What changed in this filing

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Item 1. Business

2025-03-03 compared with 2024-03-01 · 120 added, 95 removed, 600 unchanged (26% of the section changed)

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Through our wholly-owned subsidiary bank, we operate 33 full-service banking offices located in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia.

We also operate loan production offices in Florida.

We also operate a loan production office in Florida.

Through our bank, we originate commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions.

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We believe that this approach more appropriately addresses our customers’ banking needs and reflects a best-of-class delivery strategy for commercial banking services.

Our principal business is to accept deposits from the public and to make loans and other investments.

Our business is conducted through a single reportable segment, and our principal business is to accept deposits from the public and to make loans and other investments.

Our principal sources of funds for loans and investments are demand, time, savings and other deposits and the amortization and prepayment of loans and borrowings.

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We believe this combination of products, operating efficiency and technology make us attractive to customers in our markets.

In addition, we provide correspondent banking services to more than 370 community banks located in 30 states throughout the United States.

In addition, we provide correspondent banking services to more than 380 community banks located in 30 states throughout the United States (“U.S.”).

We provide a source of clearing and liquidity to our correspondent bank customers, as well as a wide array of account, credit, settlement and international services.

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We have developed a business culture whereby our management team, from the top down, is actively involved in sales, which we believe is a key differentiator from our competition.

In our operations, local decision-making has been pivotal in navigating challenges that could be posed by global health crises, such as pandemics.

Our strategic use of technology-enabled delivery channels has been essential in offering services to our customers within a low-contact framework, which helps to prevent the spread of disease while allowing continued customer service.

Identify Opportunities in Vibrant Markets.

Since opening our original banking facility in Birmingham in 2005, we have expanded into ten additional markets as of December 31, 2023.

Since opening our original banking facility in Birmingham in 2005, we have expanded into thirteen additional markets as of December 31, 2024.

Our focus has been to expand opportunistically when we identify a strong banking team in a market with attractive economic characteristics and market demographics where we believe we can achieve a minimum of $300 million in deposits within five years of market entry.

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Mecklenburg County, North Carolina

Buncombe-Asheville, North Carolina

South Carolina:

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Charlotte-Concord-Gastonia, NC-SC MSA

Buncombe-Asheville, NC-SC MSA

South Carolina:

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Real Estate Loans

We make commercial real estate loans, construction and development loans and residential real estate loans.

We make commercial real estate loans, 1-4 family residential real estate loans, and construction and development loans.

Commercial Real Estate .

Commercial real estate loans are generally limited to terms of five years or less, although payments are usually structured on the basis of a longer amortization.

We make both owner-occupied and non-owner-occupied commercial real estate loans.

Commercial real estate loans are generally limited to terms of five years or less, although payments are usually structured based on a longer amortization.

Interest rates may be fixed or adjustable, although rates generally will not be fixed for a period exceeding five years.

In addition, we generally require personal guarantees from the principal owners of the property supported by a review by our management of the principal owners’ personal financial statements.

Commercial real estate lending presents risks not found in traditional residential real estate lending.

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Also, commercial real estate loans typically involve relatively large loan balances to a single borrower.

To mitigate these risks, we closely monitor our borrower concentration.

To mitigate these risks, we closely monitor our borrower concentration and report these to the Board of Directors on a quarterly basis.

These loans generally have shorter maturities than other loans, giving us an opportunity to reprice, restructure or decline renewal.

As with other loans, all commercial real estate loans are graded depending upon strength of credit and performance.

A higher risk grade will bring increased scrutiny by our management, the credit review committee and the board of directors.

As with other loans, all commercial real estate loans are graded depending upon strength of credit and performance, and a higher risk grade will bring increased scrutiny by our management, the credit review committee, and the Board of Directors.

In addition, we generally require personal guarantees from the principal owners of the property supported by a review by our management of the principal owners’ personal financial statements.

Commercial real estate has received increased regulatory scrutiny in recent quarters due to valuation concerns associated with interest rates.

Our Credit Administration department works with vendors to conduct an annual stress test for all commercial loans, and the results are presented to our Board of Directors.

