2014 Community Banking Forum

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South Carolina Community Banking Forum 2014 Tuesday, December 9, 2014 Columbia Metropolitan Convention Center - 1101 Lincoln Street, Columbia, SC

8:30 am - 9:00 am Registration & Continental Breakfast

9:00 am - 9:05 am Welcome Jason Caskey, Financial Services Practice Leader, Elliott Davis

9:05 am - 10:00 am Investment Banking Update Bill Sammon, Managing Director, Raymond James & Associates, Inc.

Bill Wagner, Managing Director, Raymond James & Associates, Inc

10:00 am - 10:50 am Attorney Panel Discussion Jason Caskey—Moderator

Neil Grayson, Partner, Nelson Mullins Riley & Scarborough LLP Chip King, Shareholder, Haynsworth Sinkler Boyd, P.A. Kathryn Knudson, Partner, Bryan Cave LLP

10:50 am - 11:00 am Break

11:00 am - 12:05 pm Economic Update Bruce Yandle, Dean Emeritus, Clemson University

12:05 pm - 1:00 pm Lunch - Lexington Room

1:00 pm - 1:25 pm Bank Tax Update Beverly Seier, Shareholder, Elliott Davis

1:25 pm - 1:50 pm SEC Update Lee Haynes, Shareholder, Elliott Davis

1:50 pm - 2:50 pm Issues Facing Community Banks Jason Caskey—Moderator Fleetwood Hassell, CEO, Bank of South Carolina Art Seaver, CEO, Southern First Bank Wayne Wicker, CEO, South Atlantic Bank

2:50 pm - 3:00 pm Break

3:00 pm - 3:45 pm A&A Update Garry Rank, Shareholder, Elliott Davis

3:45 pm - 5:00 pm Regulatory Panel Discussion Jason Caskey—Moderator

Jeffery Burgess, Federal Deposit Insurance Corporation Paul Frey, Supervisory Examiner, Federal Reserve Bank of Richmond Kent Stone, Assistant Deputy Comptroller, Office of the Comptroller of the Currency

5:00 pm Adjourn Meeting

FINANCIAL SERVICES

Financial Services - 360° Industry Perspective

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Elliott Davis is a member of The Leading Edge Alliance, a worldwide association of independently owned accounting firms.

elliottdavis.com © Elliott Davis LLC © Elliott Davis PLLC TM ValuCast Acquired Loan Valuation Solution Recent industry convergence in the banking industry is unprecedented, creating opportunities for banks to acquire new customers, new talent and diversify asset portfolios. When it comes to the acquired loan portfolios, evaluating fair market value as well as accounting and reporting on those assets in the new economy is essential. Effective decision-making requires swift analysis and assimilation of vast amounts of data which can be a major challenge. Elliott Davis’ Financial Services consultants help banks address and automate this process by providing a tested, transparent, efficient solution.

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ValuCastTM has the following capabilities relating to ASC 310-30 Accounting: • Project future cash flows on both loan and indemnification asset • Assess loan level carrying values and accretion • Perform recast analyses • Deliver accounting packages for monthly closings • Perform sensitivity and stress testing with real time insights into cash flow projections • Provide static carrying value and accretable yield percentage projections • Customize cash flow modeling, output exhibits, and input methodology with no writing of code

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Financial Services Shareholder Contact Information

Bob Beckwith, CPA Bill Bossong, CPA, CBA Jason Caskey, CPA Shareholder Shareholder Financial Services Practice Leader Direct: 864.552.4763 Direct: 803.255.1497 Direct: 803.255.1203 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]

Lee Haynes, CPA Andy Mitchell, CPA George Noonan, CPA Shareholder Shareholder Shareholder Direct: 704.808.5208 Direct: 864.242.2691 Direct: 704.808.5293 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]

Paul Pickett, CPA Christopher Purvis, CPA Garry A. Rank, CPA Shareholder Shareholder Shareholder Direct: 804.887.2256 Direct: 704-808-5216 Direct: 864.242.2638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]

Barbara Rushing, CPA Beverly A. Seier, CPA, CPCU Stacy Stokes, CPA Shareholder Shareholder Shareholder Direct: 864.242.2625 Direct: 803.255.1214 Direct: 803.255.1472 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] 2014 Community Banking Forum

Tuesday December 9, 2014

Is this the new normal? A capital markets perspective

Discussion Materials | December 2014

RAYMOND JAMES FINANICAL SERVICES INVESTMENT BANKING AND FINANCIAL INSTITUTIONS SALES & TRADING Discussion Materials | December 2014 THE FUNDAMENTALS OF COMMUNITY BANKING HAVE CHANGED…

Median 2006 2014 Metrics Southeast U.S. Southeast U.S.

Assets ($000s) 133,698 104,602 201,361 166,697

ROAA (%) 1.05 1.00 0.73 0.81

ROATCE (%) 10.9 10.1 7.1 8.0

TCE / TA (%) 7.7 7.9 9.4 9.5

NPAs / Assets (%) 0.29 0.26 1.94 1.10

Efficiency Ratio (%) 64 66 74 71

NIM (%) 4.34 4.14 3.85 3.72

Loan Growth (%) 8.8 7.1 3.9 5.5

Loans / Deposits (%) 82 81 76 76

Pre-Tax Pre-LLP ROAA (%) 1.61 1.44 1.02 1.07

Note: Banks with assets under $10 billion Source: SNL Financial LC; LTM data as of December 31, 2006 and September 30, 2014 2 Discussion Materials | December 2014 ...MEDIAN RESULTS NO LONGER COMMAND A PREMIUM TO TBV

Historical Median Price to Tangible Book Value 250% Interquartile Range 233% 230% 228% Floor and ceiling of middle 50% with median indicated

200%

179% 168% 170% 173% 150% 134% 145% 134% 139% 128% 135% 132% 107% 107% 106% 100% 104% 95% 99% 95% 88%

73% 70% 73% 66% 67% 65% 50% 62% 47% 45% 44% 39%

0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 11/24/14

Note: Banks with assets under $10 billion, excludes MHCs Source: SNL Financial LC; data as of November 24, 2014 3 Discussion Materials | December 2014 WHAT WILL IT TAKE TO COMMAND A PREMIUM TO BOOK VALUE?

Commentary ROAA Required to Trade at Book Value Assuming 9% Tang Common Equity / Tang Assets • For many banks, 250%2.52.5 improvement in asset quality hasn’t led to a 15x trading price above 200%22 book value

• From an investor’s 150%1.51.5 11x perspective, earnings are ultimately why bank stocks trade 100%11 above book value (or below book value)

50%0.50.5 Price Price Tang / Book Value

• Based on a range of Price Tang / Book Value Price/ TangBook Value P/E multiples of 11x – 15x, a bank with 9.0% 0%00 TCE / TA must earn 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% between 0.60% and 0.82% ROAA in order to trade at book value ROAAROAA • However, to trade at a Historic Current healthy premium to Median P / E P / E book value (150%), a Current & Historical SNL U.S. Bank < $500M 15.2x 14.7x bank must earn Bank Stock Index SNL U.S. Bank $500M-$1B 15.1x 15.2x between 0.90% and P/E Multiples SNL U.S. Bank $1B-$5B 15.7x 18.1x 1.23% ROAA SNL U.S. Bank $5B-$10B 16.1x 17.3x SNL U.S. Bank > $10B 14.0x 13.5x

Source: SNL Financial LC; index data since January 1993; trading data as of November 24, 2014 4 Discussion Materials | December 2014 WHY SHOULD A BANK STOCK TRADE AT A PREMIUM TO TBV?

• What makes $1 of tangible book value (TBV) in a bank superior to $1 under the mattress?

• In theory, the $1 of TBV should deliver returns that the $1 under the mattress cannot

• One way investors determine how much to pay for a bank stock relative to its TBV is by comparing Price / TBV and ROATCE (or Return on Average Tangible Common Equity)

• A general rule is that every 6.5% to 7.0% of ROATCE is worth approximately 1.0x TBV (1)

• With this mind, it is logical to see that the change in industry fundamentals (lower net income and higher TCE levels) has led to lower valuation multiples for community banks

• Absent an M&A takeout premium, its difficult for investors to envision underperforming community banks generating the level of standalone profitability required to provide them with an adequate internal rate of return

• In the following examples, we use a simplified 7.0% ROATCE = 1.0x TBV approach to evaluate how much investors can pay for a bank assuming the investors seek a 15% IRR over three years

(1) Correlation supported by historical data based on Raymond James Research analysis Source: SNL Financial LC 5 Discussion Materials | December 2014 INVESTORS STRUGGLE TO PAY TBV PREMIUM AND MEET IRR...

Projected Stock Price of Example Bank Corp. (0.73% ROAA) Based on 7.0% ROE = 1.0x TBV

Projected Stock Price of Example Bank Corp. It is difficult for investors to meet $23.46 $24.00 Based on 7% ROE = 1.0x TBV their desired return hurdles and pay a premium to tangible book 15.0% Growth $22.00 10.0% Growth value for today’s median bank $20.36 3.9% Growth

without strong growth. $20.00 Projected TBV - 3.9% Growth $18.63 $17.67 Example Bank Corp. $18.00 $16.93 Actual Southeast LTM Medians $15.33 $16.00 Total Assets $ 201,361 $15.39 $14.36 TCE / TA 9.4% $13.98 $14.00 $13.30 $13.42 ROAA 0.73% $12.89 Efficiency Ratio 74% $12.70 $12.42 $13.89 $13.38 LTM Loan Growth 3.9% $12.00 $12.52 $11.97 $11.65 Implied Earnings and Book Value $10.00 $10.81 Implied Tangible Common Equity $ 18,928 $10.00 Implied Net Income 1,470 $8.00 Today Year 1 Year 2 Year 3 Year 4 Year 5 Share and Per Share Values Shares Outstanding 1,892,800 ROE Year 1 Year 2 Year 3 Year 4 Year 5 Earnings Per Share $0.78 3.9% Growth 7.8% 7.5% 7.2% 7.0% 6.8% Tangible Book Value Per Share $10.00 10.0% Growth 8.2% 8.3% 8.4% 8.5% 8.6% 15.0% Growth 8.5% 9.0% 9.4% 9.9% 10.2% Based on the Projected TBV Today Year 1 Year 2 Year 3 Year 4 Year 5 projected growth above, what is the 3.9% Growth $10.00 $10.81 $11.65 $12.52 $13.42 $14.36 resulting change in 10.0% Growth $10.00 $10.85 $11.79 $12.83 $13.96 $15.22 tangible book value? 15.0% Growth $10.00 $10.89 $11.92 $13.10 $14.46 $16.02

6 Discussion Materials | December 2014 TYPES OF CAPITAL / FINANCING: COST VERSUS TREATMENT

~ 15.0%

Common Equity

Conv. Preferred Equity Non-Cum. Preferred Equity

Conv. Cost of Financing of Cost Debt

~ 5.0% Sub Debt

Senior Debt

Low / None Equity Treatment by Rating / Bank Regulatory Agencies High Discussion Materials | December 2014 CAPITAL MARKETS ALTERNATIVES – IPOS

Commentary Bank IPO Activity (1) • The capital markets 4 Number of IPOs $1,000 are supportive of Total Amount Raised ($MM) growth-oriented $800 healthy community and 3 regional banks $600 • The bank IPO market 2 continues to gain $400 strength 1 $200 • The IPO market is 1 1 0 0 0 1 1 2 0 1 3 0 0 2 3 3 3 available to smaller and less profitable 0 $0 companies than before 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 - However, valuation is impacted by size '10 2011 - Q 2012 - Q 2013 - Q 2014 - Q and profitability Bank IPOs since January 1, 2014 Company City, State Total Assets ($000s) Completion Date Amount Offered ($000s) Triumph Bancorp, Inc. Dallas, TX 1,407,072 11/6/2014 80,400 • The smaller the bank, Great Western Bancorp, Inc. Sioux Falls, SD 9,292,283 10/14/2014 331,200 Veritex Holdings, Inc. Dallas, TX 710,382 10/8/2014 40,365 the more important its C1 Financial, Inc. Saint Petersburg, FL 1,449,214 8/13/2014 46,943 Green Bancorp, Inc. Houston, TX 1,751,563 8/7/2014 80,860 growth story FCB Financial Holdings, Inc. Weston, FL 5,167,500 7/31/2014 181,280 Investar Holding Corporation Baton Rouge, LA 673,964 6/30/2014 45,994 ServisFirst Bancshares, Inc. Birmingham, AL 3,572,914 5/13/2014 56,875 • Investors’ faith in the Opus Bank Irvine, CA 3,738,887 4/15/2014 163,328 Square 1 Financial, Inc. Durham, NC 2,326,427 3/26/2014 119,670 management team can Talmer Bancorp, Inc. Troy, MI 4,741,945 2/11/2014 232,555 open and shut the door for institutions on the $500MM $2B to < $500MM > $5B size “bubble” to $2B ? $5B

(1) Bank IPOs completed since September 30, 2010 with at least $10mm raised; excludes mutual-to-stock conversions Source: SNL Financial LC 8 Discussion Materials | December 2014 CAPITAL MARKETS ALTERNATIVES – FOLLOW-ONS

Commentary Bank Follow-On Activity (1) • Capital markets have 10 Number of Underwritten Follow-Ons $800 improved significantly Total Amount Raised over the last four years 8 $600 • At the early part of the recovery, the ability to 6 issue common equity $400 was only an option for 4 larger banks $200 2 • As the economy has 8 9 5 1 4 4 2 2 6 1 4 4 6 2 7 0 3 improved investors 0 $0 have become more willing to provide 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 common equity to community banks '10 2011 - Q 2012 - Q 2013 - Q 2014 - Q Bank Follow-Ons since January 1, 2014 • The second quarter of Company City, State Total Assets ($000s) Completion Date Amount Offered ($000s) Texas Capital Bancshares, Inc. Dallas, TX 14,266,502 11/12/2014 150,000 2014 was the most Southern First Bancshares, Inc. Greenville, SC 1,007,553 11/5/2014 17,280 Anchor BanCorp Wisconsin Inc. Madison, WI 2,121,249 10/21/2014 11,122 active quarter in the River Valley Bancorp Madison, IN 483,943 6/30/2014 19,401 Chemical Financial Corporation Midland, MI 6,338,328 6/19/2014 80,500 last few years and Signature Bank New York, NY 23,104,422 6/10/2014 297,649 Shore Bancshares, Inc. Easton, MD 1,049,514 5/20/2014 34,155 indicates there is a Banc of California, Inc. Irvine, CA 4,030,634 5/15/2014 112,288 Bankwell Financial Group, Inc. New Canaan, CT 812,055 5/15/2014 48,649 healthy market for Old Second Bancorp, Inc. Aurora, IL 2,004,034 4/3/2014 68,310 bank equities Guaranty Federal Bancshares, Inc. Springfield, MO 619,888 3/4/2014 17,250 Texas Capital Bancshares, Inc. Dallas, TX 11,714,691 1/23/2014 112,969

$500MM $2B to < $500MM > $5B to $2B $5B

(1) Bank underwritten follow-on offerings completed since September 30, 2010 with at least $10mm raised; excludes “secondary only” offerings Source: SNL Financial LC 9 Discussion Materials | December 2014 CAPITAL MARKETS ALTERNATIVES – PREFERRED

