What changed in this filing

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Item 1. Business

2023-03-01 compared with 2022-02-28 · 71 added, 55 removed, 286 unchanged (31% 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.

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, 2022, Seacoast had total consolidated assets of $12.1 billion, total deposits of $10.0 billion, total consolidated liabilities, including deposits, of $10.5 billion and consolidated shareholders’ equity of $1.6 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.

Seacoast has grown to be one of the largest community banks headquartered in Florida, with an expanding presence 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 provides integrated financial services including commercial and retail banking, wealth management, mortgage and insurance services to customers through advanced online and mobile banking solutions, and through Seacoast Bank's network of 78 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”).

Unrelated investors own a noncontrolling interest in the preferred stock of the REIT.

Seacoast Bank also provides brokerage and annuity services.

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.

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

Unrelated investors own a non-controlling interest in the preferred stock of the REIT.

Seacoast Bank provides brokerage and annuity services through an affiliation with a third party broker/dealer, LPL Financial.

Seacoast Insurance Services, Inc.

and Nature Coast Insurance, Inc., each a wholly owned subsidiary of Seacoast, facilitate 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.

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Expansion of Market and Competition

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 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 has continued expanding the franchise and strengthening its competitive position throughout Florida with acquisitions and new market launches, adding to its footprint in the state’s fastest growing markets.

In early 2022, Seacoast completed the acquisitions of Sabal Palm Bancorp, Inc.

and Business Bank of Florida Corp., creating a presence in the desirable Sarasota market, and continuing its growth in Brevard County.

Also in the first quarter of 2022, Seacoast entered the Naples market with a new branch and the Jacksonville market with a commercial banking team.

Early in the fourth quarter of 2022, the acquisition of Drummond Banking Company expanded the footprint into North Florida, including Ocala and Gainesville.

Seacoast expanded its presence in the dynamic South Florida market with the acquisition of Apollo Bancorp, Inc.

in the fourth quarter of 2022, and with the acquisition of Professional Holding Corp.

in January of 2023.

Also in 2022, Seacoast continued its focus on delivering better digital experiences to its customers, completing a significant digital conversion, adding Zelle®, budgeting tools, account aggregation, improved digital onboarding, Spanish language, and several other digital customer experience improvements.

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 non-bank 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, 2022, the Company and its subsidiaries employed 1,490 full time-equivalent employees.

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.

Since opening our doors in 1926, Seacoast Bank has remained true to our local roots with high integrity, 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.

Seacoast offers comprehensive training and development programs to provide professional growth opportunities and career paths, and offers tuition reimbursement to promote continued professional education.

The Seacoast Manager Excellence Program 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.

In 2022, 95% of associates participated in the annual engagement survey, and Seacoast maintained an associate engagement score of 83.1%, which is 8% higher than the Banking industry and 7% higher than the Finance industry benchmarks.

Diversity and Inclusion

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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.

As part of the many things we do to support our associates and their families, we have established five Associate Resource Groups (“ARGs”):

LGBT+, Military Outreach, Women Mean Business, Black Associates and Allies Network (“BAAN”), and Latin American and Hispanic Associates, called Unidos.

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.

For the past three years, Seacoast Bank has been named among the "Best Banks to Work For" by American Banker and has repeatedly been recognized as a best place to work for LGBTQ equality.

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.

We strive to offer competitive compensation 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.

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This discussion is qualified in its entirety by reference to the particular statutory and regulatory provisions described below and is not intended to be an exhaustive description of the statutes or regulations applicable to the Company’s and Seacoast Bank’s business.

In addition, proposals to change the laws and regulations governing the banking industry are frequently raised at both the state and federal levels.

proposals to change the laws and regulations governing the banking industry are frequently raised at both the state and federal levels.

The likelihood and timing of any changes in these laws and regulations, and the impact such changes may have on the Company and Seacoast Bank, are difficult to predict.

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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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The Company and Seacoast Bank must each remain “well-capitalized” and “well-managed” and Seacoast Bank must receive a Community Reinvestment Act (“CRA”) rating of at least “Satisfactory” at its most recent examination in order for the Company to maintain its status as a financial holding company.

In addition, the Federal Reserve has the power to order a financial holding company or its subsidiaries to terminate any nonbanking activity or terminate its ownership or control of any nonbank subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that financial holding company.

In addition, the Federal Reserve has the power to order a financial holding company or its subsidiaries to terminate any non-banking activity or terminate its ownership or control of any non-bank subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that financial holding company.

