employees.

Any discussion of the past year must be framed within the context of the COVID-19 pandemic and its impact on our employees and communities.

Our priority in addressing the pandemic thus far has been to carefully adjust our physical operations to protect the health and welfare of our associates and customers while providing continuous access to banking services.

We shifted branch operations to remain open by drive-thru or lobby appointment only for part of 2020, implemented enhanced cleaning and protection protocols, and our operational teams continue to work remotely or in staggered shifts.

Recognizing the challenges that the pandemic has brought to all of our personal and professional lives, and the related impact on our team, we have implemented various programs to support our associates’ well-being.

These include bonuses for retail and lending associates, who have kept critical functions operating at full capacity, and an employee assistance program that provides short-term counseling and other wellness resources.

Seacoast invests in its employees for the long term.

To empower associates to achieve their potential and enable their success, we provide a variety of professional development programs, opportunities, and resources.

Among these is the Seacoast Manager Excellence Program, which was recently recognized by American Banker when they named Seacoast one of 2020’s Best Banks to Work For.

This program supports associates as they progress from individual contributor to manager, focusing on creating purpose, driving results, developing talent, and leading change.

Seacoast believes that a culture of inclusion and diversity enhances its entire workforce.

Seacoast strives to make inclusion a hallmark of our culture, engaging associates in our Associate Resource Group (“ARG”) programs led by and comprised of associates who have diverse backgrounds and experiences, and who share a common interest in professional development, improving corporate culture, and building stronger communities.

Currently, Seacoast ARGs include Black Associates and Allies Network (“BAAN”), LGBTQ+, Veterans, and Women Mean Business.

Each is sponsored and supported by senior leaders across the enterprise.

The Company also commits to having a diverse talent pipeline by partnering with its business units in their efforts to recruit diverse talent across all leadership and skill areas.

The Company considers employee relations to be favorable, and has no collective bargaining agreements with any employees.

We believe our ability to attract and retain employees is a key to our success.

Accordingly, we implemented, in July 2018, a $15 per hour minimum pay rate company-wide.

We continue to strive to offer competitive salaries and employee benefits

including, among others, paid vacation time, medical, dental and vision insurance benefits, 401(k) plan with company match, tuition assistance, and an employee stock purchase plan.

Since opening our doors in 1926, Seacoast Bank has remained true to our local roots and family values, and we believe that our greatest assets will always be our people.

Professional Development and Employee Engagement

We invest in our associates through training and development programs, as well as tuition reimbursement to promote continued professional growth.

The Seacoast Manager Excellence Program, which was recognized in both 2020 and 2021 by American Banker when they named Seacoast as a Best Bank to Work For, supports associates as they progress from individual contributor to manager, focusing on creating purpose, driving results, developing talent, and leading change.

To ensure that we are meeting associates’ expectations, we conduct an Employee Engagement Survey each year.

The results of the survey and the process of continuous improvement are discussed with the Board at least annually.

In 2021, our engagement score was 83% with 93% participation by the associate base, a 9% increase from the prior year.

Diversity and Inclusion

We strive to create an atmosphere where all associates feel welcome and confident bringing their whole self to work.

Inclusion, respect, and fairness live at the core of our Company culture, and we believe the diversity of our associate base and of the communities we serve makes us stronger.

We believe each associate has a unique perspective that is valuable to our Company, our customers, and our communities.

As part of the many things we do to support our associates and their families, as well as additional steps we are taking to continue to build on this progress, we have established four Associate Resource Groups (“ARGs”):

LGBT+, Military Outreach, Women Mean Business, and Black Associates and Allies Network (“BAAN”) all of which collaborate across regions.

The Company places a high value on inclusion, engaging employees in our ARG programs, which are each sponsored by a senior executive leader and are comprised of associates with diverse backgrounds, experiences or characteristics who share a common interest in professional development, improving corporate culture and delivering sustained business results.

Seacoast was also recognized as part of the Human Rights Campaign Foundation’s 2021 Corporate Equality Index as a Best Place to Work for LGBTQ Equality, and was one of the few companies earning a top score of 100%.

This is the second consecutive year we have earned this distinction.

Associate Health and Well-Being

We strive to offer competitive salaries and employee benefits including, among others, paid vacation time, medical, dental and vision insurance benefits, 401(k) plan with company match, and an employee stock purchase plan.

Seacoast also provides access to a variety of resources to address personal and financial health and wellness.