Commentary Bank Preferred Stock Offering Activity (1) • Historically, preferred Number of Preferred Offerings stock was issued mostly 12 $1,000 by larger banks and Total Amount Raised ($MM) only to a limited extent 10 $800 by community banks 8 • Without TruPS as an $600 option for Tier 1 capital, 6 preferred stock has $400 become more popular 4 as the only alternative to common equity for 2 $200 Tier 1 capital 0 4 3 3 1 2 1 2 10 7 3 1 6 1 7 1 0 • As the economy has 0 $0 improved, bank-focused 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 and other investors have created a market '10 2011 - Q 2012 - Q 2013 - Q 2014 - Q for community bank Bank Preferred Stock Offerings since January 1, 2014 preferred equity Company City, State Total Assets ($000s) Completion Date Amount Offered ($000s) Central Federal Corporation Worthington, OH 258,989 7/15/2014 12,000 MVB Financial Corp. Fairmont, WV 997,425 6/30/2014 7,834 Katahdin Bankshares Corporation Patten, ME 639,618 6/27/2014 10,000 Commerce Bancshares, Inc. Kansas City, MO 22,837,120 6/12/2014 150,000 Merchants Bancorp Gresham, OR 173,083 5/24/2014 2,200 Kinderhook Bank Corporation Kinderhook, NY 354,019 5/5/2014 7,400 Highlands Bankshares, Inc. Abingdon, VA 598,312 4/16/2014 7,169 Cordia Bancorp Inc. Midlothian, VA 235,148 4/10/2014 15,428 Golden State Bank Upland, CA 77,584 3/3/2014 10,300

$500MM $2B to < $500MM > $5B to $2B ? $5B

(1) Bank preferred offerings completed since September 30, 2010 with at least $5mm raised; excludes mandatorily convertible issuances and offerings issued under SBLF and TARP 10 Source: SNL Financial LC Discussion Materials | December 2014 CAPITAL MARKETS ALTERNATIVES – PRIVATE PLACEMENTS

Commentary Private Placements (1) • Early on, most of the 20 Number of Private Placements $1,600 capital being raised Total Amount Raised ($MM) $1,400 was through private placements and was 15 $1,200 related to the $1,000 recapitalization of distressed banks 10 $800 $600 • The Southeast saw a 5 6 $400 large number of private 8 6 11 9 9 7 5 placements given this $200 16 14 12 10 5 3 10 13 4 region saw a 0 $0 significant number of troubled banks directly 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 related to the decline in real state activity '10 2011 - Q 2012 - Q 2013 - Q 2014 - Q and values Private Placements since June 30, 2014 Company City, State Total Assets ($000s) Completion Date Amount Offered ($000s) California Republic Bancorp Irvine, CA 983,252 11/17/2014 64,753 • The recapitalization Regent Bancorp, Inc. Davie, FL 357,408 10/20/2014 20,000 Broadway Financial Corporation Los Angeles, CA 334,684 10/16/2014 2,042 phase is over, so Prime Pacific Financial Services Lynnwood, WA 125,961 10/6/2014 4,604 Boston Private Financial Holdings, Inc. Boston, MA 6,388,823 10/2/2014 21,007 private placements are Xenith Bankshares, Inc. Richmond, VA 883,383 9/29/2014 5,588 Four Oaks Fincorp, Inc. Four Oaks, NC 833,366 8/15/2014 12,500 returning to a more Sun Bancorp, Inc. Mount Laurel, NJ 2,894,658 8/14/2014 20,000 Peoples Bancorp Inc. Marietta, OH 2,163,892 8/4/2014 42,500 normal level CCF Holding Company Jonesboro, GA 370,209 7/28/2014 8,000 Bank of the Carolinas Corporation Mocksville, NC 428,047 7/16/2014 45,813 Royal Bancshares of Pennsylvania, Inc. Narberth, PA 734,410 7/1/2014 13,943 $500MM $2B to < $500MM > $5B to $2B $5B

(1) Private placements of common equity since September 30, 2010 with at least $3mm raised; excludes rights offerings and IPOs Source: SNL Financial LC 11 Discussion Materials | December 2014 CAPITAL MARKETS ALTERNATIVES – SUBORDINATED DEBT

Commentary Bank Sub Debt Activity (1) • The capital markets 9 $500 are currently very 8 Number of Sub Debt Offerings $400 receptive to community 7 Total Amount Raised ($MM) bank sub debt 6 5 $300 • In Q3 2014 alone, over 4 $400 million of sub $200 debt was raised 3 2 $100 • The emergence of 1 3 0 0 0 0 3 1 4 2 3 1 3 3 2 4 8 6 Kroll ratings for banks 0 $0 has helped open up the sub debt markets 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 - In particular, Kroll’s '10 2011 - Q 2012 - Q 2013 - Q 2014 - Q BBB- ratings (or Bank Sub Debt Activity since June 30, 2014 “investment grade Company City, State Total Assets ($000s) Completion Date Amount Offered ($000s) California Republic Bancorp Irvine, CA 983,252 11/17/2014 25,000 but for size”) allow Independent Bank Corp. Rockland, MA 6,384,428 11/17/2014 35,000 Fulton Financial Corporation Lancaster, PA 17,238,174 11/12/2014 100,000 insurance First Community Financial Partners, Inc. Joliet, IL 917,891 10/31/2014 9,800 companies to buy New Hampshire Thrift Bancshares, Inc. Newport, NH 1,483,112 10/29/2014 17,000 Presidio Bank San Francisco, CA 483,593 10/22/2014 10,000 bank sub debt BNC Bancorp High Point, NC 3,683,230 9/25/2014 60,000 United Financial Bancorp, Inc. Glastonbury, CT 5,159,478 9/18/2014 75,000 Brookline Bancorp, Inc. Boston, MA 5,587,486 9/11/2014 75,000 Pacific Premier Bancorp, Inc. Irvine, CA 1,921,525 8/29/2014 60,000 • Larger issuers can First Business Financial Services, Inc. Madison, WI 1,306,503 8/26/2014 15,000 raise sub debt at Eagle Bancorp, Inc. Bethesda, MD 3,914,444 7/31/2014 70,000 Greer Bancshares Incorporated Greer, SC 363,296 7/23/2014 3,975 5.50% to 7.50% while Independent Bank Group, Inc. McKinney, TX 2,353,675 7/17/2014 65,000 smaller issuers are typically closer to $500MM $2B to < $500MM > $5B 7.00% to 9.00% ? to $2B $5B

(1) Bank sub debt offerings completed since September 30, 2010 with at least $3mm raised Source: SNL Financial LC 12 Discussion Materials | December 2014 SUPERIOR SIZE AND SCALE LEAD TO SUPERIOR PROFITABILITY...

Commentary Size and Scale Provide Operational Advantages • Operational metrics reveal that scale is almost linearly Return on Average Assets Efficiency Ratio 1.20% 100% correlated with performance; 1.04% 83% this correlation is expected to 0.90% 75% 0.86% 0.90% 0.82% 75% 70% 68% further drive consolidation in 64% 62% the banking industry 0.67% 0.60% 0.53% 50% • Larger banks are typically more efficient than smaller 0.30% 25% banks

• The median bank with assets 0.00% 0% <$250M $250M - $500M - $1.0B - $2.5B - $5.0B - <$250M $250M - $500M - $1.0B - $2.5B - $5.0B - between $2.5 billion and $5 $500M $1B $2.5B $5.0B $15.0B $500M $1B $2.5B $5.0B $15.0B billion requires $0.11 less in operating expense to produce Return on Avg. Tang. Common Equity Net Operating Expense (1)

$1 of revenue compared to 15.0% 3.00% 2.81%

the median bank with assets 2.44% 11.7% between $250 million and 12.0% 2.20% 2.09% 9.9% 10.3% $500 million 9.5% 2.00% 1.87% 9.0% 1.60% 7.5% • Ultimately, larger size typically results in better profitability, as 6.0% 5.3% 1.00% measured by ROAA and ROATCE 3.0%

0.0% 0.00% <$250M $250M - $500M - $1.0B - $2.5B - $5.0B - <$250M $250M - $500M - $1.0B - $2.5B - $5.0B - $500M $1B $2.5B $5.0B $15.0B $500M $1B $2.5B $5.0B $15.0B

(1) Defined as non-interest expense as a percentage of average assets minus non-interest income as a percentage of average assets Source: SNL Financial LC; data for all publicly traded banks and thrifts; reflects LTM financials for the most recent reported period 13 Discussion Materials | December 2014 ...SUPERIOR PROFITABILITY LEADS TO SUPERIOR VALUATION

Commentary Median Pricing Multiples by Asset Size

• Valuation is driven by 220% Price / Tang. Book 16.0x profitability, and profitability is P / 2015E driven by size 15.5x 202% 200% 15.4x • Larger size alone does not 15.0x result in a better valuation 183% 180% 175% • This graph illustrates that 14.3x 14.1x price to forward earnings 14.0x 13.9x 14.0x Price / 13.8x multiples, regardless of asset 160% 155% 2015E EPS 13.7x 13.7x 153% size bucket, are generally in 13.5x 148% the 13.0x to 14.5x range 141% 142% 13.1x 140% 13.0x • However, there is an 127% extremely strong correlation 120% between asset size bucket 113% and price to tangible book 12.0x 106% value multiples 99% 100% 90%

81% 11.0x 80%

60% 10.0x

Source: SNL Financial LC; excludes banks with total assets greater than $10 billion; data as of November 24, 2014 14 Discussion Materials | December 2014 SOUTH CAROLINA SNAPSHOT

Absolute Change 9/30/2014 9/30/2013 Change (%) Bank Statistics # of Banks 66 70 -4 -5.7% Acquisitions (Closed) 3 - - - Failures 1 - - - Banks with Texas ratio > 100% 7 7 0 0.0%

Financial Metrics - LTM Medians ROA 0.65% 0.53% 0.12 22.6% ROE 5.87% 4.76% 1.11 23.3% TCE 10.52% 10.31% 0.21 2.0% Leverage Ratio 10.19% 10.31% -0.13 -1.2% NPAs 2.75% 3.42% -0.67 -19.6% LLR / Gross Loans 1.56% 1.87% -0.31 -16.6% LTM Loan Growth 1.92% -2.16% NM NM

Pricing Ratios Price / TBV 115% 95% 20 21.5% Price / EPS 16.2x 14.9x 1.3 8.7%

Source: SNL Financial LC 15 Discussion Materials | December 2014 M&A ENVIRONMENT – WHAT HAS CHANGED

Pre-Recession Environment Current Environment

• Buyers were willing to take on significant book value • Buyers are focused on managing tangible book dilution and the market was willing to accept it value dilution (10% or less) and earning back the dilution taken in a reasonable period of time (3 to 4 • Buyers were willing to take earnings per share years) dilution in the first and sometimes second year of a transaction • Buyers want meaningful and immediate earnings per share accretion (10% or more) • Sellers were willing to accept high-priced stocks trading off of future growth prospects (often young • Sellers are focused on the quality of the buyer’s banks) with limited liquidity stock (liquidity, dividend, historical performance) and that it is trading at a reasonable valuation with • Wholesale funding was accepted as a way to potential upside leverage franchise value • Wholesale funding has fallen out of favor with • Trust preferred allowed buyers to pay high prices by regulators financing some or all of the transaction with low cost debt • Trust preferred does not exist; alternative sources of capital (preferred equity, sub debt) are significantly more expensive

• Regulators want higher capital levels, comprised mostly of common equity

16 Discussion Materials | December 2014 M&A ENVIRONMENT – WHAT HAS STAYED THE SAME?

• Level of profitability and earnings growth are significant drivers of value • Demonstrated loan growth is critical • Diversification in loan portfolio more important than ever • Core deposits and customer relationships are key • Growth markets remain attractive • Buyers wary of seller asset quality • Fee income only valuable if it is creating bottom-line earnings • Good management with strong culture creates attractive franchises • Mergers of peers remain financially attractive but difficult to consummate

17 Discussion Materials | December 2014 CURRENT M&A ENVIRONMENT

Buyer Perspective & Issues Seller Perspective & Issues

• Increased stock price allows higher offer • Pricing improving to attractive levels prices • Some still holding onto pre-recession pricing • No need to stretch as far • No relief from interest rate and regulatory • Seller expectations are rising faster than challenges bank values • Shareholder liquidity and ability to reinstate a • Prior purchase accounting accretion fading dividend

• Asset values more stable – NPAs less of a • Market becoming more competitive for concern attractive targets

• Regulatory focus on post-merge capital • Private equity backed banks and large levels require thorough analysis community banks very interested in making acquisitions • Length of time to close deal • Double dip opportunity • Comprehensive understanding of deferred taxes on NOLs necessary • Raising capital remains expensive / dilutive

18 Discussion Materials | December 2014

M&A ACTIVITY ON THE RISE AS FAILED BANK OPPORTUNITIES DISAPPEAR

Deal Volume is Increasing 250 200 200 176 166 175 153 150 102 102 121 87 100 109 63 48 57 Number of Deals of Number 50 28 22

0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

180 Banks Failures are Decreasing 157 160 140 140 120 100 92 80 60 51 40 26 24 11 17 20 4 3 4 3 Number of Bank FailuresNumberBank of 0 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Note: Excludes transactions with deal value less than $10 million and equity ownership acquired less than 100% Source: SNL Financial LC 19 Discussion Materials | December 2014 ACQUISITION PRICING IS IMPROVING

Pricing is Increasing 300 30 25x 23x 23x 250 22x 23x 22x 23x 22x 25 20x 21x 18x 253 19x 200 240 246 242 231 18x 18x 20 201 186 150 168 15 147 132

100 119 129 120 124 10

Price / TBV (%) TBV / Price Price / LTM EPS / LTM Price 50 5

0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Price / TBV (Seller ROAA > 0.75) 300 25 20x 20x 21x 21x 21x 20x 19x 250 18x 20 264 279 256 17x 17x 264 258 200 15x 15x 14x 14x 201 15 201 188 150 156 153 164 138 139 147 10

100

Price / TBV (%) TBV / Price Price / LTM EPS / LTM Price 50 5

0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Note: Excludes transactions with deal value less than $10 million and equity ownership acquired less than 100% Source: SNL Financial LC 20 Discussion Materials | December 2014 LARGER BANKS ARE SELLING FOR HIGHER PRICES

Banks Under $1.0B vs. Over $1.0B 400 Assets Over $1.0B 350 346 Assets Under $1.0B 300 250 301 237 241 275 200 219 188 150 171 165 172 135 144 Price / / (%) TBV Price 129 100 125 114 122 128 50 116 87 91 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Deals Since 2008 Over / Under $1.0B in Assets % Over $1.0B 93 Deals 19%

% Under $1.0B 81% 389 Deals

Note: Excludes transactions with deal value less than $10 million and equity ownership acquired less than 100% Source: SNL Financial LC 21 Discussion Materials | December 2014 M&A PRICING TRENDS ARE IMPROVING IN THE CAROLINAS

Commentary Price / Tang. Book Value of • Initial tangible book value 200% Carolinas Transactions Since January 1, 2011 dilution, the number of 180% years required to earn back that dilution, and 160% EPS accretion are key 2014 Median 141% drivers of acquirer 140% capacity-to-pay 120% • Increased bank stock 2013 Median 100% prices have increased 100% acquirer capacity-to-pay, 2012 Median 81% leading to higher M&A 80% pricing both nationwide 2011 Median 61% and in the Carolinas 60%

• Also, improving asset 40% quality, improving earnings, lower credit 20% marks, and an overall 0% better operating environment are making sellers more valuable

• The market is becoming

more competitive as more

Jan-14 VSB - YDKN Jan-14

Mar-12 CBF - SCMF - CBF Mar-12

May-13 HTBI - - BGVF HTBI May-13 HTBI BONC - Mar-14

Mar-11 PSTB CPBK - Mar-11 FNSE - OZRK Jan-13 - SCBT FFCHFeb-13

banks are looking to grow - NCFT BNCN Jun-12

Apr-11 FNBN - GRAN FNBN Apr-11 - SCBT - PBCE Dec-11

Sep-12CPSEPTOK -

May-12 PSTB - CSBC - PSTB May-12 ECBE CRFN Sep-12 - Dec-13BNCN SSFC -

Aug-13 CRLN - Forest - CRLN Aug-13

Sep-13 NCBC - Sep-13 Select

Jun-14 BNCN - - Harbor BNCN Jun-14

May-13 BNCN - - RDBN BNCN May-13

Jun-14 FCBN - FCNCA Jun-14 Oct-14 NBBC - Premier

through acquisitions BNCN - Sep-11 Regent

Nov-13 NBBC - CapStone NBBC - Nov-13

Oct-14 FHN - TrustAtlantic FHN Oct-14 -

Dec-11 BNCN - KeySourceBNCN Dec-11 - Apr-11 Westminster - CFOK Apr-11 Comm. BNCN First Dec-13 - Note: excludes investor recapitalizations, transactions without publicly available pricing, and transactions for which price to tangible book value is not meaningful 22 Source: SNL Financial LC Discussion Materials | December 2014 Q&A

Questions?