As further described below, each of the Company and Seacoast Bank is well-capitalized as of December 31, 2022, and Seacoast Bank has a rating of “Outstanding” in its most recent CRA evaluation.

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The BHC Act requires that a bank holding company obtain the prior approval of the Federal Reserve before (i) acquiring direct or indirect ownership or control of more than 5% of the voting shares of any additional bank or bank holding company, (ii) taking any action that causes an additional bank or bank holding company to become a subsidiary of the bank holding company, or (iii) merging or consolidating with any other bank holding company.

The Federal Reserve may not approve any such transaction that would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any section of the United States, or the effect of which may be substantially to lessen competition or to tend to create a monopoly in any section of the country, or that in any other manner would be in restraint of trade, unless the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction meeting the convenience and needs of the community to be served.

monopoly in any section of the country, or that in any other manner would be in restraint of trade, unless the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction meeting the convenience and needs of the community to be served.

The Federal Reserve is also required to consider:

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Section 13 of the BHC Act, commonly referred to as the “Volcker Rule,” generally prohibits banking organizations with greater than $10 billion in assets from (i) engaging in certain proprietary trading, and (ii) acquiring or retaining an ownership interest in or sponsoring a “covered fund,” all subject to certain exceptions.

The Volcker Rule also specifies certain limited activities in which bank holding companies and their subsidiaries may continue to engage and requires banking organizations to implement compliance programs.

The Volcker Rule also

specifies certain limited activities in which bank holding companies and their subsidiaries may continue to engage and requires banking organizations to implement compliance programs.

In 2020, amendments to the proprietary trading and covered funds regulations issued by the federal banking agencies, the SEC, and the CFTC took effect, simplifying compliance and providing additional exclusions and exemptions.

The Company and the Bank were not subject to the Volcker Rule in 2021, but may become so in the future.

The Company does not currently anticipate that the Volcker Rule will have a material effect on its operations, as the Company does not engage in activities prohibited by the Volcker Rule.

The Company may incur costs to adopt additional policies and systems to ensure compliance with the Volcker Rule.

Other Regulatory Matters:

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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, 2022 would exceed such revised well-capitalized standard.

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The Company is a legal entity separate and distinct from Seacoast Bank and its other subsidiaries.

The Company's primary source of cash, other than securities offerings, is dividends from Seacoast Bank.

The Company's primary source of cash is dividends from Seacoast Bank.

The prior approval of the OCC is required if the total of all dividends declared by a national bank (such as Seacoast Bank) in any calendar year will exceed the sum of such bank’s net profits for that year and its retained net profits for the preceding two calendar years, less any required transfers to surplus.

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During the year ended December 31, 2021, Seacoast Bank distributed $47.7 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 $198.9 million to the Company, without prior OCC approval, as of December 31, 2022.

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Seacoast Bank also is subject to certain Federal Reserve regulations.

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.

In the quarter following four consecutive quarters reporting assets over $10 billion, which will be the first quarter of 2023, Seacoast Bank will meet the definition of a “large institution” and will 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.

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Transactions with Affiliates and Insiders:

Seacoast Bank is subject to restrictions on extensions of credit and certain other transactions between Seacoast Bank and the Company or any nonbank affiliate.

Generally, these covered transactions with either the Company or any affiliate are limited to 10% of Seacoast Bank’s capital and surplus, and all such transactions between Seacoast Bank and the Company and all of its nonbank affiliates combined are limited to 20% of Seacoast Bank’s capital and surplus.

Seacoast Bank is subject to restrictions on extensions of credit and certain other transactions between Seacoast Bank and the Company or any non-bank affiliate.

Generally, these covered transactions with either the Company or any affiliate are limited to 10% of Seacoast Bank’s capital and surplus, and all such transactions between Seacoast Bank and the Company and all of its non-bank affiliates combined are limited to 20% of Seacoast Bank’s capital and surplus.

Loans and other extensions of credit from Seacoast Bank to the Company or any affiliate generally are required to be secured by eligible collateral in specified amounts.

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Federal Reserve rules require depository institutions, such as Seacoast Bank, to maintain reserves against their transaction accounts, primarily interest bearing and non-interest bearing checking accounts.

Effective March 26, 2020, reserve requirement ratios were reduced to zero percent.

Effective March 26, 2020, reserve

requirement ratios were reduced to zero percent.

These reserve requirements are subject to annual adjustment by the Federal Reserve.

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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.

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.