In managing the risks associated with our commercial real estate portfolio, we utilize several practices.

We have three independent loan reviews performed each year that cover 35-40% (approximately 400 relationships) of the entire commercial loan portfolio on a committed basis.

Two of these reviews include commercial real estate loans and construction and development loans.

These independent reviews, conducted by a third-party vendor, address underwriting, servicing, and risk grade confirmation and result in written findings and recommendations.

We also hold formal quarterly meetings—including Lenders, Regional Credit Officers, and Regional CEOs—to discuss all problem credits and potential workout plans in detail.

In addition, we prepare monthly and quarterly reports for our Board of Directors and management covering problem loans, concentrations, exceptions, regulatory requirements (including HVCRE and Regulation H), and notable trends.

Furthermore, every year during the first quarter, our Credit Administration department prepares a comprehensive report on our commercial real estate and commercial construction portfolios, including analysis of current performance, industry information, and trends across multifamily, retail, office, hotel, and nursing/assisted living facilities, all of which is presented to our Board.

Owner-Occupied Commercial Real Estate.

We focus on the banking needs of established operating companies, which includes owner-occupied office and industrial real estate loans.

Risks associated with owner-occupied commercial real estate include the quality of the borrower’s management and operations, fluctuations in the value of real estate, and the overall strength of the economy.

In addition to a proven management team and track record, we target businesses with strong historical cash flows.

Loans are conservatively underwritten and typically carry the personal guarantee of the business owners.

We believe this portfolio segment is well diversified by industry type.

At year-end 2024, owner-occupied commercial real estate totaled approximately $2.55 billion, representing 20.2% of our total loan portfolio.

Substandard loans in this segment totaled $25.1 million, and we recorded approximately $237,000 in charge-offs during 2024.

In addition to the credit quality monitoring actions described above, we also require annual reviews for relationships greater than $3.0 million, which are completed by the responsible Lender and submitted to Credit Administration for approval.

These reviews include a discussion of key credit issues and collateral monitoring and help ensure any emerging risks are quickly identified and addressed.

Non-Owner-Occupied Commercial Real Estate.

Risks associated with non-owner-occupied commercial real estate include fluctuations in the value of real estate, the overall strength of the economy, tenant vacancy rates, and the quality of the borrower’s management.

We lend to developers and owners with a proven history of success, who demonstrate sufficient equity in their projects and strong liquidity.

Loans are conservatively underwritten, with interest rates, vacancy levels, and rental rates stressed to gauge performance through various economic conditions.

These loans typically carry personal guarantees from the owners.

At year-end 2024, non-owner-occupied commercial real estate amounted to approximately $4.18 billion, representing 33.2% of our total loan portfolio.

Substandard loans in this category totaled $15.4 million, with no charge-offs recorded in 2024.

In order to manage the risk inherent in these credits, we prepare a quarterly report to the Board of Directors detailing the top 20 metropolitan areas in which our collateral is located.

In addition to the credit quality monitoring actions described above for non-owner-occupied commercial real estate loans over $3.0 million, we perform a more granular loan-level stress test using updated borrower financial information and data provided by a third-party vendor.

These loan-level stress test results are shared with the Risk Management Committee for further oversight.

Relationships exceeding $3.0 million are subject to the same annual review requirement that applies to owner-occupied properties and construction loans.

1-4 Family Mortgage .

Our 1-4 family mortgage residential loans consist primarily of residential second mortgage loans, residential construction loans, and traditional mortgage lending for one-to-four family residences.

We will originate fixed-rate mortgages with long-term maturities;

however, most of these fixed-rate loans are sold in the secondary mortgage market.

All 1-4 family mortgage loans are made in accordance with our appraisal policy, with the ratio of the loan principal to the value of the collateral established by an independent appraisal generally not exceeding 85%.

Risks associated with these loans are generally less significant than those for our other real estate loan types.

Potential risks include bankruptcies, economic downturns, customer financial problems, and fluctuations in real estate values.

We have not made, and do not expect to make, any “Alt-A” or subprime loans.

At year-end 2024, our 1-4 family mortgage portfolio was approximately $1.44 billion, representing 11.5% of our total loan portfolio.