23 Discussion Materials | December 2014 RAYMOND JAMES RECENT NATIONWIDE ADVISORY TRANSACTIONS

Has agreed to Has entered into a Has acquired Has entered into a Has entered into a Has announced a merger Has entered into a acquire nine definitive agreement Has been acquired by definitive agreement to definitive agreement to of equals with definitive agreement to branches from to acquire be acquired by be acquired by be acquired by

Park Cities Financial Group, Inc. United Bancorp, Inc. Pending Pending Pending Pending Pending Pending August 2014 July 2014

South Street Finance Corp. Has completed a merger Has acquired Has acquired of equals with Has acquired Has acquired Has been acquired by Has been acquired by Has been acquired by

United Financial Banking Companies, Inc July 2014 April 2014 April 2014 February 2014 February 2014 January 2014 January 2014 January 2014

Southern Bancshares Lakeland Bancorp, Inc. (N.C.), Inc. Mid-Wisconsin Financial Services, Inc. Has acquired Has been acquired by Has acquired Has acquired Has acquired Has sold Has merged with two branches to Bulk Sale of Classified Loans

October 2013 October 2013 July 2013 May 2013 May 2013 April 2013 March 2013 February 2013

OCEANIC BANK Palmetto Bancshares Inc. Home Federal Savings BBCN Bancorp, Inc. HPK Financial Corp. Bank Has acquired has been acquired by Has been acquired by the subsidiary of Has acquired Has been acquired by has sold two branches to Bulk Sale of HMN Financial Inc. Piedmont Community Classified Loans has sold one branch to Bank Holdings, Inc.

February 2013 January 2013 January 2013 December 2012 September 2012 July 2012 March 2012 February 2012

Raymond James served as financial advisor to the first institution listed in each tombstone 24 Attorney Panel Discussion

Neil Grayson, Partner, Nelson Mullins Riley & Scarborough LLP

Chip King, Shareholder, Haynsworth Sinkler Boyd, P.A.

Kathryn Knudson, Partner, Bryan Cave LLP

The Economic Situation

December 9, 2014 Char-Lanta & the Coast One-lane Economy is Opening Up! What’s Holding us Back? Reasons for Optimism Complicating Factors The Region and South Carolina NASA. April – October, 2012. http://www.businessinsider.com/regional-powerhouses-driving-the-us-economy-2014- 3?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_term=Business%20Insider%20Select&utm_campaign=BI%20Select%20% 28Wednesday%20Friday%29%202014-03-12&utm_content=emailshare

Employment Growth, 4Q2012 - 4Q2013

Cherokee York

Spartanburg Pickens Greenville

Oconee Lancaster Union Chester

Chesterfield Marlboro Anderson Laurens Dillon Fairfield Kershaw Newberry Darlington Abbeville Greenwood Lee

Florence Saluda Richland Marion Mccormick Lexington Horry Sumter

Edgefield Calhoun Clarendon Williamsburg Aiken

Orangeburg Georgetown

Barnwell Bamberg Berkeley Dorchester

Allendale

Colleton Hampton Charleston

Jasper 17.6%-6% Beaufort 2.4% - 1.3% Negative

5.1% - 2.6% 1.1% - 0.1%

Source: U.S. Bureau of Labor Statistics South Carolina County Unemployment Rate September 2014

3.14% U.S. GDP GROWTH Recent Forecasts 2014 2015 Conference Board 2.1% 2.6% Congressional Budget Office 1.5 3.4 IMF 2.2 3.1 Moody’s Analytics 2.2 3.4 Wells Fargo 2.2 2.9 Livingston Survey 2.2 3.0

October 2014 estimates. Earlier 2014 estimates.

Expect 2.5% to 3.5% real 3.14% GDP growth, 2014-2017. Recession in 2018.

Federal Receipts & Expenditures 1Q1990 - 4Q2012 $4,500 billions Title

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500 1990-01-01 1990-09-01 1991-05-01 1992-01-01 1992-09-01 1993-05-01 1994-01-01 1994-09-01 1995-05-01 1996-01-01 1996-09-01 1997-05-01 1998-01-01 1998-09-01 1999-05-01 2000-01-01 2000-09-01 2001-05-01 2002-01-01 2002-09-01 2003-05-01 2004-01-01 2004-09-01 2005-05-01 2006-01-01 2006-09-01 2007-05-01 2008-01-01 2008-09-01 2009-05-01 2010-01-01 2010-09-01 2011-05-01 2012-01-01 2012-09-01

Expenditures Receipts

What’s holding us back? Feeling Over-Regulated These Days?

What about the Evidence?

Shall. Must. May not. Prohibited. Required.

Three Components: News, Tax Code Expirations, Variation in GDP Forecasts Debt Ceiling Debate

Lehman

Mid-term Elections

Three Components: News, Tax Code Expirations, Variation in GDP Forecasts

More Reasons for Optimism

3 years

1970s

1980s

2008

1990s Complicating Factors Participation Rate by Educational Attainment For those 25 or Older September 2014 High School, Less than High 58.0% School, 44.3% 5.3% 8.4%

5.4% 2.9%

Less than Bachelor's, Bachelor's or 66.5% more, 74.7%

Overall Participation Rate: 62.7% Unemployment Unemployment Rate: 7.6% Rate: 11.0%

Unemployment Unemployment Rate: 6.0% Rate: 3.8%

Overall Participation Rate: 63.4% UNDERGROUND ECONOMY

The Sharing Economy The Geographic Imprint State Real GDP Growth Compounded Annual Rate, 2009 - 2013

2.48% - 11.56% 1.81% - 2.17% 1.24% - 1.80% 0.42% - 1.23% U.S. = 2.0%

South Carolina & The Region

9/2016

QUESTIONS? Excess Reserves U.S. Banking System 1/1984 - 8/2014 $Billions 3000000

2500000

2000000

1500000

1000000

500000

0 1984-02-01 1985-01-01 1985-12-01 1986-11-01 1987-10-01 1988-09-01 1989-08-01 1990-07-01 1991-06-01 1992-05-01 1993-04-01 1994-03-01 1995-02-01 1996-01-01 1996-12-01 1997-11-01 1998-10-01 1999-09-01 2000-08-01 2001-07-01 2002-06-01 2003-05-01 2004-04-01 2005-03-01 2006-02-01 2007-01-01 2007-12-01 2008-11-01 2009-10-01 2010-09-01 2011-08-01 2012-07-01 2013-06-01 2014-05-01 Income Tax Update for Community Banks

Tuesday December 9, 2014 Beverly Seier Shareholder, Elliott Davis

This material was used by Elliott Davis during an oral presentation; it is not a complete record of the discussion. This presentation is for informational purposes and does not contain or convey specific advice. It should not be used or relied upon in regard to any particular situation or circumstances without first consulting the appropriate advisor. No part of the presentation may be circulated, quoted, or reproduced for distribution without prior written approval from Elliott Davis.

• Legislative Update - Bad Debts & OREO Carrying Costs - Tangible Property Regulations - Business Tax Extenders - State Tax Law Changes • Information Reporting - Year End Information Reporting Checklist - Organizational Actions • Regulatory Update - Tax Sharing Agreements - BASEL III Impact on DTAs

LEGISLATIVE UPDATE

Bad Debts OREO Carrying Costs Tangible Property Regulations Business Tax Extenders State Tax Law Changes Bad Debts – LB&I Directive

• Background: - Sec. 166 permits a deduction for any debt that becomes worthless in a taxable year - Confusion surrounding the determination of “worthlessness” for bad debt deductions • Book treatment (GAAP & Regulatory) • Tax treatment - IRS Exam issues - IRS Notice 2013-35 issued but more clarification was needed

Bad Debts – LB&I Directive

• IRS Large Business &International (LB&I) Directive Related to §166 Deductions for Eligible Debt and Eligible Debt Securities - Issued on 10/24/2014 to IRS examiners - Applies to Bank and Bank subsidiaries - Does not apply to small banks that use the reserve method of accounting for loan losses under §585 - Directive “is intended to provide an efficient manner of resolving many bad debt deduction issues for Banks and Bank Subsidiaries and to more efficiently manage LB&I’s audit resources” - Technically, only binding on LB&I field examination

Bad Debts – LB&I Directive

• IRS Large Business &International (LB&I) Directive Related to §166 Deductions for Eligible Debt and Eligible Debt Securities - Describes 3 situations in which examiners should not challenge a bank’s bad debt deductions depending on how the deductions are determined - Clarifies that LB&I examiners will not challenge the inclusion of certain estimated selling costs to the extent such estimated selling costs are included in the charge-off reported in the applicable financial statement.

Bad Debts – LB&I Directive

• Facts-and-Circumstances” Test - Examiners will not challenge a deduction if the amount is the same as amounts reported on the bank’s financial statements for the credit-related impairment portion of its charge-off of eligible debt and debt securities - In no event may the post-deduction tax basis of the eligible debt or eligible debt security be less than the post- deduction book basis, as increased by any portion of the book charge-off not related to credit impairment.

Bad Debts – LB&I Directive

• “Conclusive Presumption” Rule - Used by banks that have been ordered to charge off a debt by federal or state banking regulators - Deduction amount should match the sum of the amounts reported on financial statements and the portion of the charge-off taken in excess of credit-related impairment pursuant to the order - Signed Certification Statement is required

Bad Debts – LB&I Directive

• “Conformity” method - Examiners are not to challenge a bank’s bad debt deduction if the bank has made a proper conformity election under Regulation 1.166-2(d)(3) regardless of whether or not the express determination requirement included in Regulation 1.166-2(d)(3)(iii)(D) is satisfied.

Bad Debts – LB&I Directive

• Implementation of LB&I Directive - Applies on an entity-by-entity basis - Applies to tax years beginning in 2010-2014 - Pending any future guidance modifying or superseding the Directive, once the Directive is applied, it must be applied consistently from year to year going forward - Can file amended returns or make the changes in its current taxable year – no Form 3115 / 481(a) adj required

Bad Debts – LB&I Directive

• Certification Statement - If following Directive, Certification Statement must be provided within 30 days of request to examiner upon examination - Must be signed by an individual who is authorized to execute the Taxpayer’s Federal income tax return for the taxable year under audit, and must certify, under penalty of perjury that, for the taxable year under audit that certain provisions of the Directive are met - Certification Statement Template is included in the Directive - Planning Note: Get Certification Statement signed by authorized officer when return filed for future audit purposes

Bad Debts – LB&I Directive

• The Taxpayer should retain the underlying accounting documentation that would permit the LB&I examiner to reconcile the Taxpayer’s Applicable Financial Statement with the amount of its bad debt deduction for Eligible Debt and Eligible Debt Securities reported on the Taxpayer’s Federal income tax return

Bad Debt Conformity Election

• Bad debt conformity election provides banks with a safe harbor for deducting worthless loans, must file a change of accounting method (form 3115) • The tax bad debt deduction occurs in the period that a loan is determined to be a loss asset for regulatory purposes • The election must be made by each bank in the consolidated group • Each bank must receive an Express Determination Letter (EDL) from their primary federal regulators on an annual basis – continue to request it

14 Bad Debt Conformity Election

• Advantages: - Provides audit protection against IRS for bad debt deductions - Nonaccrual loan interest is not included as taxable interest income (Rev Ruling 2007-32)

15 Real Property Acquired through Foreclosure

• Acquisition and holding costs for OREO are NOT capitalized under IRC §263A(b)(2) and Reg. §1.263A- 3(a)(1) • If these costs were previously capitalized, taxpayer must file an Automatic Change of Accounting Method (Form 3115) with change number 195 Tangible Property Regulations

• Overview - On Sept 13, 2013, IRS and US Treasury Department released final tangible property regulations - Impacts: • Treatment of materials and supplies • Capitalization of amounts paid to acquire or produce tangible property • When repairs and maintenance should be expensed vs capitalized - Mandatory for years beginning on or after January 1, 2014

Tangible Property Regulations

• Materials and Supplies – Reg. Sec. 1.162-3 - Incidental components obtained to maintain, repair, or improve a unit of tangible property - Useful life of 12 months or less - Cost of $200 or less - Deductible - Impacts manufacturing type companies more than service companies - Examples for banks: coffee for a coffee maker, toner for a copy machine (which you are likely already expensing)

Tangible Property Regulations

• De Minimis Safe Harbor – Reg. Sec. 1.263(a)-1(f) - Allows taxpayer to follow their book minimum capitalization policy for tax purposes - Can expense up to $5,000 per invoice or item if taxpayer: • Has an applicable financial statement • Has a written policy in place at the beginning of the year • Treatment is same for book and tax - Annual election attached to tax return (irrevocable) AICPA example of a De Minimis Safe Harbor Written Capitalization Policy

[Name of my company or client] Capitalization Policy

1. Purpose This accounting policy establishes the minimum cost (capitalization amount) that shall be used to determine the capital assets that are to be recorded in [name of your business]’s annual financial statements (or books).

2. Capital Asset definition A “Capital Asset” is defined as a unit of property that: (1) has an economic useful life that extends beyond 12 months; and (2) was acquired or produced for a cost of $____ or more. Capital Assets must be capitalized and depreciated for financial statement (or bookkeeping) purposes.

3. Capitalization thresholds [Name of your business] establishes $______as the threshold amount for minimum capitalization. Any items costing below this amount should be expensed in [name of your business]’s financial statements (or books).