Comprehensive Employee Assistance Plan (EAP) resources are accessible to all associates, addressing a wide range of topics from substance abuse to child and elder care resources.

Associates are encouraged to balance their physical fitness with their work life, with a Company reimbursement for a portion of fitness center memberships.

We also offer financial planning resources for help with student debt, retirement planning and one-on-one financial planning sessions to all associates.

Supervision and Regulation

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Changes in applicable laws, regulations or regulatory guidance, or their interpretation by regulatory agencies or courts may have a material adverse effect on the Company and Seacoast Bank’s business, operations, and earnings.

Supervision and regulation of banks, their holding companies and affiliates is intended primarily for the protection of depositors and customers, the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”), and the U.S.

Supervision and regulation of banks, their holding companies and affiliates is intended primarily for the protection of depositors and customers, the Deposit

Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”), and the U.S.

banking and financial system rather than holders of the Company's capital stock.

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Shareholder Say-On-Pay Votes:

The Dodd-Frank Act requires public companies to provide shareholders with an advisory vote on executive compensation (known as say-on-pay votes), the frequency of a say-on-pay vote, and the golden parachutes

available to executives in connection with change-in-control transactions.

Public companies must give shareholders the opportunity to vote on say-on-pay proposals at least every three years and the opportunity to vote on the frequency of say-on-pay votes at least every six years, indicating whether the say-on-pay vote should be held annually, biennially, or triennially.

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Other Regulatory Matters:

The Company and its subsidiaries are subject to oversight by the SEC, the Financial Industry Regulatory Authority, (“FINRA”), the PCAOB, the NASDAQ stock exchange and various state securities regulators.

The Company and its subsidiaries are also subject to oversight by the SEC, the PCAOB, the NASDAQ stock exchange and various state securities and insurance regulators.

The Company and its subsidiaries have from time to time received requests for information from regulatory authorities in various states, including state attorneys general, securities regulators and other regulatory authorities, concerning business practices.

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The required minimum leverage ratio for all banks and bank holding companies is 4%.

In addition, effective January 1, 2019, the capital rules require a capital conservation buffer of 2.5% above each of the minimum risk-based capital ratio requirements (CET1, Tier 1 and total risk-based capital), which is designed to absorb losses during periods of economic stress.

In addition, the capital rules require a capital conservation buffer of 2.5% above each of the minimum risk-based capital ratio requirements (CET1, Tier 1 and total risk-based capital), which is designed to absorb losses during periods of economic stress.

These buffer requirements must be met for a bank or bank holding company to be able to pay dividends, engage in share buybacks or make discretionary bonus payments to executive management without restriction.

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FDICIA imposes progressively more restrictive restraints on operations, management and capital distributions, depending on the category in which an institution is classified.

FDICIA generally prohibits a depository institution from making any capital

distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized.

FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized.

To be well-capitalized, Seacoast Bank must maintain at least the following capital ratios:

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The Federal Reserve has not yet revised the well-capitalized standard for bank holding companies to reflect the higher capital requirements imposed under the current capital rules.

For purposes of the Federal Reserve’s Regulation Y, including determining whether a bank holding company meets the requirements to be a financial holding company, bank holding companies, such as the Company, must maintain a Tier 1 risk-based capital ratio of 6.0% or greater and a total risk-based capital ratio of 10.0% or greater to be well-capitalized.

For purposes of the Federal Reserve’s Regulation Y, including determining whether a bank holding company meets the requirements to be a financial holding company, bank holding

companies, such as the Company, must maintain a Tier 1 risk-based capital ratio of 6.0% or greater and a total risk-based capital ratio of 10.0% or greater to be well-capitalized.

If the Federal Reserve were to apply the same or a similar well-capitalized standard to bank holding companies as that applicable to Seacoast Bank, the Company’s capital ratios as of December 31, 2021 would exceed such revised well-capitalized standard.

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Failure to meet minimum capital requirements could also result in restrictions on the Company’s or Seacoast Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications or other restrictions on growth.

In 2020, the Company’s and Seacoast Bank’s regulatory capital ratios were above the well-capitalized standards and met capital conservation buffer as of December 31, 2020.

In 2021, the Company’s and Seacoast Bank’s regulatory capital ratios were above the well-capitalized standards and met the capital conservation buffer as of December 31, 2021.

Based on current estimates, we believe that the Company and Seacoast Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2022.

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The OCC and the Federal Reserve have each indicated that depository institutions and their holding companies should generally pay dividends only out of current operating earnings.