Substandard loans totaled $3.8 million, and we recorded approximately $761,000 in charge-offs for 2024.

In addition to the credit quality monitoring actions described above, our quarterly regional credit meetings and monthly/quarterly reports to the Board also include details on problem 1-4 family mortgage loans and broader portfolio trends.

Construction and Development Loans .

We make construction and development loans both on a pre-sold and speculative basis.

If the borrower has entered into an agreement to sell the property prior to beginning construction, then the loan is considered to be on a pre-sold basis.

If the borrower has not entered into an agreement to sell the property prior to beginning construction, then the loan is considered to be on a speculative basis.

Construction and development loans are generally made with a term of 12 to 36 months, with interest payable monthly.

The ratio of the loan principal to the value of the collateral as established by independent appraisal typically will not exceed 80% of residential construction loans.

Speculative construction loans will be based on the borrower’s financial strength and cash flow position.

Development loans are generally limited to 75% of appraised value.

Loan proceeds will be disbursed based on the percentage of completion and only after the project has been inspected by an experienced construction lender or third-party inspector.

During times of economic stress, construction and development loans typically have a greater degree of risk than other loan types.

To mitigate the risk of construction loan defaults in our portfolio, the board of directors and management tracks and monitors these loans closely.

We make construction and development loans on both a pre-sold and speculative basis.

If the borrower has entered into an agreement to sell the property prior to beginning construction, the loan is considered pre-sold;

otherwise, it is deemed speculative.

Construction and development loans are generally made with terms of 12 to 36 months, with interest payable monthly.

The ratio of loan principal to the value of collateral, as determined by an independent appraisal, typically does not exceed 80% for residential construction loans.

Speculative construction loans are underwritten based on the borrower’s financial strength and cash flow position, while development loans are generally limited to 75% of the appraised value.

Loan proceeds are disbursed proportionally with construction progress and only after the project has been inspected by either an experienced construction lender or a qualified third-party inspector.

Construction and development loans generally carry a higher degree of risk than other loan types during times of economic stress.

Construction and development loans are monitored by our Credit Administration department, and we provide quarterly reports on this portfolio to the Board of Directors.

The Credit Administration department also reviews and approves loan draws on commercial construction loans with a committed balance exceeding $3.0 million.

These reviews include monitoring interest reserve sufficiency and assessing occupancy or absorption levels at six months post-completion for newly completed projects.

At year-end 2024, we had $3.5 million in substandard construction and development loans, and the Bank has not realized a loss in this portfolio over the past five years.

Relationships in excess of $3.0 million are also subject to annual review by the responsible Lender, with final approval required from Credit Administration, ensuring any potential concerns in this portfolio are identified and addressed proactively.

To mitigate the risk of construction loan defaults in our portfolio, management tracks and monitors these loans closely, with oversight from the Board of Directors.

Total construction loans decreased $30.3 million, or 2.0%, at December 31, 2024, compared to December 31, 2023.

There were $105,000 in net charge-offs on construction loans during 2023 and no charge-offs on construction loans during 2022.

There were $(8,000) in net charge-offs (recoveries) on construction loans during 2024 and $105,000 in net charge-offs (recoveries) on construction loans during 2023.

There were $3.5 million in construction loans rated as substandard at December 31, 2024 and $1.1 million construction loans rated as substandard at December 31, 2023.

Residential Real Estate Loans .

Our residential real estate loans consist primarily of residential second mortgage loans, residential construction loans and traditional mortgage lending for one-to-four family residences.

We will originate fixed-rate mortgages with long-term maturities.

The majority of our fixed-rate loans are sold in the secondary mortgage market.

All loans are made in accordance with our appraisal policy, with the ratio of the loan principal to the value of collateral as established by independent appraisal generally not exceeding 85%.

Risks associated with these loans are generally less significant than those of other loans.

Those risks involve bankruptcies, economic downturn, customer financial problems and fluctuations in the value of real estate, and the risk that homes in our primary service areas may experience significant price declines in the future.

We have not made and do not expect to make any “Alt-A” or subprime loans.