4. Capitalization method and procedure All Capital Assets are recorded at historical cost as of the date acquired.

Tangible assets costing below the aforementioned threshold amount are recorded as an expense for [name of your business]’s annual financial statements. Alternatively, assets with an economic useful life of 12 months or less are required to be expensed for financial statement purposes, regardless of the acquisition or production cost.

5. Recordkeeping Invoice substantiating an acquisition cost of each unit of property shall be retained for a minimum of four years.

Tangible Property Regulations

• Improvements to Tangible Property – Reg. Sec. 1.263(a)-3 - Betterments must be capitalized - Restorations must be capitalized if the restoration is a substantial part of the unit of property. If not a substantial part of the unit, they must expensed • IRS has not defined “substantial” - Improvements to adapt property to a new or different use must be capitalized

Tangible Property Regulations

• Improvements to Tangible Property – Reg. Sec. 1.263(a)-3 (continued) - There is an annual, irrevocable Safe Harbor election for Small Taxpayers (avg. gross receipts of $10 million or less for past 3 years) • Election allows taxpayers to expense repairs and maintenance if less than $10,000 or 2% of the unadjusted basis of property - Routine maintenance costs must be expensed unless taxpayer makes an annual election to capitalize (irrevocable) • Election requires repairs and maintenance to be capitalized the same for tax as for books

Tangible Property Regulations

• Implementation – Rev. Proc. 2014-16 - Written Capitalization Policy (asap) - De Minimis Safe Harbor Election (annual, irrevocable) - Election to Capitalize Repair & Maintenance Costs same as books (annual, irrevocable) - Safe Harbor Election for Small Taxpayers with Buildings (annual, irrevocable)

Tangible Property Regulations

- Partial Disposition Election (annual, no special election form, revocable) - Form 3115 (Automatic Change in Accounting Method) is required where applicable • For example, if taxpayer is currently capitalizing repairs & maintenance costs and would like to expense under new regulations, they must file Form 3115

Tangible Property Regulations

• Planning Opportunities for Banks: - Maintenance/repair items • May potentially include parking lots, roof, renovations, signage • Need to review invoices and work performed in relation to the entire building - Cost Segregation Study • New branches/headquarters

Business Tax Extenders

• 50% Bonus Depreciation - Expired in 2013 – not yet extended for 2014 • Section 179 Expensing - Increased limits for 2013 were $500,000 for maximum deduction with phase-out beginning at $2 million - Without extension, the section 179 limit would be $25,000 with phase-out beginning at $200,000 • Qualified Leasehold Improvements - 15-Year straight-line cost recovery life expired in 2013 reverting to a 39-year recovery life

26 Business Tax Extenders

• S-Corp Built-in Gains Tax - Reduced recognition period of 5-years expired in 2013 - Without extension, the recognition period would be 10-years

• Will legislative action extend these business tax incentives?? State Tax Law Changes

• North Carolina - Corporate Rate Reductions • 6.9% in 2013 • 6% in 2014 • 5% 2015 • 4% 2016 (if state meets certain revenue targets) • 3% 2017 (if state meets certain revenue targets) - Adjust DTAs to reflect change in tax rate which will be an additional tax expense to NC banks - Bank change for ACH credit payments effective July 18, 2014 (Wells Fargo to Bank of America)

28 State Tax Law Changes

• North Carolina - Moving from NEL to NOL regime - Exempt income will no longer be a reduction in the loss carryforward. This is not a retroactive change - Effective for years beginning on or after 1/1/2015 - May need to change your first quarter 2015 provision calculations if generating losses with tax exempt income

29 State Tax Law Changes

• New York - Effective in 2015, banks with NY nexus will be subject to corporate income tax as the bank franchise tax will be repealed effective December 31, 2014

State Tax Law Changes

• Pennsylvania - Actively sending notices/questionnaires to banks across the country notifying them of potential nexus - Act 52 imposed significant PA Shares Tax changes effective 1/1/2014 • Expands “doing business” criteria to out-of-state banks • Even if no PA branches/employees, may have nexus if $100,000 or more of PA gross receipts and Bank holds a security interest, mortgage, or lien in real or personal property located in PA - If any connections with PA, need to review activities

State Tax Law Changes

• South Carolina - Change in state law exempts corporate officers from unemployment insurance coverage beginning 1/1/2015 • FAQ on SC website: - http://dew.sc.gov/corpofficers/Corporate_Officers_Exemption _FAQ.pdf

• Definition of “Corporate officers” are described in a corporation’s bylaws or appointed by the board of directors

State Tax Law Changes

• South Carolina UI (con’t) - Corporations may elect UI coverage of its corporate officers • All officers or none • If elect, must file “Election of UI Coverage Form” with DEW - Coverage lasts a minimum of two full calendar years - Will continue if don’t terminate • If don’t elect, the employer must notify the corporate officers in writing that they are ineligible for unemployment benefits

State Tax Law Changes

• South Carolina UI (con’t) - How does election of coverage of corporate officers affect state and federal unemployment taxes? • If your corporate officers are not covered by state UI, - Not required to pay state UI taxes on their wages - Lose Federal Unemployment Tax Act (FUTA) tax credit - Required to pay the maximum FUTA tax rate on your corporate officers’ wages • As of January 1, 2015, 6.0 percent tax on the first $7,000 of wages = a maximum of $420 per corporate officer per year. • If your corporate officers are covered by state UI, - Receive FUTA tax credit against FUTA tax State Tax Law Changes

• South Carolina UI (con’t) – Examples Per Officer - Elect SC UI for Corporate officers: Pay FUTA & SUTA • FUTA: $7,000 x .006 = $42.00 per year • SUTA: $14,000 x Company SUTA Rate = $XXX.XX per year

- Don’t Elect SC UI for Corporate officers: Pay FUTA only • FUTA: $7,000 x .06 = $420.00 per year

The corporation will have to review their 2015 SC SUTA rate to determine cost/benefit.

INFORMATION REPORTING

Year End Tax Checklist Forms 1099-A and 1099-C Organizational Actions Year End Information Reporting Checklist

Some common forms to remember……. • Forms 1099-A/C - Cancellation of Debt • Forms 1099-INT & Forms 1099-MISC - Gifts to Customers • 1099-INT if value > $10 for deposits less than $5,000 • 1099-INT if value > $20 for deposits of $5,000 or more - Vendor/Director payments • Forms 3921 & 3922 – Exercise of ISOs/ESPP • Forms 8937 – Stock Basis Transactions

Forms 1099-A and 1099-C

• Generally either Form 1099-A or Form 1099-C is required for foreclosures, repossessions, etc. - Form 1099-A • Used to report taking possession of property or property abandonment • Can be for recourse-debt (RD) or non-recourse debt (NRD) arrangements • Generally required when property is business property, investment property, or real property • For Borrower, deemed sale at loan balance – NRD • For Borrower, deemed sale at FMV - RD

38 Forms 1099-A and 1099-C

• Form 1099-C - Only required when there is Cancellation of Debt Income (COD) Present of > $600 - May file just Form 1099-C if have COD and Foreclosure in the same year • Applies to Recourse Debt arrangements only • Debt is cancelled when an “Identifiable Event” occurs • Borrower deemed to sell property at FMV with COD Income for the excess of debt over FMV • FMV is often questioned by the borrowers (FMV presumed to be Bid Price)

39 Forms 1099-A and 1099-C

• Form 1099-C – Identifiable Events - A discharge in bankruptcy under Title 11 for business or investment debt - A cancellation in receivership, foreclosure or similar court proceedings - A cancellation when statute for collecting expires - A cancellation when creditor elects foreclosure remedies that ends the creditors rights to collect

40 Forms 1099-A and 1099-C Continued

- A cancellation due to probate or similar proceedings - A cancellation under an agreement between the creditor and debtor at less than full consideration - A discharge because of a policy of creditor to discontinue collections

41 Forms 1099-A and 1099-C

• Form 1099-C – Identifiable Events - Expiration of the nonpayment testing period • Basically no payments in a 36 month period ending on December 31 (MAY BE ELIMINATED) - Creditor can rebut this occurrence if: • The creditor has engaged in significant collection activity in the final 12 months of the testing period, OR • Facts and circumstances that exist on January 31 following the end of the testing period

42 Forms 1099-A and 1099-C

• Loan payment in a year subsequent to issuing a Form 1099-C - Bank should NOT amend/correct the originally filed Form 1099-C - It is unclear how the borrower is to reverse the COD income that they reported in a prior year if they later make payment on the loan • Charge-off does not mean debt forgiveness

Forms 1099-A and 1099-C – NEW UPDATE

• IRS has issued proposed regulations to eliminate the 36-month nonpayment rule triggering COD income reporting - IRS agrees that information reporting (1099-C) should coincide with the actual discharge of debt. Under the 36-month rule, a debtor may believe he/she has taxable income even though the creditor has not discharged the debt and continues to try to collect it. - Effective when Final Regulations are published

Organizational Actions

• Reporting Organizational Actions - Enacted in tandem with the 1099-B basis reporting and transfer statement requirements - Requires issuers of stock and securities to report actions undertaken by the issuer that affect a stockholder’s basis - Reporting is made to the stockholders and the IRS - The goal is to provide the stockholders the needed information to calculate the basis of the stock - This applies to any corporation of any size - So, what are the specifics and why do they matter? 45 Organizational Actions

• Reporting Organizational Actions - Any organizational action that impacts basis must be reported - Reporting includes ID of the stock and a detailed description of the impact of the organizational action on the stock • Examples: - Mergers and Reorganizations - Stock Dividends - Stock Splits - Non-dividend distributions - Stock Conversion 46 Organizational Actions

• Reporting Organizational Actions - Report to Stockholders by January 15th of the following year - Report to the IRS within 45 days following the organizational action or, if earlier, January 15th of the following year - IRS Form 8937 has been provided to report organizational actions - Required to report to each stockholder and the IRS – Lots of Paper if numerous stockholders

47 Organizational Actions

• Reporting Organizational Actions - Regulations allow the issuers to meet both reporting requirements by timely posting the required information on the taxpayer’s public website within 45 days of the organizational action and keeping it available for 10 years - If you do not have a public website, you must report directly to the stockholders and the IRS - What is the big deal if you miss the reporting requirements??? Penalties!!!!

48 Organizational Actions

• Reporting Organizational Actions - Penalty is $100 for each missed report - Potential penalties are large for one organizational action - Examples: • 500 shareholders and the issuer misses the required reporting of an organizational action • The penalty would be: $50,000 • No Abatement rules currently exist

REGULATORY UPDATE

Tax Sharing Agreements BASEL III Impact on DTAs Tax Sharing Agreement

• June 11, 2014 - Final supplemental guidance was issued by Federal regulators - Instructs banks and their holding company to review/revise their tax allocation agreements to address tax refunds - The goal of the guidance is to protect the depository institution

Tax Sharing Agreement

• Agreements should accomplish the following: - Clearly acknowledge that an agency relationship exists between the holding company and the depository institution - Do not contain other language to suggest a contrary intent - Require the holding company to promptly forward any payment due to the depository institution

52 BASEL III Impact on DTAs

• Effective January 1, 2015

• BASEL III will impose stricter limitations on the regulatory capital calculation

• More complex than current rules

• The requirement to project the DTA that will be realized over the next 12 months is not included in the current BASAL III rules.

BASEL III Impact on DTAs

• Common equity tier 1 capital deductions: - Goodwill and other intangible assets - DTAs are placed in the same category as mortgage servicing rights and equity investments in certain financial institutions: • Total of the DTAs, MSRs, and equity investments are limited to 15% of adjusted common equity • No item can exceed 10% of adjusted common equity

54 BASEL III Impact on DTAs

- DTAs from NOLs and credits will be deductions from Tier I equity. The phase–in percentages are as follows: • 2015 – 40% • 2016 – 60% • 2017 – 80% • 2018 – 100%

55 BASEL III Impact on DTA

• The deferred tax assets/liabilities will need to be segregated into the following categories: - DTAs from temporary differences • ALLL, OREO Write-downs, etc. - DTAs from NOLs, capital losses and tax credits - Deferred tax liabilities • DTLs related to assets removed from Tier 1 capital are netted against those assets directly (goodwill, MSRs, net OCI – if elected). • DTLs related to temporary differences in asset/liabilities.

56 BASEL III Impact on DTA

• Once the deferred tax assets and liability buckets are determined, the remaining deferred tax liabilities will be allocated among the deferred tax assets and credits

• There has been uncertainty regarding timing of the allocation of the deferred tax liabilities. The liability allocation could occur before the calculation of the DTAs utilized from a carryback claim calculation or after, and the results may not be the same. - Must be consistent from period to period

BASEL III Impact on DTA

• The example below illustrates the impact on the DTA when DTLs are allocated after the carryback calculation:

Net DTA deducted Gross Temporary Net Temporary Given Amounts Carryback Capacity Net of C/B DTL allocated from CET1 DTA, less DTL Reduce DTA by CB DTA

Temp DTA 800 (700) 100 (60) 740 (700) 40

Credit DTA 400 - 400 (240) 160

DTL (300) - (300) -

Net Amounts 900 (700) 200 (300) 160 740 (700) 40

58 BASEL III Impact on DTAs

• The example below illustrates the impact on the DTA if the DTL allocation is done before the carryback calculation.

Net DTA deducted from Gross Temporary Reduce DTA by Net Temporary Given Amounts DTL allocated CET1 DTA, less DTL CB DTA

Temp DTA 800 (200) 600 (600) -

Credit DTA 400 (100) 300

DTL (300) -

Net Amounts 900 (300) 300 600 (600) -

59 BASEL III Impact on DTAs

• There is no limitation on DTAs that can be recovered through a carryback claim, this is the same as existing rules. • Banks with DTAs comprised of mostly NOLs will likely have a greater limitation. • Banks that have paid income tax in the past 2 years but are now reporting losses will likely have less limitations on tier 1 capital. • PLANNING NOTE: Determine impact of BASEL III on your bank’s capital ratios NOW

Questions??? Beverly Seier Email: [email protected] Phone: 803.255.1214 Website: www.elliottdavis.com

Elliott Davis, LLC/PLLC is one of the largest accounting, tax and consulting services firms in the Southeast and ranks among the top 50 CPA firms in the U.S. With offices in SC, NC, GA and VA, the firm provides clients across a wide range of industries with smart, customized solutions and its people with rewarding opportunities. Founded in 1925, Elliott Davis is a member of The Leading Edge Alliance, an international professional association of independently owned accounting firms based in the U.S. and is strategically aligned with LEA Europe and LEA Asia Pacific, a worldwide network of more than 450 offices in 100 countries around the globe. For more information about Elliott Davis and its services, visit http://www.elliottdavis.com.