In October of 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate by two basis points, applicable to all insured depository institutions beginning with the first quarterly assessment period in 2023 and will remain in effect until the level of the DIF reserve ratios to insured deposits meets the FDIC's long-term goals.

Standards for Safety and Soundness:

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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.

On January 1, 2021, Congress passed federal legislation that made sweeping changes to federal anti-money laundering laws, subject to pending implementation by regulatory rule making, and, on June 30, 2021, FinCEN published the first set of “national AML priorities,” as required by the Bank Secrecy Act, which include, but are not limited to, cybercrime, terrorist financing, fraud, and drug/human trafficking.

FinCEN is required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these national priorities into their AML programs.

As of December 31, 2022, no such regulations have been proposed.

Economic Sanctions:

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The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations.

Higher allowances for loan losses and capital levels may also be required.

Higher allowances for credit losses and capital levels may also be required.

The Guidance is triggered when CRE loan concentrations exceed either:

• Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk based capital;

• Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk based capital.

• Total reported loans secured by multifamily and non-farm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk based capital.

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.

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At December 31, 2022, the total CRE exposure for Seacoast Bank represents approximately 230% of total risk based capital, also below the Guidance’s threshold.

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

On a consolidated basis, construction and land development and commercial real estate loans represent 41% and 210%, 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 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 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.

Seacoast Bank exceeded the $10 billion asset threshold in 2022.

The Company's compliance with the provisions of the Durbin amendment is required no later than July 1, 2023, and the limits to debit card interchange are expected to reduce the Company's revenue, on an annualized basis after taxes, by approximately $10 million.

Community Reinvestment Act:

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

On May 5, 2022, the OCC, FRB, and FDIC issued a notice of proposed rule making to provide for a coordinated approach to modernize their respective CRA regulations, such that all banks will be subject to the same set of CRA rules.

Key elements are expected to include (i) expanding access to credit, investment, and basic banking services in low- and moderate-income communities;

(ii) updating CRA assessment areas by including activities associated with online and mobile banking, branchless banking, and hybrid models;

and (iii) better tailoring CRA evaluations and data collection requirements by bank size and type.

No final rule has been issued, but the rule making may affect the Bank’s CRA compliance obligations in the future.

Privacy and Data Security:

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Seacoast Bank is subject to such standards, as well as standards for notifying customers in the event of a security breach.

Seacoast Bank is similarly required to have an information security program to safeguard the confidentiality and security of customer information and to ensure proper disposal.

Seacoast Bank is similarly

required to have an information security program to safeguard the confidentiality and security of customer information and to ensure proper disposal.

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

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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.

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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These rules also address initial rate adjustment notices for adjustable-rate mortgages (ARMs), periodic statements for residential mortgage loans, and prompt crediting of mortgage payments and response to requests for payoff amounts.

In 2020, the CARES Act granted certain forbearance rights and protection against foreclosure to borrowers with a “federally backed mortgage loan,” including certain first or subordinate lien loans designed principally for the occupancy of one to four families.

These consumer protections continue during the COVID-19 pandemic emergency.

In 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act granted certain forbearance rights and protection against foreclosure to borrowers with a “federally backed mortgage loan,” including certain first or subordinate lien loans designed principally for the occupancy of one to four families.

These consumer protections under the CARES Act continued during the COVID 19 pandemic emergency, and while most of these protections expired in 2022, on January 18, 2023, in its revised Mortgage Servicing Examination Procedures, the CFPB stated it expected servicers to continue to utilize these safeguards, regardless of their expiration.

Non-Discrimination Policies:

Seacoast Bank is also subject to, among other things, the provisions of the Equal Credit Opportunity Act (the “ECOA”) and the Fair Housing Act (the “FHA”), both of which prohibit discrimination based on race or color, religion, national origin, sex, and familial status in any aspect of a consumer or commercial credit or residential real estate transaction.

The Department of Justice (the “DOJ”), and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending that provides guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices.

discriminatory lending practices.

The DOJ has increased its efforts to prosecute what it regards as violations of the ECOA and FHA.

On March 15, 2022, Congress enacted the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) to address references to LIBOR in contracts that (i) are governed by U.S.

(ii) will not mature before June 30, 2023;

and (iii) lack fallback provisions providing for a clearly defined and practicable replacement for LIBOR.

On December 16, 2022, the FRB adopted a final rule to implement the LIBOR Act by identifying benchmark rates based on SOFR (Secured Overnight Financing Rate) that will replace LIBOR in certain financial contracts after June 30, 2023.

The final rule identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act.

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