Consumer Loans

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As of December 31, 2024, we had commitments to extend credit beyond current amounts funded of $3.55 billion, had issued standby letters of credit in the amount of $125.1 million, and had commitments for credit card arrangements of $366.8 million.

In addition to loans, we purchase investments in securities, primarily in mortgage-backed securities and state and municipal securities.

In addition to loans, we purchase investments in securities, primarily in treasuries and mortgage-backed securities.

No investment in any of those instruments will exceed any applicable limitation imposed by law or regulation.

Our Board of Directors reviews the investment portfolio on an ongoing basis in order to ensure that the investments conform to the policy as set by the Board of Directors.

Our investment policy provides that no more than 30% of our total investment portfolio may be composed of municipal securities.

All securities held are traded in liquid markets, and we have no auction-rate securities.

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Deposit Services

We seek to establish solid core deposits, including checking accounts, money market accounts, savings accounts and a variety of certificates of deposit and IRA accounts.

We seek to establish solid core deposits, including checking accounts, money market accounts, savings accounts and a variety of certificates of deposit and individual retirement arrangements, or IRA accounts.

To attract deposits, we employ an aggressive marketing plan throughout our service areas that features a broad product line and competitive services.

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Congress, state legislatures and federal and state regulatory agencies.

The recent changes in the U.S.

presidential administration and the composition of the U.S.

Congress is expected to lead to potentially significant changes to the existence, priorities, scope, practices and/or staffing levels of various regulatory agencies.

For example, in February 2025, the Trump administration directed the CFPB to, among other things, suspend rule implementations and cease supervision activities.

Accordingly, the following discussion must be read in light of the enactment of any new federal or state banking laws or regulations or any amendment or repeal of existing laws or regulations, or any change in the policies of the regulatory agencies with jurisdiction over our operations, after the date of this Form 10-K.

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Additionally, the BHC Act provides that the Federal Reserve may not approve a merger or other acquisition transaction if the transaction would result in or tend to create a monopoly or substantially lessen competition or otherwise function as a restraint of trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served.

In July 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy.

Among other initiatives, the Executive Order encouraged the federal banking agencies to review their current merger oversight practices under the BHC Act and the Bank Merger Act and adopt a plan for revitalization of such practices.

There are many steps that must be taken by the agencies before any formal changes to the framework for evaluating bank mergers can be finalized, and the prospects for such action are uncertain at this time.

However, the adoption of more expansive or prescriptive standards may have an impact on the merger and other acquisition activities of U.S.

financial institutions like us.

Change in Bank Control

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Under a rebuttable presumption established by the Federal Reserve, the acquisition of 10% or more of a class of voting stock of a bank holding company would, under the circumstances set forth in the presumption, constitute acquisition of control of the bank holding company.

In addition, any person or group of persons must obtain the approval of the Federal Reserve before acquiring 25% (5% in the case of an acquirer that is already a bank holding company) or more of the outstanding common stock of a bank holding company, or otherwise obtaining control or a “controlling influence” over the bank holding company.

In addition, any person or group of persons acting in concert must obtain the approval of the Federal Reserve before acquiring 25% or more of the outstanding common stock of a bank holding company or otherwise obtaining control or a “controlling influence” over the bank holding company.

(certain presumptions of control may apply once an acquiror owns 5% or more of the common stock and certain other factors are present).

Permissible Activities Under the BHC Act

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factoring accounts receivable;

making, acquiring, brokering or servicing loans and usual related activities;

making, acquiring, brokering or servicing loans and usual lending-related activities;

leasing personal property;

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performing selected data processing services and support services;

acting as an agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions;

and performing selected insurance underwriting activities.

and acting as an agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions.

Despite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity or control constitutes a serious risk to the financial safety, soundness, or stability of it or any of its bank subsidiaries.

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insuring, guaranteeing, or indemnifying against loss or harm, or providing and issuing annuities, and acting as principal, agent, or broker for these purposes, in any state;

providing financial, investment, or advisory services;

providing financial, investment, or economic advisory services;

issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly;

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For us to qualify to become a financial holding company, the bank and any other depository institution subsidiary of ours must be well-capitalized and well-managed and must have a CRA rating of at least “satisfactory”.