Tuesday December 9, 2014 Lee Haynes Shareholder, Elliott Davis

2014 SEC Update

AGENDA • Selected Topics of Current Interest at the SEC • Frequent Areas of Staff Comment • Other Items - Removal of TDR Designation - AS 18 – Related Parties

2014 SEC Update

Selected Topics of Current Interest at the SEC

2014 SEC Update Selected Topics of Current Interest at the SEC SELECTED TOPICS OF CURRENT INTEREST AT THE SEC • Cybersecurity • Disclosure Effectiveness / Disclosure Reform • Financial Crisis Enforcement Actions • Financial Reporting and Audit Task Force • Implementation of Dodd-Frank Act • Insider Trading • Municipal Securities Markets

2014 SEC Update Selected Topics of Current Interest at the SEC CYBERSECURITY • Materiality of cybersecurity disclosures - In comment letters, companies are being guided to disclose prior incidents even if they're not deemed to be material - Obviously, this is a difference in practice from the way you would typically approach disclosures of most risks (for example, litigation)

2014 SEC Update Selected Topics of Current Interest at the SEC CYBERSECURITY • The SEC cybersecurity guidance identifies six areas where cybersecurity disclosures may be necessary under Regulation S-K: 1) Risk Factors 2) Management's Discussion and Analysis of Financial Condition and Results of Operation (MD&A) 3) Description of Business 4) Legal Proceedings 5) Financial Statement Disclosures 6) Disclosure Controls and Procedures. © 2014 Elliott Davis, PLLC © 2014 Elliott Davis, LLC 6

2014 SEC Update Selected Topics of Current Interest at the SEC CYBERSECURITY • Disclosures - Disclosures should focus on the unique facts and circumstances related to specific, material cybersecurity risk factors. For example: • Cybersecurity risks and costs associated with operations • Cybersecurity risks arising from outsourcing activities • Cybersecurity risks that may go undetected for an extended period • Cybersecurity risks that give rise to relevant insurance coverage

2014 SEC Update Selected Topics of Current Interest at the SEC CYBERSECURITY • Disclosures - Cybersecurity incidents that have occurred during the past year and that are individually or collectively material in nature - Actual cyber attacks should be disclosed as to the nature, occurrence, and the potential cost of the attack, as well as the related consequences of the attack - Disclosing information about prior attacks is considered helpful for users understand the risk the company is facing and how the company is remediating past security breaches © 2014 Elliott Davis, PLLC © 2014 Elliott Davis, LLC 8

2014 SEC Update Selected Topics of Current Interest at the SEC CYBERSECURITY • Disclosures - Costs for actual and potential security breaches that should be considered for disclosure include the following: • Remedial costs associated with a loss of data and information and the loss of business after an attack • Loss of revenues due to a loss of data or customers • Regulatory fines • Litigation costs • Reputational damage that can lead to loss of customers and reduced investor confidence © 2014 Elliott Davis, PLLC © 2014 Elliott Davis, LLC 9

2014 SEC Update Selected Topics of Current Interest at the SEC CYBERSECURITY • Disclosures - Impact on valuations (reputational losses could trigger impairment of intangible assets) - Impact on results of operations (MD&A) - Timing of cybersecurity events (subsequent events disclosures) - Threatened or pending litigation (legal proceedings and/or commitments and contingencies) - Risks that affect a company's information system and the integrity of financial reporting (management's assessment of and report on internal controls) © 2014 Elliott Davis, PLLC © 2014 Elliott Davis, LLC 10

2014 SEC Update Selected Topics of Current Interest at the SEC CYBERSECURITY • Basic expectations regarding disclosures - Lower threshold to be considered material - More details - Less boilerplate

2014 SEC Update Selected Topics of Current Interest at the SEC DISCLOSURE EFFECTIVENESS / DISCLOSURE REFORM • The Division of Corporation Finance is reviewing the disclosure requirements in S-K and S-X, which provide requirements for financial statements, and is considering ways to improve the disclosure regime for the benefit of both companies and investors • Initially, the review will focus on the business and financial disclosures required by forms 10-K, 10-Q, and 8-K • Subsequent phases of the project will include compensation and governance information included in proxy statements

2014 SEC Update Selected Topics of Current Interest at the SEC FINANCIAL CRISIS ENFORCEMENT ACTIONS • Key statistics regarding SEC enforcement actions related to the financial crisis are as follows:

Statistics Number of Entities and Individuals Charged 175 Number of CEOs, CFOs, and Other Senior Corporate Officers Charged 70 Number of Individuals Who Have Received Officer and Director Bars, Industry 40 Bars, or Commission Suspensions Penalties Ordered or Agreed To > $1.87 billion Disgorgement and Prejudgment Interest Ordered or Agreed To > $1.29 billion Additional Monetary Relief Obtained for Harmed Investors $418 million * Total Penalties, Disgorgement, and Other Monetary Relief > $3.59 billion

* In settlements with Evergreen, J.P. Morgan, State Street, TD Ameritrade, and Claymore Advisors

2014 SEC Update Selected Topics of Current Interest at the SEC FINANCIAL REPORTING AND AUDIT TASK FORCE • The SEC Enforcement Division’s Financial Reporting and Audit Task Force is: - strengthening its efforts to identify and prosecute securities law violations related to financial reporting and audit failures - identifying and exploring areas susceptible to fraudulent financial reporting • the identification efforts include: - ongoing review of financial statement restatements and revisions - analysis of performance trends by industry - use of technology-based tools

2014 SEC Update Selected Topics of Current Interest at the SEC IMPLEMENTATION OF DODD-FRANK ACT • The Dodd-Frank Act contains more than 90 provisions that require SEC rulemaking • Of the mandatory rulemaking provisions, the SEC has proposed or adopted rules for about three-quarters of them

2014 SEC Update Selected Topics of Current Interest at the SEC INSIDER TRADING • Insider trading continues to be a high priority area for the SEC's enforcement program. In recent years, the SEC has filed insider trading cases against hundreds of entities and individuals whose illegal tipping or trading has undermined the level playing field that is fundamental to the integrity and fair functioning of the capital markets. Examples of insider trading enforcement actions include: - Bank Executive and Friend - SEC charged a former senior vice president at of a bank and his friend with insider trading in advance of the bank's acquisition of another financial institution

2014 SEC Update Selected Topics of Current Interest at the SEC INSIDER TRADING • Examples (continued) - Accounting Firm Partner and Three Other Traders - SEC charged an accounting firm partner and three other traders with insider trading on information from a client who came to the accountant confidentially for tax advice in advance of a tender offer announcement - Amateur Golfers - SEC charged a group of golfing friends with making more than $554,000 in illicit profits by trading on inside information received from an executive who belonged to the same country club

2014 SEC Update

Frequent Areas of Staff Comment

2014 SEC Update Frequent Areas of Staff Comment ALLOWANCE FOR LOAN LOSSES • Effects of acquisitions on credit ratios and trends • Quantification of the effects of changes to ALLL methodologies • Historical loss period utilized and how it interacts with the qualitative analysis performed • Clarity as to how the qualitative factors are identified and measured • Loan groupings utilized for homogenous pools • Directional inconsistency – increases in ALLL but improving credit trends or vice versa

2014 SEC Update Frequent Areas of Staff Comment DEFERRED TAX ASSETS • Full reversal of a valuation allowance • Partial reversal of a valuation allowance • No reversal of a valuation allowance

2014 SEC Update Frequent Areas of Staff Comment DEFERRED TAX ASSETS • Questions regarding the analysis and disclosures - Have you explained the significant factors that resulted in past losses and/or current profitability? - How much and how long were past losses and/or current profitability? - How long do you believe it will take for you to recoup your deferred tax asset? - If true, why will current profitability be sustainable in light of the current economic environment? - What has management’s track record been with respect to its ability to forecast future results?

2014 SEC Update Frequent Areas of Staff Comment INTEREST RATE RISK DISCLOSURES • Clarity surrounding models and assumptions utilized • Clarity on how outputs from the model should be evaluated and against which metrics • Interactions/differences between multiple models utilized (net interest income/EVE) • Board policy limits • Stress scenarios • Best practices – estimated re-pricing beta

2014 SEC Update Frequent Areas of Staff Comment NON-GAAP FINANCIAL MEASURES • Until a metric is required to be disclosed by a system of regulation that is applicable to the registrant, it is considered a non-GAAP financial measure • Quantitative reconciliation of the Non-GAAP measure • Current examples of Non-GAAP Metrics - Fully phased-in Basel III metrics - Basel III metrics for banks not subject to the rules until 1/1/2015 - Supplementary Leverage Ratio (SLR) - Liquidity Coverage Ratio (LCR)

2014 SEC Update

Other Items

2014 SEC Update Other Items

TDRs Removal of TDR Designation

2014 SEC Update Other Items REMOVAL OF TDR DESIGNATION • GAAP does not specifically speak to removing TDRs from their lifetime TDR label for TDR loans that have: - performed as agreed for a sustained period of time since the restructuring occurred and - the borrowers may now be able to qualify for market terms under current standard underwriting practices • Emerging practice of removing the lifetime label by analogy to a clause in ASC 310-20 (formerly FAS 91)

2014 SEC Update Other Items REMOVAL OF TDR DESIGNATION • The emerging trend in TDR loan accounting utilizes an analogy to ASC 310-20-35-9 (formerly FAS 91) refinancing guidance. • Applying this approach, the TDR may qualify as a new loan and NOT be classified and reported as a TDR if: - the terms of the TDR reflect current market rates (i.e. terms are the same as if the loan were refinanced) and - the borrower qualifies for market terms under standard underwriting in the current market environment). Federal regulators and the SEC have indicated that they will not object to applying this accounting treatment (by analogy to the guidance in ASC 310-20-35-9 (formerly FAS 91)) to TDRs until guidance is available within U.S. GAAP.

2014 SEC Update Other Items REMOVAL OF TDR DESIGNATION • Accounting standard setters have not issued formal guidance related to this practice of removing TDRs by analogy • Federal regulators and the SEC have indicated that they will not object to applying this accounting treatment (by analogy to the guidance in ASC 310-20-35-9 (formerly FAS 91)) to TDRs until guidance is available within U.S. GAAP assuming the loans meet certain criteria and proper disclosures are provided

2014 SEC Update Other Items REMOVAL OF TDR DESIGNATION • Other considerations - It would not be prudent to remove a loan from TDR status for which the institution forgave principal to a borrower as a concession during the modification process. - A TDR loan for which the institution has previously taken a related charge-off should be more closely scrutinized prior to removing from TDR status upon refinancing at market terms. Loans with previous charge-offs should be evaluated for payment history to determine if the borrower was performing at the initial TDR modification date and throughout the TDR classification period. Loans for which the borrower has experienced significant financial difficulty in the past most likely would not qualify to be removed from TDR classification.

2014 SEC Update Other Items REMOVAL OF TDR DESIGNATION • Other considerations, continued - Each institution should develop an accounting policy if it chooses to adopt the practice. - Each institution choosing to adopt this emerging guidance should develop internal controls surrounding the process of removing loans from TDR status and should evaluate each loan on a case by case basis. - Detailed disclosures should be included in the financial statements surrounding the institution’s accounting policy for removing loans from TDR status.

2014 SEC Update Other Items REMOVAL OF TDR DESIGNATION • The concept of removing loans from TDR classification continues to emerge, and as a reminder, is not currently directed under U.S. GAAP. • Institutions adopting the practice of removing loans from TDR classification should be aware that future authoritative guidance could deem the practice incorrect which would cause institutions to evaluate previously removed TDRs using final authoritative guidance if issued.

2014 SEC Update Other Items

Related Parties

2014 SEC Update Other Items RELATED PARTIES • The Public Company Accounting Oversight Board (PCAOB) recently adopted new Auditing Standard No. 18, Related Parties (AS 18) • Significantly revises the standards for the audit of related party transactions by independent auditors of public companies • Also amends existing auditing standards to address audits of significant unusual transactions and financial relationships and transactions between issuers and their executive officers

2014 SEC Update Other Items RELATED PARTIES • Will be effective for audits of financial statements for fiscal years beginning on or after December 15, 2014, including reviews of interim financial information within these fiscal years.

2014 SEC Update Other Items RELATED PARTIES NEW AUDIT PROCEDURES • AS 18 will require expanded procedures related to relationships and transactions with related parties • AS 18 will require expanded procedures related to assertions of equivalence with terms of arm’s-length transactions - The auditor will be required to express a qualified or adverse opinion on the audited financial statements containing such an equivalence assertion if the auditor is unable to obtain sufficient audit evidence to substantiate that assertion and management will not modify the disclosure. © 2014 Elliott Davis, PLLC © 2014 Elliott Davis, LLC 35

2014 SEC Update Other Items RELATED PARTIES SIGNIFICANT UNUSUAL TRANSACTIONS • Amendment revises AS 5’s definition of “significant unusual transactions” to be significant transactions “that are outside the normal course of business for the company or that otherwise appear to be unusual due to their timing, size or nature.” • The amendments will require the auditor to perform specified procedures to address and evaluate significant unusual transactions

2014 SEC Update Other Items RELATED PARTIES RELATIONSHIPS AND TRANSACTIONS WITH EXECUTIVES • AS 18 will require the auditor to perform expanded procedures related to financial relationships and transactions with executive officers, including executive compensation, perquisites and other arrangements. • AS 18 will require the auditor to make inquiries of the chair of the compensation committee regarding the structuring of the company’s compensation for its executive officers and executive officer expense reimbursements.

2014 SEC Update Other Items RELATED PARTIES MANAGEMENT REPRESENTATIONS • New management representations will be required as to related party relationships or transactions, including representations that management has no knowledge of related party transactions that are undisclosed or are improperly accounted for and disclosed and as to the absence of undisclosed side agreements.

Questions?

Contact Information

Lee Haynes, CPA Email: [email protected] Phone: 704.808.5208

Issues Facing Community Banks

Fleetwood Hassell, CEO, Bank of South Carolina

Art Seaver, CEO, Southern First Bank

Wayne Wicker, CEO, South Atlantic Bank

Community Banking Forum

2014 Accounting and Financial Reporting Update

Tuesday December 9, 2014

2014 Accounting and Financial Reporting Update

AGENDA • 2014 Accounting Standards Updates Applicable to Community Banks • COSO Framework Revised • Documenting your Reading of SOC Reports • 2014 Frequently Asked Questions • Revenue from Contracts with Customers (ASU 2014-09) • Proposed CECL Model

2014 Accounting and Financial Reporting Update

2014 Accounting Standards Updates (ASU) Applicable to Community Banks

2014 Accounting and Financial Reporting Update

Pronouncement Affects Effective Date and Transition ASU 2014-17, Pushdown Separate financial statements Effective November 18, 2014 Accounting of an acquired entity, business or nonprofit entities (public or private) ASU 2014-15, Disclosure of All entities. Effective for the annual period ending after December 15, 2016, and for Uncertainties About and an annual periods and interim periods thereafter. Early application is Entity’s Ability to Continue as a permitted. Going Concern

ASU 2014-14, Troubled Debt Creditors who hold Effective for public entities annual periods and interim period beginning Restructurings by Creditors government guaranteed after December 15, 2014. For non-public entities annual periods and mortgage loans (including interim periods beginning after December 15, 2015. guarantees of FHA and VA) ASU 2014-12, Accounting for Entities that issue share-based Effective for all entities for annual periods and interim periods within Share-Based Payments When payments when the terms of those annual periods beginning after December 15, 2015. Early adoption the Terms of an Award Provide an award stipulate that a is permitted. That a Performance Target performance target could be Could Be Achieved after the achieved after an employee Entities may apply the amendments either (a) prospectively to all awards Requisite Service Period completes the requisite service granted or modified after the effective date or (b) retrospectively to all period. awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date.