Under a Federal Reserve policy adopted in 2009, the board of directors of a bank holding company must consider different factors to ensure that its dividend level is prudent relative to maintaining a strong financial position, and is not based on overly optimistic earnings scenarios, such as potential events that could affect its ability to pay, while still maintaining a strong

financial position.

In accordance with Federal Reserve policy, the board of directors of a bank holding company must consider different factors to ensure that its dividend level is prudent relative to maintaining a strong financial position, and is not based on overly optimistic earnings scenarios, such as potential events that could affect its ability to pay, while still maintaining a strong financial position.

As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should consult with the Federal Reserve and eliminate, defer or significantly reduce the bank holding company’s dividends if:

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During the year ended December 31, 2020, Seacoast Bank distributed $20.2 million to the Company.

Prior approval by the OCC is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank’s profits for that year combined with its retained net profits for the preceding two calendar years.

Prior approval by the OCC is required if the total of all dividends declared by a national bank in any calendar year

exceeds the bank’s profits for that year combined with its retained net profits for the preceding two calendar years.

Under this restriction Seacoast Bank is eligible to distribute dividends up to $221.8 million to the Company, without prior OCC approval, as of December 31, 2021.

No dividends on the Company's common stock were declared or paid in 2020, 2019, and 2018.

It is the policy of the Federal Reserve that bank holding companies should pay cash dividends on common stock only on income available during the past year, only if prospective earnings retention is consistent with the organization's expected future needs and financial condition, and only if the level of cash dividends does not undermine the bank holding company's ability to serve as a source of strength to its banking subsidiary.

The Company has paid quarterly dividends since the second quarter of 2021.

Whether the Company continues to pay quarterly dividends and the amount of any such dividends will be at the discretion of the Company's board of directors and will depend on the Company's earnings, financial condition, results of operations, business prospects, capital requirements, regulatory restrictions, and other factors that the board of directors may deem relevant.

Regulation of the Bank:

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Seacoast Bank also is subject to certain Federal Reserve regulations.

As the Company and the Bank each had less than $10 billion in consolidated assets in 2020, they are not subject to the routine supervision of the CFPB, but this may change in the future as the Company and the Bank grow.

In addition, as discussed in more detail below, Seacoast Bank and any of the Company's other subsidiaries that offer consumer financial products and services are subject to regulation and potential supervision by the Consumer Financial Protection Bureau (“CFPB”).

Authority to supervise and examine the Company and Seacoast Bank for compliance with federal consumer laws remains largely with the Federal Reserve and the OCC, respectively.

In the quarter following four consecutive quarters reporting assets over $10 billion, Seacoast Bank would meet the FDIC's definition of a “large institution” and would become subject to direct supervision by the Consumer Financial Protection Bureau (“CFPB”) for compliance with a wide range of consumer compliance laws, and for assessment of the effectiveness of the Bank's compliance management system.

Until such time, authority to supervise and examine the Company and Seacoast Bank for compliance with federal consumer laws remains largely with the Federal Reserve and the OCC, respectively.

However, the CFPB may participate in examinations on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary regulators.

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The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits.

Deposit insurance may be terminated by the FDIC upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by a bank’s federal regulatory agency.

or condition imposed by a bank’s federal regulatory agency.

In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC on behalf of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company.

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Failure of a financial institution to comply with the USA PATRIOT Act’s requirements could have serious legal and reputational consequences for the institution.

Seacoast National Bank has augmented its systems and procedures to meet the requirements of these regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by law.

FinCEN has adopted rules that require financial institutions to obtain beneficial ownership information with respect to legal entities with which such institutions conduct business, subject to certain exclusions and exemptions.

Bank regulators are focusing their examinations on anti-money laundering compliance, and we continue to monitor and augment, where necessary, our anti-money laundering compliance

In addition, FinCEN issued rules that became effective on May 11, 2018, that require, subject to certain exclusions and exemptions, covered financial institutions to identify and verify the identity of beneficial owners of legal entity customers.

Banking regulators will consider compliance with the Act’s money laundering provisions in acting upon acquisition and merger proposals.

Bank regulators routinely examine institutions for compliance with these obligations and have been active in imposing cease and desist and other regulatory orders and money penalty sanctions against institutions found to be violating these obligations.

Sanctions for violations of the Act can be imposed in an amount equal to twice the sum involved in the violating transaction, up to $1 million.