Additionally, we must file an election with the Federal Reserve to become a financial holding company and must provide the Federal Reserve with 30 days written notice prior to engaging in a permitted financial activity.

Additionally, we must file an election with the Federal Reserve to become a financial holding company and must provide the Federal Reserve with 30 days written notice after engaging in a permitted financial activity.

We have not elected to become a financial holding company at this time.

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The method for determining an institution's risked-based assessment rate differs for small banks and large banks.

Small banks (generally, those with less than $10 billion in assets over four consecutive quarters) are assigned an individual rate based on a formula using financial data and ratings on capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risks, or so-called “CAMELS” ratings.

Large banks (generally, those with $10 billion or more in assets) are assigned an individual rate based on a scorecard.

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and (3) for large banks that are not well-rated or not well-capitalized, increase for significant holdings of brokered deposits.

The Bank became subject to the large bank scorecard methodology in the second quarter of 2021.

In November 2023, the FDIC issued a final rule implementing a special assessment to recover the loss to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.

The assessment base for the special assessment equals an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion.

The special assessment will be collected at an annual rate of approximately 13.4 basis points for an anticipated total of eight quarterly assessment periods.

The special assessment will be collected at an annual rate of approximately 13.4 basis points for an initial total of eight quarterly assessment periods.

Due to updated loss estimates, the FDIC currently projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate.

The amount the Bank pays to the FDIC in assessments is affected not only by the risk the Bank poses to the Deposit Insurance Fund, but also by the adequacy of the fund to cover the risk posed by all insured institutions.

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Moreover, the Dodd-Frank Act permanently increased the standard maximum deposit insurance amount from $100,000 to $250,000, and raised the minimum required Deposit Insurance Fund reserve ratio (i.e., the ratio of the amount on reserve in the Deposit Insurance Fund to the total estimated insured deposits) from 1.15% to 1.35%.

To support the Deposit Insurance Fund in response to those circumstances, the FDIC took several extraordinary actions, including imposing a one-time special assessment on insured institutions and requiring institutions to prepay quarterly assessments attributable to a three-year period.

To support the Deposit Insurance Fund in response to those circumstances, the FDIC took several extraordinary actions, including imposing a one-time special assessment on insured institutions in 2023, with an updated assessment in 2024, and requiring institutions to prepay quarterly assessments attributable to a three-year period.

The FDIC also has established a higher long-term target Deposit Insurance Fund ratio of 2%.

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the Fair Housing Act, prohibiting discrimination in most housing-related activities, including financing, based on race, color, sex, national origin or religion.

the Equal Credit Opportunity Act, as implemented by Regulation B issued by the CFPB, prohibiting discrimination in any aspect of a credit transaction.

Additionally, the Dodd-Frank Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations.

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6.0% based upon tier 1 capital;

8.0% based upon total regulatory capital.

8.0% based upon total regulatory capital (tier 1 plus tier 2).

A minimum leverage ratio (tier 1 capital as a percentage of total assets) of 4.0% is also required under the Basel III Capital Rules.

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At December 31, 2024, the Bank was well-capitalized under the regulatory framework for prompt corrective action.

To be categorized as well-capitalized, the Bank had to maintain minimum total risk-based, tier 1 risk-based, CET1 risk-based, and tier 1 leverage ratios of 10%, 8%, 6.5% and 5%, respectively.

To be categorized as well-capitalized, the Bank had to maintain minimum total risk-based, tier 1 risk-based, CET1 risk-based, and tier 1 leverage ratios of 10%, 8%, 6.5% and 5%, respectively, and must not be subject to any order or written agreement or directive by a federal banking agency to meet and maintain a specific capital level for any capital measure.

Federal banking agencies are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories.

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The regulations also establish procedures for downgrading an institution to a lower capital category based on supervisory factors other than capital.

Banks that are not well capitalized may not accept or renew brokered deposits without a waiver from the FDIC.

Banks that are not well capitalized may not accept or renew brokered deposits without a waiver from the FDIC and are subject to restrictions on the interest rates that can be paid on deposits.