2014 Accounting and Financial Reporting Update

Pronouncement Affects Effective Date and Transition ASU 2014-11, Repurchase-to- Entities that enter into Effective for public business entities for the first interim or annual period Maturity Transactions, repurchase agreements, beginning after December 15, 2014. For all other entities, the accounting Repurchase Financings, and securities lending transactions, changes are effective for annual periods beginning after December 15, Disclosures and repo-to-maturity 2014, and interim periods beginning after December 15, 2015. An entity is transactions. required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application for a public business entity is prohibited; however, all other entities may elect to apply the requirements for interim periods beginning after December 15, 2014.

For public business entities, the disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase- to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. For all other entities, both new disclosures are required to be presented for annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015.

2014 Accounting and Financial Reporting Update

Pronouncement Affects Effective Date and Transition ASU 2014-09, Revenue from All entities. For public entities, the guidance is effective for annual reporting periods Contracts with Customers beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted.

For all other entities (nonpublic entities), the guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. A nonpublic entity may elect to apply this guidance earlier, however, only as of the following: • An annual reporting period beginning after December 15, 2016, including interim periods within that reporting period (public entity effective date) • An annual reporting period beginning after December 15, 2016, and interim periods within annual periods beginning after December 15, 2017 • An annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. An entity should apply the guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying guidance at the date of initial application.

2014 Accounting and Financial Reporting Update

Pronouncement Affects Effective Date and Transition ASU 2014-04, Reclassification of Creditors who obtain Effective for public business entities for annual periods, and interim periods Residential Real Estate physical possession within those annual periods, beginning after December 15, 2014. For other Collateralized Consumer Mortgage (resulting from an in- entities, the amendments are effective for annual periods beginning after Loans Upon Foreclosure — a substance repossession or December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. Early implementation of the guidance is permitted. The consensus of the FASB Emerging foreclosure) of residential guidance can be implemented using either a modified retrospective transition Issues Task Force real estate property method or a prospective transition method. collateralizing a consumer mortgage loan in satisfaction of a receivable. ASU 2014-01, Accounting for For reporting entities that Effective for public business entities for annual periods, and interim Investments in Qualified meet the conditions, and reporting periods within those annual periods, beginning after December Affordable Housing Projects—a that elect to use the 15, 2014. For all entities other than public business entities, the consensus of the FASB Emerging proportional-amortization amendments are effective for annual periods beginning after December Issues Task Force method, to account for 15, 2014, and interim periods within annual reporting periods beginning investments in qualified after December 15, 2015. Early adoption is permitted. The amendments affordable housing in this ASU should be applied retrospectively to all periods presented. projects, all amendments in this ASU apply. For reporting entities that do not meet the conditions or that do not elect the proportional-amortization method, only the disclosure-related amendments in this ASU apply. © 2014 Elliott Davis, PLLC © 2014 Elliott Davis, LLC 8

2014 Accounting and Financial Reporting Update

COSO Framework REVISED

2014 Accounting and Financial Reporting Update

COSO-UPDATED Internal Control-Integrated Framework What has changed: The updated framework builds upon the original version.

What has not changed… What has changed… 1. Definition of internal control 1. Update to reflect current 2. Five components of internal conditions in business and controls operating environments 3. The fundamental criteria used to 2. Codify principles that support the assess effectiveness of systems of five components of internal control internal control 3. Expand financial reporting and 4. Use of judgment in evaluating non-financial reporting the effectiveness of systems of 4. Increase focus on operations, internal control compliance and reporting objectives

2014 Accounting and Financial Reporting Update

COSO-UPDATED Internal Control-Integrated Framework Summary of updates: Control Environment 1. Demonstrates commitment to integrity and ethical values 2. Exercises oversight responsibility 3. Establishes structure, authority and responsibility 4. Demonstrates commitment to competence 5. Enforces accountability

Risk Assessment 6. Specifies relevant objectives 7. Identifies and analyzes risk 8. Assesses fraud risk 9. Identifies and analyzes significant change Control Activities 10. Selects and develops control activities 11. Selects and develops general controls over technology 12. Deploys through policies and procedures Information & 13. Uses relevant information 14. Communicates internally Communication 15. Communicates externally Monitoring Activities 16. Conducts ongoing and/or separate evaluations 17. Evaluates and communicates deficiencies

2014 Accounting and Financial Reporting Update

COSO-UPDATED Internal Control-Integrated Framework • Updated framework supersedes the 1992 Internal Control- Integrated Framework and 2006 Guidance on Internal Control Over Financial Reporting-Guidance for Smaller Reporting Companies • Transition will occur between now and December 15, 2014

2014 Accounting and Financial Reporting Update

COSO-NEW AREAS OF FOCUS • Fraud Risk Assessments • Outsourced Service Providers (OSPs) • Information Technology • Comprehensive Risk Assessments

2014 Accounting and Financial Reporting Update

COSO-NEW AREAS OF FOCUS Fraud Risk Assessments • Financial institutions continue to be the most frequent victims of fraudulent activities • Common fraud schemes and stats for banks • Sample approach: - Identify fraud risk factors - Identify fraud risks and schemes - Assess and prioritize fraud risks and schemes - Determine controls that mitigate fraud risks and assess anti-fraud controls

2014 Accounting and Financial Reporting Update

COSO-NEW AREAS OF FOCUS Outsourced Service Providers (OSPs) • Processes outsourced…not the risk • Greater emphasis on how OSPs are monitored • Vendor management focus by the regulators…not just COSO! • Common pitfalls: - Management fails to evaluate exceptions noted in SOC reports - Lack of SOC reports obtained and no additional work performed when a SOC report is not available - Risk assessments (including fraud risk assessments) that do not consider risks associated with OSPs

2014 Accounting and Financial Reporting Update

COSO-NEW AREAS OF FOCUS Information Technology • Specific points of focus related IT (see Principle 11) • Focus on process for ensuring the quality of information • Common pitfalls: - Lack of understanding regarding the source of data and/or validation of data included in reports - Design gaps in controls addressing the accuracy, completeness and integrity of data included in reports (e.g., spreadsheets)

2014 Accounting and Financial Reporting Update

COSO-NEW AREAS OF FOCUS Comprehensive Risk Assessments • Risk analysis is a dynamic process that is updated as new processes are introduced or new risks identified • Historically, there have been separate risk assessments conducted by various functions within the bank • COSO-2013 suggests that your risk assessment consider (“include”) the 17 principles

2014 Accounting and Financial Reporting Update

COSO-TRANSITION PLAN Transition Approach (5-Step Plan): 1. Develop awareness, expertise, and alignment 2. Conduct preliminary impact assessment 3. Perform detail review of the new areas of focus 4. Develop and execute COSO transition plan for SOX compliance, including: - Remediation plans - Updated documentation and test plans 5. Communicate updates to external auditors

2014 Accounting and Financial Reporting Update

COSO-TRANSITION PLAN Transition Timeline: 1. Develop awareness, expertise, and alignment 2. Conduct preliminary impact assessment 3. Perform detail review of the new areas of 2 focus 0 4. Develop and execute COSO transition plan for 1 SOX compliance, including: 4 - Remediation plans - Updated documentation and test plans 5. Communicate updates to external auditors

2014 Accounting and Financial Reporting Update

COSO-TRANSITION PLAN Transition Timeline: 1. Develop awareness, expertise, and alignment Ongoing Complete 2. Conduct preliminary impact assessment by 6/30 Oops…we are behind 3. Perform detail review of the new areas of Complete 2 schedule…what do we by 6/30 focus 0 do at this point in the 4. Develop and execute COSO transition plan for 1 SOX compliance, including:year? Complete by 9/30 4 - Remediation plans - Updated documentation and test plans 5. Communicate updates to external auditors Ongoing

2014 Accounting and Financial Reporting Update

COSO-TRANSITION PLAN CAVEAT: While this approach is not recommended, if you have determined that at this point your company has no other option… 1) Keep using COSO 1992 for the current year - Clearly state that you are using COSO’s 1992 framework 2) Go ahead and identify gaps 3) Make a transition plan for 2015 that starts early (see transition approach on the previous slides) …however, you should be prepared to answer the questions as to why the company did not implement COSO 2013 by the deadline and what the company’s plan is to implement

2014 Accounting and Financial Reporting Update

Documenting Your Reading of Outsourced Service Organization Control (SOC) Reports

2014 Accounting and Financial Reporting Update

• Determine which SOC report covers a key financial process or system, • For SOC reports identified as “key,” document: • Name of service organization • Services covered by the service organization • Period covered by the SOC report • SOC report type (Type 1 or Type 2) • If a Type 1, document why not testing the operating effectiveness of the controls in the report is appropriate • Name and qualifications of service auditor • Opinion type - If a qualified opinion, document the nature of the qualification(s) and any implications resulting from the qualification. • Locations covered (if applicable)

• Are there any subservice organizations carved out of the report? • If so, document: • The name of subservice organization • Any relevant functions performed by the carved-out subservice organization • The procedures applied to address relevant functions performed by the carved-out subservice organization • Are there any deviations noted in the report? • Document the deviations/exceptions noted and the procedures applied to address the relevant functions impacted by the deviations/exceptions • Determine whether complementary user entity controls (UCCs) identified by the service organization are relevant in addressing the risks of material misstatement relating to the relevant assertions in the financial statements

2014 Frequently Asked Questions

2014 Accounting and Financial Reporting Update

• OREO Sales Accounting • TDRs • ALLL Issues • DTAs – Reversal of Valuation Allowances • Internal Audit Outsourcing • BSA Examinations • BASEL III

Revenue From Contracts With Customers ASU 2014-09

2014 Accounting and Financial Reporting Update Revenue Recognition • Applies to revenue arising from contracts with customers. • Excludes lease contracts, insurance contracts, contractual rights and obligations within the scope of other guidance (banking financial instruments) and non-monetary exchanges (to facilitate sales to customers) between entities in the same line of business. • Requires the recognition of revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration a company receives or expects to receive.

© 2014 Elliott Davis, PLLC © 2014 Elliott Davis, LLC 28 2014 Accounting and Financial Reporting Update 5-Step Model 1. Identify the contract with a customer. 2. Identify the separate performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to the separate performance obligations. 5. Recognize revenue as each performance obligation is satisfied.

© 2014 Elliott Davis, PLLC © 2014 Elliott Davis, LLC 29 2014 Accounting and Financial Reporting Update Possible Impact on Community Banks • Upfront fees - Loan application and origination fees • Variable pricing arrangements - Late payment penalties and fees • OREO sales • Credit card loyalty programs • Underwriting fees • Treasury management fees

Proposed CECL Model

2014 Accounting and Financial Reporting Update Credit Losses – CECL Model • CECL would apply to the following financial assets (measured at AC): - Debt instruments (e.g., all loans and HTM debt securities) - Trade Receivables - Reinsurance receivables - Lease receivables recognized by a lessor - Loan commitments • Simplifies the accounting for purchased credit impaired financial assets • CECL would not apply to equity instruments • CECL would not apply to available-for-sale debt securities • Retains concept of a troubled debt restructuring “TDR”

Credit Losses – CECL Model • Expected credit losses over entire life of the instrument (“life of loan”) - Consider expected prepayments during “life” - Consider collateral pledged - Do not consider expected extensions, renewals and modifications - Requires long range forecasting techniques • Estimate of expected credit losses based on all relevant internal and external information including: - Past events - Current conditions - Reasonable and supportable forecasts

Credit Losses – CECL Model • Information to consider includes the following: - Quantitative and qualitative factors specific to the borrower - Current economic environment of the entity - Internal and external information - Current point and forecasted direction of the economic cycle • No recognition threshold (e.g., probability of losses having occurred) - Must consider the expected risk of credit loss, even if remote • The estimate of expected credit losses may reflect the time value of money - No specific methods to estimate expected credit losses prescribed - Approaches that can be used • Discounted Cash Flows • Loss-Rate Approach • Probability of Default/Loss Given Default • Aging schedule - No reconciliation of chosen method to a DCF methodology

Credit Losses – CECL Model Implementation considerations Entities need to consider key transitional aspects under the CECL model: • Assessing the data collection and aggregation process • Determining reasonable and supportable forecasts • Compliance with the additional reporting and disclosure requirements • Technology needs and solutions to support the selected method of measurement of expected losses

Current Portfolio Historical Spreadsheet Level data approach technology

Credit Losses – CECL Model Reasonable and supportable forecasts

Expected implementation challenges • Document decisions and changes to support accounting policy elections • Address the potential knowledge gap related to the economic data used over the life of the loan • Ensure transparency and traceability for policy elections and factors used in the estimation process • Establish adequate reconciliation of asset balances used in the calculation of expected losses • Provide clear explanations for changes in the allowance from period to period

Professional Overview Garry focuses on corporate auditing and accounting as well as consultation regarding governance, financial systems and internal controls. With more than 33 years of experience, his industry concentrations include financial services, manufacturing and Securities and Exchange Commission (SEC) reporting. Additional professional experience includes the management of complex engagements, mergers and acquisitions, projects involving subsidiary companies and the application of accounting and reporting standards.

Garry Rank Shareholder Greenville, SC [email protected]

2014 Accounting and Financial Reporting Update

Professional Overview Lee has over 20 years of combined experience in public accounting and accounting/management positions in publicly held companies including approximately 5 years with a Big Four accounting firm. He has participated in the audits of larger entities, including multinational and multistate operations. Lee concentrates his time in the financial services industry serving both publicly traded as well as privately held community banks located in North Carolina, South Carolina and Virginia. In addition to financial services expertise, Lee has extensive experience with preparation of consolidated financial statements, Lee Haynes Securities and Exchange Commission (SEC) filings as well as Shareholder Sarbanes-Oxley compliance. Since enactment of Sarbanes-Oxley, Lee has overseen audits of internal control over financial reporting Charlotte, NC as required by Sarbanes-Oxley for audit clients as well as assisted in [email protected] the design, documentation and implementation of internal control programs for non-audit SEC registrant clients.

2014 Accounting and Financial Reporting Update

Professional Overview With more than 20 years of experience in finance and accounting, Jay focuses on providing assurance and consulting services to financial institutions including external and internal audits, risk management, information technology and Sarbanes-Oxley compliance. Jay also leads the firm’s SSAE 16 – Service Organization Controls Reporting practice. Jay is both a certified public accountant and a certified internal auditor. His experience includes serving as senior compliance manager for a global banking institution, a business advisory senior manager for an international CPA firm, a managing consultant for a Jay Brietz large technology and process consulting firm and a financial Senior Manager statement auditor for a Big Four accounting firm. Charlotte, NC Jay has written numerous articles on dealing with Sarbanes-Oxley, [email protected] corporate governance and internal controls. He also was a principal contributor in COSO’s Guidance on Monitoring Internal Control Systems.

Regulatory Panel Discussion

Jeffery Burgess, Federal Deposit Insurance Corporation

Paul Frey, Supervisory Examiner, Federal Reserve Bank of Richmond

Kent Stone, Assistant Deputy Comptroller, OCC

Investment Banking Update

Bill Sammon Managing Director, Raymond James & Associates, Inc.