On January 1, 2021, Congress passed federal legislation that made sweeping changes to federal anti-money laundering laws, including changes that will be implemented in 2021 and subsequent years.

Economic Sanctions:

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The Guidance also applies when a bank has a sharp increase in CRE loans or has significant concentrations of CRE secured by a particular property type.

Seacoast Bank has exposures to loans secured by commercial real estate due to the nature of its markets and the loan needs of both our retail and commercial customers.

Seacoast Bank believes that its long term experience in CRE lending, underwriting policies, internal controls, and other policies currently in place, as well as its loan and credit monitoring and administration procedures, are generally appropriate to managing our concentrations as required under the Guidance.

Seacoast Bank has exposures to loans secured by commercial real estate due to the nature of its markets and the loan needs of both its retail and commercial customers.

At December 31, 2021, Seacoast Bank had outstanding $155.0 million in commercial construction and residential land development loans and $75.8 million in residential construction loans to individuals, which represents approximately 21% of total risk-based capital at December 31, 2021, well below the Guidance’s threshold.

At December 31, 2021, the total CRE exposure for Seacoast Bank represents approximately 177% of total risk based capital, also below the Guidance’s threshold.

On a consolidated basis, construction and land development and commercial real estate loans represent 24% and 157%, respectively, of total consolidated risk-based capital.

a consolidated basis, construction and land development and commercial real estate loans represent 19% and 162%, respectively, of total consolidated risk-based capital.

Debit Interchange Fees:

Interchange fees, or “swipe” fees, are fees that merchants pay to card companies and card-issuing banks such as Seacoast Bank for processing electronic payment transactions on their behalf.

The “Durbin Amendment” in the Dodd-Frank Act provides limits on the amount of debit card interchange that may be received or charged by the debit card issuer, for insured depository institutions with $10 billion or more in assets (inclusive of its affiliates) as of the end of the calendar year.

Subject to certain exemptions and potential adjustments, the Durbin Amendment limits debit card interchange received or charged by the issuer to $0.21 plus 5 basis points multiplied by the value of the transaction.

Upon crossing the $10 billion asset threshold in a calendar year, the rules require compliance with these limits by no later than July 1 of the succeeding year.

Seacoast Bank did not exceed the $10 billion asset threshold in 2020.

Seacoast Bank did not exceed the $10 billion asset threshold in 2021, but may exceed this threshold in 2022.

If so, the Company's compliance with the provisions of the Durbin amendment would be required no later than July 1, 2023, and the limits to debit card interchange would reduce the Company's revenue, on an annualized basis after taxes, by approximately $7.7 million.

Community Reinvestment Act:

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Federal CRA regulations require, among other things, that evidence of discrimination against applicants on a prohibited basis, and illegal or abusive lending practices be considered in the CRA evaluation.

In June 2020, the OCC issued final rules to modernize the CRA, but those rules have not yet been fully implemented and may change.

Seacoast Bank has a rating of “Outstanding” in its most recent CRA evaluation.

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Customers must be notified when unauthorized disclosure involves sensitive customer information that may be misused.

On December 18, 2020, federal banking agencies proposed a new rule that would require banks to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification incident”.

On November 18, 2021, the federal banking agencies issued a new rule effective in 2022 that requires banks to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification incident”.

Consumer Regulation:

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These laws and regulations include, among numerous other things, provisions that:

• limit the interest and other charges collected or contracted for by Seacoast Bank, including new rules respecting the terms of credit cards and of debit card overdrafts;

• limit the interest and other charges collected or contracted for by Seacoast Bank;

• govern Seacoast Bank’s disclosures of credit terms to consumer borrowers;

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Mortgage Regulation:

The CFPB adopted a rule that implements the ability-to-repay and qualified mortgage provisions of the Dodd-Frank Act (the “ATR/QM rule”), which requires lenders to consider, among other things, income, employment status, assets, payment amounts, and credit history before approving a mortgage, and provides a compliance “safe harbor” for lenders that issue certain “qualified mortgages.” The ATR/QM rule defines a “qualified mortgage” to have certain specified characteristics, and generally prohibits loans with negative amortization, interest-only payments, balloon payments, or terms exceeding 30 years from being qualified mortgages.

exceeding 30 years from being qualified mortgages.

The rule also establishes general underwriting criteria for qualified mortgages, including that monthly payments be calculated based on the highest payment that will apply in the first five years of the loan and that the borrower have a total debt-to-income ratio that is less than or equal to 43%.

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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