Financial institutions are subject to significant regulatory scrutiny regarding their liquidity positions.

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In addition, no dividends, withdrawals or transfers may be made from the bank’s surplus without the prior written approval of the Superintendent.

The bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines.

Our and the Bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines.

The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice.

Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividends if payment would cause it to become undercapitalized or if it already is undercapitalized.

We and the Bank are also restricted from paying dividends if we fail to maintain capital above the Basel III capital conservation buffer.

Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.

If, in the opinion of the federal banking agencies, the bank were engaged in or about to engage in an unsafe or unsound practice, the federal banking agencies could require, after notice and a hearing, that the bank stop or refrain from engaging in the questioned practice.

If, in the opinion of the federal banking agencies, we or the Bank were engaged in or about to engage in an unsafe or unsound practice (such as paying an excessive dividend), the federal banking agencies could require, after notice and a hearing, that we or the Bank stop or refrain from engaging in the questioned practice.

Restrictions on Transactions with Affiliates and Insiders

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In addition to the limitation on the amount of these transactions, certain of these transactions must also meet specified collateral requirements.

The bank must also comply with other provisions designed to avoid the taking of low-quality assets.

The bank must also comply with other provisions designed to avoid the taking of low-quality assets from an affiliate.

An affiliate for purposes of Sections 23A and 23B includes a bank’s parent holding company and any subsidiary owned by the parent holding company.

We are also subject to Section 23B of the Federal Reserve Act, which, among other things, prohibits an institution from engaging in these transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

We are also subject to Section 23B of the Federal Reserve Act, which, among other things, prohibits a bank from engaging in these transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the bank or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

The bank is also subject to restrictions on extensions of credit to its executive officers, directors, principal shareholders and their related interests.

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The guidance describes the criteria the agencies will use as indicators to identify institutions potentially exposed to commercial real estate (“CRE”) concentration risk.

An institution that has (i) experienced rapid growth in CRE lending, (ii) notable exposure to a specific type of CRE, (iii) total reported loans for construction, land development, and other land representing 100% or more of the institution’s capital, or (iv) total CRE loans representing 300% or more of the institution’s capital, and the outstanding balance of the institution’s CRE portfolio has increased by 50% or more in the prior 36 months, may be identified for further supervisory analysis of the level and nature of its CRE concentration risk.

An institution that has (i) experienced rapid growth in CRE lending, (ii) notable exposure to a specific type of CRE, (iii) total reported loans for construction, land development, and other land representing 100% or more of the institution’s capital, or (iv) total non-owner occupied CRE loans representing 300% or more of the institution’s capital, and the outstanding balance of the institution’s CRE portfolio has increased by 50% or more in the prior 36 months, may be identified for further supervisory analysis of the level and nature of its CRE concentration risk.

If a concentration is present, management must employ heightened risk management practices that address, among other things, board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending.

In 2015, the U.S.

bank regulatory agencies issued additional guidance entitled “Statement on Prudent Risk Management for Commercial Real Estate Lending” to remind financial institutions of existing guidance on prudent risk management practices for CRE lending activity.

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Failure to comply with these statutes, rules and regulations, or failure to maintain an adequate compliance program, could lead to monetary penalties and reputational damage to our bank.

Our banking regulators evaluate the effectiveness of our policies and procedures when determining whether to approve certain proposed banking activities, including branch application.

Our banking regulators evaluate the effectiveness of our policies and procedures when determining whether to approve certain proposed banking activities, including acquisitions and branch applications.

We believe the policies and procedures implemented by our Board of Directors are sufficient to be compliant with these laws.

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The rule prohibits financial institutions from charging fees for paying overdrafts on ATM and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

There has been an enhanced focus by federal bank regulatory agencies with respect to industry practices relating to overdraft fees and non-sufficient funds fees.

For example, the Consumer Financial Protection Bureau issued a Request for Information in January 2022 seeking public input with respect to financial institution practices relating to, among other areas, credit card fees, overdraft fees and non-sufficient funds fees and stated its intent to reduce these types of fees through crafting rules, issuing industry guidance and focusing supervision and enforcement resources to achieve this goal.