William F. Sammon, Managing Director of Financial Institutions Sales and Trading with Raymond James and Associates. Mr. Sammon has over 17 years of experience in the investment business focusing on Financial Institutions. His background includes institutional sales, capital formations of public and private instruments and private equity. He currently manages the Financial Institutions Sales and Trading Group which makes principal markets in over 600 banks. He is a member of the advisory board for the HBI Private Equity Fund I, HBI Private Equity Fund II and ICBA Private Equity Fund I and is a director of HBI Funds LLC. Mr. Sammon is a graduate of the University of Iowa with a Bachelor's degree in Economics.

Bill Wagner Managing Director, Raymond James & Associates, Inc.

Mr. Wagner joined Raymond James as part of the Howe Barnes acquisition in 2010. Mr. Wagner is a Managing Director, heading up the Financial Institutions Group in Raleigh, NC which focuses on community depository businesses. Mr. Wagner has been an investment banker to financial institutions in the Southeast since 1992 and has represented both buyers and sellers in merger transactions as well as capital raising transactions involving all forms of capital; including, common equity, preferred equity and subordinated debt.

In addition, Mr. Wagner works closely with numerous community banks providing strategic advisory services regarding capital management, shareholder value creation and acquisition strategy. He began his career with Deloitte & Touche in Columbus, OH. Mr. Wagner holds a B.S. degree from Miami University and an M.B.A. degree from the Fuqua School of Business at Duke University. Mr. Wagner is also a Certified Public Accountant.

Attorney Panel Discussion Neil Grayson Partner, Nelson Mullins Riley & Scarborough LLP

Neil Grayson, a partner with Nelson Mullins Riley & Scarborough LLP and the head of the Firm’s Financial Institutions Practice Group, has a corporate practice focused primarily on the financial institutions and mobile payments industries. Mr. Grayson advises clients on matters related to corporate governance, enforcement actions and other bank regulatory matters, recapitulations, private equity, securities offerings and reporting requirements, mergers and acquisitions, executive compensation, and related corporate and regulatory matters. Mr. Grayson has experience in corporate governance matters, securities compliance for public companies, and representation of emerging growth companies and private equity funds. Mr. Grayson has handled more than 50 public offerings and hundreds of private placements of securities while with Nelson Mullins. He has also handled more than 30 new formations and more than 50 mergers or other acquisitions as well as worked with banks and bank holding companies through the Southeast. Mr. Grayson received a Bachelor of Arts from Wofford College and attended the University of South Carolina School of Law, where he received his Juris Doctor in 1987.

Chip King Shareholder, Haynsworth Sinkler Boyd, P.A.

Chip King is the senior member of the Firm’s corporate securities and financial institution regulatory practices. In the securities area, he has acted as SEC counsel in dozens of IPOs and registered offerings. He regularly advises both reporting and non-reporting companies and their directors on their fiduciary duties in the context of shareholder proposals, tender offers, proxy contests, going private transactions and general corporate law.

He has also been the Firm's lead attorney on more than 40 mergers and acquisitions and has assisted the Firm’s other attorneys on securities issues in numerous other mergers and acquisitions. He has helped form more than 16 national and state banks and federally and state chartered savings institutions. He regularly advises financial institutions and their holding companies to ensure continuing compliance with federal and state regulations.

Kathryn Knudson Partner, Bryan Cave LLP

Kathryn Knudson leads Bryan Cave LLP’s Financial Institutions Group. The Financial Institutions group represents hundreds of community banks throughout the United States. The group is annually a national leader in merger and acquisition transactions, going private transactions and public and private capital issuances for community banks.

Ms. Knudson also counsels financial institutions, and their officers and directors, as they address the challenges resulting from the current economic cycle. This includes advice on all aspects of regulatory enforcement actions and, if necessary, preparation for potential receivership for the institution. In addition, she counsels officers and directors regarding corporate governance matters, board and management issues, regulatory issues generally and strategies for dealing with dissident shareholders.

Ms. Knudson also advises financial institutions on raising capital, conversion to Subchapter S tax status and going private transactions. She assists financial institutions and their management teams on a wide variety of securities law issues, including public and private offerings, proxy solicitations, periodic reporting requirements, disclosure obligations, insider trading and corporate governance.

Economic Update Bruce Yandle Dean Emeritus, Clemson University

Bruce Yandle is a consultant, writer and speaker on economics and political economy. He is Mercatus Center Distinguished Adjunct Professor of Economics at George Mason University and participates regulatory in the Center’s Capitol Hill lecture series. Yandle is Dean Emeritus of Clemson University’s College of Business & Behavioral Science and Senior Fellow Emeritus, Property & Environment Research Center (PERC) in Bozeman, MT. While serving as Alumni Distinguished Professor of Economics at Clemson University, he taught in graduate programs in France, Italy, Germany, and the Czech Republic. He is author/editor of 17 books, including his forthcoming co-authored Cato Institute book, Bootleggers and Baptists: Understanding America’s Regulatory Journey.

Dr. Yandle served in Washington on two occasions, first as a senior economist on the White House staff during the Ford Administration and later as Executive Director of the Federal Trade Commission in the Reagan Administration. Bruce was member and chairman of the South Carolina State Board of Economic Advisors, member and chairman of the Spartanburg Methodist College board of trustees, and member of the board of trustees of the Foundation of Economic Education. In 2012, he received the Adam Smith Award from the Association of Private Enterprise Education for his career-long leadership in promoting the free market economy. Prior to entering an academic career, Dr. Yandle was in the industrial machinery business for 15 years. His quarterly Economic Situation report is distributed by Clemson University’s Strom Thurmond Institute and George Mason University’s Mercatus Center.

Bank Tax Update Beverly Seier Shareholder, Elliott Davis

With more than 20 years of experience, Bev focuses on serving financial institutions, insurance companies and SEC registrants. She provides both public and private clients with a wide range of services, including tax planning and compliance, ASC 740 and SSAP 101 tax provision consulting, federal and state audit examinations assistance, mergers and acquisitions tax planning and Sec. 382 change-in- control and 280G golden parachute studies.

Prior to joining Elliott Davis, Bev was a Tax Partner at a Northeast-based accounting firm

SEC Update Lee Haynes Shareholder, Elliott Davis

Lee has more than 20 years of combined experience in public accounting and accounting/management positions in publicly held companies. He has participated in the audits of larger entities, including multinational and multistate operations. Lee concentrates his time in the financial services industry serving both publicly traded as well as privately held community banks located in North Carolina, South Carolina and Virginia.

In addition to financial services expertise, Lee has extensive experience with preparation of consolidated financial statements, Securities and Exchange Commission (SEC) filings and Sarbanes-Oxley compliance. This experience is complemented by Lee’s experience with engagements involving internal controls within an organization. Lee works on audits of the design and effectiveness of internal controls of service organizations under SSAE 16 (formerly SAS 70) SOC1 Type 1 and Type 2 engagements as well as AT101 SOC2 Type 1 and Type 2 engagements and has also overseen audits of internal control over financial reporting as required by Sarbanes-Oxley and FDICIA for audit clients as well as assisted in the design, documentation and implementation of internal control programs for non-audit clients.

Issues Facing Community Banks Fleetwood Hassell CEO, Bank of South Carolina

Mr. Hassell was born and raised in Charleston, South Carolina. He graduated from Porter-Gaud High School and earned a BS and MBA from the University of South Carolina School of Business. Mr. Hassell began his banking career in 1983 as a management trainee at the Citizens and Southern National Bank of South Carolina. He has been with The Bank of South Carolina since its organization in 1986, starting as an Assistant Vice President for commercial lending and business development. Since that time, he has held the positions of Vice President, Senior Vice President, and Executive Vice President and Senior Lender. He was elected to the Board of Directors of The Bank of South Carolina and its parent company in 2006 and was named President and Chief Executive Officer on April 10, 2012.

Mr. Hassell has served on the Boards of the Kidney Foundation, Crime Stoppers, Atlantic Coast Conservation Association, Trident Tech Foundation, Charleston Breakfast Rotary Club (past President), Charleston Day School (past Treasurer), Porter Gaud School Alumni, the Preservation Society, and South Carolina Bankers Association. He currently serves on the College of Charleston Foundation Board, Trident United Way Board, and the Association of the Blind Board. In January 2012, Mr. Hassell was appointed to the South Carolina State Board of Financial Institutions.

Art Seaver CEO, Southern First Bank

R. Arthur “Art” Seaver, Jr., is the founder and Chief Executive Officer of Southern First First Bank. Southern First Bank and its holding company Southern First Bancshares opened in 2000 and now rank as the 6th largest financial institution on South Carolina with over $890 million in total assets. He has over 27 years of banking experience in the Greenville market with experience at Citizens & Southern National Bank of South Carolina and Greenville National Bank. Mr. Seaver is a 1986 graduate of Clemson University with a bachelor’s degree in financial management and a 1999 graduate of the BAI Graduate School of Community Bank Management. Mr. Seaver is past Chairman of the United Way in Greenville and serves as an elder at First Presbyterian Church. He is currently a member of the Board of Directors for the South Carolina Bankers Association. Past organizations that he has worked with include Leadership Greenville, the Greenville Chamber of Commerce, the South Carolina Network of Business and Education Partnership, Junior Achievement, the Greenville Convention and Visitors Bureau, the Junior League, and the South Carolina Bankers Association.

Wayne Wicker CEO, South Atlantic Bank

K. Wayne Wicker serves as chairman of the board and chief executive officer of South Atlantic Bancshares, Inc. and South Atlantic Bank. He is a veteran banker with more than 25 years of experience in the Myrtle Beach and South Carolina markets, including leadership positions with Nexity Bank as senior vice president for correspondent banking and Anchor Bank as senior vice president and North Coast regional executive. Mr. Wicker holds a B.S. degree in business administration from The Citadel and has completed The Graduate School of Banking of the South at Louisiana State University and the South Carolina Bankers School at the University of South Carolina.

He currently serves on the board of the South Carolina Bankers Association and is actively involved in a wide variety of community activities, having served as a past president of the Myrtle Beach High School Booster Club, and on the boards of the South Carolina Young Bankers Association and the Myrtle Beach Area and North Myrtle Beach Chambers of Commerce. A former member of the South Carolina Air National Guard, Mr. Wicker is a Gulf War veteran. He is married to the former Mary Langston of Myrtle Beach and his son Wilson is currently attending The Citadel.

A&A Update Garry Rank Shareholder, Elliott Davis

Garry focuses on corporate auditing and accounting as well as consultation regarding governance, financial systems and internal controls. With more than 34 years of experience, his industry concentrations include financial services, manufacturing and Securities and Exchange Commission (SEC) reporting. Additional professional experience includes the management of complex engagements, mergers and acquisitions, projects involving subsidiary companies and the application of accounting and reporting standards.

Regulatory Panel Discussion Jeff Burgess Territory Supervisor, Federal Deposit Insurance Corporation

Mr. Burgess is the Field Supervisor for the FDIC's Charlotte Territory. The Charlotte Territory is responsible for all examination activities of state nonmember institutions in the Western half of North Carolina and all of South Carolina. Prior to this role, Mr. Burgess served as a Supervisory Examiner responsible for supervision of the Territory’s large banks. Mr. Burgess began his career with the FDIC in 1991 as an Assistant Examiner in the Hollywood, Florida Field Office.

In 1998, Mr. Burgess joined the Comptroller of the Currency as a National Bank Examiner in the agency's Southeast Territory. While in this position he served on a number of large bank teams in the Southeast ranging in size from $20 billion to several hundred billion. Mr. Burgess led a number of complex examinations around the U.S. and overseas at foreign locations of large U.S. banks. Mr. Burgess eventually returned to the FDIC in 2007 where he was promoted to Senior Examiner and, ultimately, to his current position. Mr. Burgess holds a Bachelor of Science degree in Financial Management from Clemson University.

Paul Frey Supervisory Examiner, Federal Reserve Bank of Richmond

Paul is a Managing Examiner for the Federal Reserve Bank of Richmond. He works in the Supervision, Regulation & Credit Department and is based out of the Charlotte, North Carolina office. Paul’s primary responsibilities include managing the regulatory relationships of a portfolio of large and complex holding companies across the Fifth District. Paul has over twenty one years of regulatory experience serving in a variety of capacities and started his career with the Federal Reserve Bank of Philadelphia. Paul is a native of the Philadelphia, Pennsylvania area, and received his Bachelors of Science degree in Accounting from the Pennsylvania State University, and his Masters of Business Administration degree from Saint Joseph’s University.

Kent Stone Assistant Deputy Comptroller

Kent Stone has been the Assistant Deputy Comptroller in the Charlotte, N.C., field office of the Office of the Comptroller of the Currency (OCC) since 2006. In his current position, Mr. Stone oversees the operations of the Charlotte field office and a staff of 42 examiners and support personnel. The Charlotte field office supervises all national community banks and federal savings associations (FSA) operating in North Carolina and South Carolina and provides examination support to some of the largest national banks and FSAs in the country. Mr. Stone began his career with the OCC in 1987 as an Assistant National Bank Examiner in Longview, Texas. He was commissioned as a National Bank Examiner in 1992 and a Federal Thrift Regulator in 2013. Mr. Stone has held numerous positions within the OCC, including Field Examiner, Analyst, Training Team Leader, and Problem Bank Specialist.

He is a 1986 graduate of Texas State University with a bachelor of business administration degree in computer information systems and a 2012 graduate of the Federal Executive Institute .

William (Bill) J. Bossong, CPA, CBA Shareholder Financial Institutions Group Consulting

Services: Consulting | Industries: Financial Services

Professional Overview Bill has more than eight years of public accounting experience with an emphasis in financial institutions and SEC registrants. He leads the firm’s Financial Institution Consulting Practice for merger and acquisition matters. These services include due diligence projects, Day 1 valuations, Day 2 accounting, internal audits over other Day 2 providers, and accounting policy creation and review. This team has developed ValuCastTM, a proprietary solution

designed to assist banks with Day 1 and 2 accounting in accordance with the Accounting 1901 Main Street Standards Codification (ASC). Bill has led numerous FDIC-assisted and whole bank valuation Suite 900 Columbia, SC 29201 projects including valuing various net assets acquired to include but not limited to the loan portfolio, core deposit intangible, time deposits, borrowings and other long term debt, and Direct: 803.255.1497 share based payment awards. In addition to the Day 1 valuations and Day 2 experience, Bill Office: 864.242.3370 and his team have assisted their clients by developing projection and other financial Fax: 803.255.0733 planning models and reports. Bill also has a significant amount of experience related to the Allowance for Loan and Lease Losses (ALLL) under ASC 450-20 and ASC 310-10 to include [email protected] building an ALLL model for a large regional bank.

Bill has also worked closely with the valuation team for various financial service line of business acquisitions to include leasing companies, mortgage companies, and broker dealer/investment companies. He provides consulting services to numerous clients ranging in size from $400 million in assets to over $20 billion in assets.