In October 2022, the Consumer Financial Protection Bureau issued guidance with respect to certain practices relating to overdraft fees and bounced check fees.

There has been an enhanced focus by federal bank regulatory agencies with respect to industry practices relating to overdraft fees, credit card fees and non-sufficient funds fees.

For example, the CFPB issued a Request for Information in January 2022 seeking public input with respect to financial institution practices relating to, among other areas, credit card fees, overdraft fees and non-sufficient funds fees and stated its intent to reduce these types of fees through crafting rules, issuing industry guidance and focusing supervision and enforcement resources to achieve this goal.

In October 2022, the CFPB issued guidance with respect to certain practices relating to overdraft fees and bounced check fees.

The FDIC issued guidance in August 2022 with respect to bank practices involving charging multiple non-sufficient funds fees on the representment of items on a deposit account.

In February 2023, the Consumer Financial Protection Bureau issued a proposed rule that would restrict certain practices relating to credit card late fees.

On January 17, 2024, the Consumer Financial Protection Bureau issued a proposed rule that would require financial institutions with over $10 billion in total assets to treat overdraft loans like credit cards and other loans as well as to provide clear disclosures and other protections.

On January 24, 2024, the Consumer Financial Protection Bureau issued a proposed rule that would prohibit non-sufficient funds (NSF) fees on transactions that financial institutions decline in real time.

These types of transactions include declined debit card purchases and ATM withdrawals, as well as some declined peer-to-peer payments.

In March 2024, the CFPB finalized a rule restricting certain practices relating to credit card late fees.

In December 2024, the CFPB issued a final rule generally requiring financial institutions with over $10 billion in assets to either cap overdraft fees at $5.00 or otherwise follow Truth in Lending Act requirements when providing deposit account overdraft services.

Open Banking Rule

On October 22, 2024, the CFPB issued its final rule implementing Section 1033 of the Dodd-Frank Act with respect to personal financial data rights, more commonly known as the “Open Banking Rule.” The final rule, among other things, requires banks, credit unions, and other financial service providers to make a consumer’s data available upon request to the consumer and their authorized third parties in a secure and reliable manner, and establishes obligations for third parties accessing consumers’ data, including data security and privacy protections.

According to the CFPB, the rule is designed to foster competition and innovation in the financial services industry by making it easier for consumers to switch financial providers and for new companies to offer innovative products and services.

The compliance deadline is phased-in based on the asset size of the financial institution.

For depositary institutions with $10 billion to $250 billion in total assets, the compliance deadline is April 1, 2027.

Interchange Fees

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On July 9, 2019, the agencies adopted a final rule excluding community banks (i.e., those banks having $10 billion or less in total consolidated assets and trading assets and liabilities of 5% or less of total consolidated assets) from the Volcker Rule.

On October 8, 2019, the agencies finalized revisions to the Volcker rule that simplified and streamlined compliance requirements for banking entities that do not have significant trading activities, while banking entities with significant trading activity would become subject to more stringent compliance requirements.

On October 8, 2019, the agencies finalized revisions to the Volcker rule that simplified and streamlined compliance requirements for banking entities that do not have significant trading activities, while banking entities with significant trading activities would become subject to more stringent compliance requirements.

The revisions continue to prohibit proprietary trading, while providing greater clarity and certainty for activities allowed under the law.

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The asset threshold has been increased to $250 billion.

A number of the effects of the Dodd-Frank Act are described or otherwise accounted for in various parts of this Supervision and Regulation section.

A number of the effects of the Dodd-Frank Act are described or otherwise accounted for in various parts of this Bank Supervision and Regulation section.

The following items provide a brief description of certain other provisions of the Dodd-Frank Act that may be relevant to us and the Bank.

● The Dodd-Frank Act created the CFPB and gave it broad powers to supervise and enforce consumer protection laws.

The CFPB now 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.

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.

The CFPB has examination and enforcement authority over all banks with more than $10 billion in assets for four consecutive quarters.

Institutions with less than $10 billion in assets for four consecutive quarters will continue to be examined for compliance with consumer laws by their primary bank regulator.

Our total assets were greater than $10 billion at the end of the second, third, and fourth quarters of 2020, and for all four quarters of 2021.

We are now subject to CFPB supervisory and enforcement authority and expenses related to regulatory compliance are likely to increase as a result.

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New proposals to change the laws and regulations governing the banking industry are frequently introduced in the United States Congress, in the state legislatures and before the various bank regulatory agencies.

Additionally, the future implementation and enforcement of regulations may be affected by the outcome of the 2024 Presidential election, which is resulting in significant changes in the leadership of the various bank regulatory agencies.

The likelihood and timing of any such changes and the impact such changes might have on us and the Bank, however, cannot be determined at this time.

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Our management believes that we have good relations with our employees.

Hiring, Promotion & Talent Development

Hiring, Promotion and Talent Development

We are always looking to build our workforce from within and promote from our current talent pool whenever possible.

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We also aim to assist our employees with position-related training and development when available.

We recruit the best people for the job regardless of gender, race, ethnicity, age, disability, sexual orientation, gender identity, cultural background or religious belief.

It is our policy to fully comply with all state and federal laws applicable to discrimination in the workplace.

Health and Safety

The success of our business is fundamentally connected to the well-being of our employees.

Accordingly, we are committed to the health, safety and wellness of our employees.

In response to local government and health guidelines around the COVID-19 pandemic, glass barriers have been installed where necessary, and we regularly encourage our employees to utilize video conferencing platforms when possible.

All branches and internal corporate offices have been provided with cleaning supplies and are encouraged to disinfect surface areas consistently.

We maintain a social distancing policy and update our procedures as federal and state agencies make new recommendations.

At the Bank, the health and safety of our employees are our top priority.

We are committed to providing a safe and supportive work environment where every team member can thrive.

We continuously assess and improve our safety practices, ensuring compliance with all relevant regulations, and promote a culture of open communication.

Compensation and Benefits

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As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for our employees in order to attract and retain superior talent.

Diversity and Inclusion

We are committed to our continued efforts to increase diversity and foster an inclusive work environment that supports our employees and the communities we serve.

We recruit the best people for the job regardless of gender, race, ethnicity, age, disability, sexual orientation, gender identity, cultural background or religious belief.

It is our policy to fully comply with all state and federal laws applicable to discrimination in the workplace.

Information about our Executive Officers

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from 1986 until 2009, when the company was sold to a subsidiary of Berkshire Hathaway.

Foshee (69) – Mr.

Foshee has served as our Executive Vice President, Chief Financial Officer, Treasurer and Secretary since 2007 and as Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the Bank since 2005.

Foshee served as the Chief Financial Officer of Heritage Financial Holding Corporation, a publicly traded bank holding company headquartered in Decatur, Alabama, from 2002 until it was acquired in 2005.

Foshee is a Certified Public Accountant.

Foshee will retire from his position as Chief Financial Officer effective as of the filing of this Form 10-K.

The Board appointed Kirk Pressley to succeed Mr.

Foshee as Chief Financial Officer following Mr.

Foshee’s retirement.

Kirk Pressley (58) – Mr.

Pressley was appointed Chief Financial Officer effective as of the filing of this Form 10-K, following the retirement of our former Chief Financial Officer, William M.

Pressley joined the Bank as Executive Vice President of Strategic Planning in June of 2023.

Prior to joining the Bank, Mr.

Pressley started his career as an external auditor focused on financial institutions for two large international public accounting firms.

Pressley then served as the Controller for BBVA USA Bancshares, previously BBVA Compass Bancshares, from 2003 to 2015.

He most recently held the position of Senior Executive Vice President and CFO of BBVA USA, Houston, Texas, from 2015 to 2021.

Woodie, III (57) – Mr.

Woodie was appointed interim Chief Financial Officer effective October 2024.

In 1989, Ed joined SouthTrust Bank, and over his 15-year career with the bank served as Vice President in asset and liability and treasury management and then later in mergers and acquisitions.

Ed joined CapitalSouth Bank in 2004 as Vice President and Controller.

In 2008, Ed joined ServisFirst Bank as Controller and has served in that role for 16 years.

Rushing (67) – Mr.

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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