Education, Credentials and Special Training Certified Public Accountant Certified Bank Auditor Master of Accountancy, University of South Carolina B.S., Accounting, University of South Carolina SEC Reporting, AICPA

Professional Affiliations American Institute of Certified Public Accountants South Carolina Association of Certified Public Accountants

Civic and Community Activities Walk Team Captain, Juvenile Diabetes Research Foundation Board of Directors, Midlands March of Dimes Deacon and Former Member of the Finance Committee, First Baptist Church of Columbia

Robert Beckwith, CPA Shareholder

Services: Tax | Industries: Financial Services

Professional Overview Bob focuses on providing tax consulting services to clients in the financial services industry. Bob has more than 40 years of bank tax consulting and compliance experience, including 20 years at a Big Four accounting firm. He assists clients with financial reporting in accordance with FASB ASC 740 and planning and analysis of C corporation tax issues including mergers and acquisitions, tax benefit limitations upon Sec. 382 change-of-control, compensation and golden parachutes, and accounting methods and periods. Bob has served multi-billion dollar organizations, 200 East Broad Street filing complex consolidated and multi-state returns. He also possesses expertise in Suite 500 Greenville, SC 29601 planning for the election to be an S corporation bank and the resulting compliance issues. Direct: 864.552.4763 Office: 864.242.3370 Education, Credentials and Special Training Fax: 864.241.5713 Certified Public Accountant M.S., Accounting, Colorado State University [email protected] B.S., Business Administration with emphasis in accounting, University of Nebraska

Professional Affiliations American Institute of Certified Public Accountants South Carolina Association of Certified Public Accountants

Thought Leadership Panelist, Bank Tax Institute Community Banking Panel Co-instructor, Co-Community Bank Tax Workshop

Stacy S. Stokes, CPA Shareholder

Services: Tax | Industries: Closely Held Businesses, Personal Financial Services

Professional Overview With more than 18 years of experience, Stacy focuses on providing comprehensive tax services to a diverse client base which includes closely held businesses, pass- through entities and high net worth individuals. He has extensive experience in the area of wealth management solutions for family owned businesses and high net worth individuals.

Education, Credentials and Special Training 1901 Main Street Certified Public Accountant Suite 900 Columbia, SC 29201 Masters of Taxation, University of South Carolina B.S., Accounting, University of South Carolina Direct: 803.255.1472 Office: 803.256.0002 Professional Affiliations Fax: 803.255.0730 American Institute of Certified Public Accountants South Carolina Association of Certified Public Accountants [email protected] Civic and Community Activities President, Habitat for Humanity - Central South Carolina Chapter Treasurer, Congaree Land Trust Past Board Member, Family Connection of SC Past President, University of South Carolina Friends of Accounting Past Board Member, Juvenile Diabetes Research Foundation Past Treasurer, Satchel Ford Elementary PTO Past President, Kiwanis Young Professionals of Columbia Riley Institute for Diversity Leadership Class Participant

Beverly A. Seier, CPA, CPCU Shareholder

Services: Tax | Industries: Financial Services and Insurance

Professional Overview With more than 20 years of experience, Bev focuses on serving financial institutions, insurance companies and SEC registrants. She provides both public and private clients with a wide range of services, including tax planning and compliance, ASC 740 and SSAP 101 tax provision consulting, federal and state audit examinations assistance, mergers and acquisitions tax planning and Sec. 382 change-in-control and 280G golden parachute studies. 1901 Main Street Suite 900 Prior to joining Elliott Davis, Bev was a Tax Partner at a Northeast-based Columbia, SC 29201 accounting firm. Direct: 803.255.1214 Office: 803.256.0002 Education, Credentials and Special Training Fax: 864.241.5808 Certified Public Accountant [email protected] Chartered Property Casualty Underwriter B.S., Business Administration/Accounting and Mathematics, magna cum laude, University of Mary Washington

Professional Affiliations American Institute of Certified Public Accountants Pennsylvania Institute of Certified Public Accountants

Barbara S. Rushing, CPA Shareholder

Services: Assurance | Industries: Financial Services

Professional Overview Barbara focuses on providing services to SEC clients in the financial services industry. With more than 20 years of experience, including several years at a Big Four accounting firm, Barbara has extensive knowledge of GAAP and SEC policies. She works with SEC registrant clients with complex accounting issues, comment letters, stock offerings and merger and acquisition reporting. Barbara has serviced more than 40 public offerings. 200 East Broad Street Suite 500 Barbara is Vice Chairperson of the Firm’s Assurance & Advisory Committee, a Greenville, SC 29601 technical committee that oversees quality control policies and risk management of

the Firm’s attest practice. Direct: 864.242.2625 Office: 864.242.3370 Fax: 864.241.5830 Education, Credentials and Special Training [email protected] Certified Public Accountant B.S., Accounting, University of South Carolina

Professional Affiliations American Institute of Certified Public Accountants South Carolina Association of Certified Public Accountants

Garry A. Rank, CPA Shareholder

Services: Assurance | Industries: Financial Services, SEC Reporting

Professional Overview Garry focuses on corporate auditing and accounting as well as consultation regarding governance, financial systems and internal controls. With more than 34 years of experience, his industry concentrations include financial services, manufacturing and Securities and Exchange Commission (SEC) reporting. Additional professional experience includes the management of complex engagements, mergers and acquisitions, projects involving subsidiary companies 200 East Broad Street and the application of accounting and reporting standards. Suite 500 Greenville, SC 29601 Education, Credentials and Special Training

Certified Public Accountant Direct: 864.242.2638 Office: 864.242.3370 Graduate, American Bankers Association, Business of Banking School Fax: 864.241.5819 B.S., Accounting, University of Akron [email protected] Professional Affiliations American Institute of Certified Public Accountants, Center for Audit Quality Small Firm Task Force South Carolina Bankers Association North Carolina Bankers Association Georgia Bankers Association

Civic and Community Activities Past President and Past Treasurer, Habitat for Humanity of Greenville County Alumnus, Leadership Greenville, Greenville Chamber of Commerce Past President and Past Treasurer, Greenville Breakfast Rotary Club

Thought Leadership Speaker on audit committee responsibilities SCBA/FDIC Directors College, 2003-2012 NCBA Bank Directors Assembly, 2004, 2007-2012 Presentations on SEC, corporate governance and new accounting pronouncements Elliott Davis CFO forum, 2003-2013 Authored various articles for publication regarding corporate governance, Sarbanes-Oxley Act of 2002 and ethics

Christopher R. Purvis, CPA Shareholder

Services: Assurance | Industries: Financial Services

Professional Overview Chris has more than a decade of experience providing audit and consulting services for financial institutions. Chris leads the firm’s Compliance Consulting Services group. Training relevant to compliance includes the North Carolina Bankers Association's Regulatory Compliance School.

Prior to joining Elliott Davis in August 2009, Chris was employed as the Controller 700 East Morehead Street of American Founders Bank, a mid-sized community bank headquartered in Suite 400 Lexington, Kentucky. Chris' prior experience in public accounting was with BKD, Charlotte, NC 28202 LLP in Louisville, Kentucky and Dean, Dorton & Ford PSC in Lexington, Kentucky. Chris' primary focus in public accounting has been in providing services for Direct: 704.808.5216 community banks, including external audit, internal audit, regulatory compliance, Office: 704.333.8881 external loan reviews, Bank Secrecy Act reviews and Interest Rate Risk testing. Fax: 704.749.7916

Education, Credentials and Special Training [email protected] Certified Public Accountant B.S., Accounting, University of Kentucky B.B.A., Finance, University of Kentucky General School of Banking, Kentucky Bankers Association Regulatory Compliance School, North Carolina Bankers Association

Professional Affiliations American Institute of Certified Public Accountants North Carolina Association of Certified Public Accountants North Carolina Bankers Association

Civic and Community Activities Board of Directors, Charlotte Steeplechase Association/Charlotte Queen’s Cup

Paul M. Pickett, CPA Shareholder

Services: Assurance | Industries: Financial Services

Professional Overview Paul focuses on providing professional accounting services to the financial services industry, specifically community banks. With more than 20 years of public accounting experience, he has served on audit engagements for more than 40 community banks and bank holding companies in Virginia, West Virginia, North Carolina and South Carolina. Paul has extensive knowledge of GAAP and SEC policies and assists clients with the preparation of consolidated financial Riverfront Plaza statements, quarterly reviews and assistance with SEC filings and reporting, and West Tower, Suite 1000 merger and acquisition reporting. In addition, he serves as an instructor for a 901 E. Byrd Street number of continuing education courses relating to financial institution accounting Richmond, VA 23219 and auditing.

Direct: 804.887.2256 Education, Credentials and Special Training Office: 804.612.4380 Certified Public Accountant Fax: 877.803.0432 University of Virginia National Banking School and National Banking Conference, [email protected] American Institute of Certified Public Accountants B.B.A., Accounting, Radford University

Professional Affiliations American Institute of Certified Public Accountants Virginia Society of Certified Public Accountants North Carolina Bankers Association Virginia Association of Community Banks Virginia Bankers Association West Virginia Bankers Association

George Noonan, CPA Shareholder

Services: Tax | Industries: Financial Services

Professional Overview With more than 18 years of experience in public accounting, George has worked extensively in the banking and related industries. He provides his clients with a variety of services including tax planning and research, ASC 740 consultation, FIN 48 analysis, tax return preparation, quarterly estimate preparation, forecasts and projections. His experience includes tax preparation and consulting of numerous

700 East Morehead Street financial institutions. George has served multi-billion dollar financial institutions Suite 400 filing complex consolidated and multi-state income tax returns. Charlotte, NC 28202 Education, Credentials and Special Training Direct: 704.808.5293 Certified Public Accountant Office: 704.333.8881 B.S., Accounting and Finance, Wright State University Fax: 704.749.7993 Bank Tax Institute, Annually [email protected] Professional Affiliations American Institute of Certified Public Accountants North Carolina Association of Certified Public Accountants North Carolina Bankers Association South Carolina Bankers Association

F. Andrew Mitchell, CPA Shareholder

Services: Assurance, Consulting | Industries: Financial Services, Manufacturing & Distribution, Professional Services

Professional Overview Andy focuses on providing clients with corporate strategy, transaction, finance and auditing services. With 40 years of accounting experience, including 20 years with a Big Four accounting firm, his extensive background includes significant work with public companies and merger and acquisition transactions in the financial services, professional services, manufacturing and distribution industry sectors. As an audit 200 East Broad Street partner, Andy served numerous public company clients and was the partner for Suite 500 more than a dozen initial public offerings. He recently completed five years as an Greenville, SC 29601 elected member of the firm’s Executive Committee and currently serves as the

managing shareholder for the Greenville office assurance practice. Direct: 864.242.2691 Office: 864.242.3370 Fax: 864.241.5798 Andy also served as chief financial officer for a publicly held company and two large private companies. In this capacity, he was responsible for all financial areas [email protected] including accounting, acquisitions, budgeting, forecasting, credit, cash management, borrowings, information systems and stock offerings for these companies. Andy participated in the completion of an initial public offering and a secondary offering for the public company which owned numerous retail stores, then negotiated the sale of the company. He also participated in the acquisition of a large operating subsidiary in the aviation service industry where he was actively involved in the completion of an underwritten bond offering and subsequent registration of those securities. For the third company, he was responsible for the reorganization and ultimate sale of the company which was involved in the sale of hardware and software development and integration services for national retail chains.

Since joining Elliott Davis in 2004, Andy has been responsible for the formation and development of the firm’s transaction services practice and serving financial institutions as a client service shareholder, including several public reporting companies.

Education, Credentials and Special Training Certified Public Accountant B.B.A., Accounting, University of Cincinnati

Professional Affiliations American Institute of Certified Public Accountants South Carolina Association of Certified Public Accountants Ohio Society of Certified Public Accountants

Lee E. Haynes, CPA Shareholder

Services: Assurance | Industries: Financial Services

Professional Overview Lee has more than 20 years of combined experience in public accounting and accounting/management positions in publicly held companies. He has participated in the audits of larger entities, including multinational and multistate operations. Lee concentrates his time in the financial services industry serving both publicly traded as well as privately held community banks located in North Carolina, South Carolina and Virginia.

In addition to financial services expertise, Lee has extensive experience with 700 East Morehead Street preparation of consolidated financial statements, Securities and Exchange Suite 400 Commission (SEC) filings and Sarbanes-Oxley compliance. This experience is Charlotte, NC 28202 complemented by Lee’s experience with engagements involving internal controls

within an organization. Lee works on audits of the design and effectiveness of Direct: 704.808.5208 Office: 704.333.8881 internal controls of service organizations under SSAE 16 (formerly SAS 70) SOC1 Fax: 704.749.7908 Type 1 and Type 2 engagements as well as AT101 SOC2 Type 1 and Type 2 engagements and has also overseen audits of internal control over financial [email protected] reporting as required by Sarbanes-Oxley and FDICIA for audit clients as well as assisted in the design, documentation and implementation of internal control programs for non-audit clients.

Education, Credentials and Special Training Certified Public Accountant B.A., Accounting, Furman University National Banking School, McIntire School of Commerce at the University of Virginia

Professional Affiliations American Institute of Certified Public Accountants North Carolina Association of Certified Public Accountants South Carolina Association of Certified Public Accountants Georgia Society of Certified Public Accountants North Carolina Bankers Association South Carolina Bankers Association Virginia Bankers Association Independent Bankers Association of South Carolina Georgia Bankers Association

R. Jason Caskey, CPA Shareholder and Financial Services Practice Leader

Services: Assurance | Industries: Financial Services

Professional Overview As leader of the firm’s Financial Services practice, Jason focuses on serving financial institutions and SEC registrants. With more than 24 years of experience, he serves community banking clients in both the private and public sector. Jason has assisted clients with public stock offerings, mergers and acquisitions, and SEC filings including comfort letters. In addition, he also serves clients with a number of consulting engagements including outsourced internal audit, external loan reviews and Bank Secrecy Act reviews. Jason recently completed six years as an elected member of the 1901 Main Street firm’s Executive Committee. He recently completed four years as the managing Suite 900 Columbia, SC 29201 shareholder of the firm’s Columbia office.

Direct: 803.255.1203 Education, Credentials and Special Training Office: 803.256.0002 Certified Public Accountant Fax: 803.255.0714 B.S., Accounting, University of South Carolina University of Virginia National Banking School [email protected] Professional Affiliations American Institute of Certified Public Accountants South Carolina and North Carolina Association of Certified Public Accountants State Bankers Associations in South Carolina, North Carolina, Georgia and Virginia Independent Bankers Association of South Carolina

Civic and Community Activities Board of Directors and Audit Committee, United Way of the Midlands Board of Directors and Audit Committee, Navigating from Good to Great Board of Advisors and Audit Committee, USC Business Partnership Foundation Member, Greater Columbia Chamber of Commerce Finance Committee Deacon, First Baptist Church of Columbia Columbia Chamber of Commerce Committee of 100 Former Board of Directors and Audit Committee, Central Carolina Community Foundation Former Member Board of Directors, Children’s Trust of South Carolina Former Board of Directors, South Carolina Student Loan Corporation Former Board of Directors and Audit Committee, SC Economics Former Member Board of Trustees, Charleston Southern University Former Member Board of Directors, Juvenile Diabetes Research Foundation 2011 Heart Ball Chair, American Heart Association, Columbia 2008 Distinguished Young Alumnus, USC Moore School of Business Class of 2006 "20 Under 40,” The State elliottdavis.com © Elliott Davis LLC © Elliott Davis PLLC South Carolina Community Banking Forum Tuesday, December 9, 2014 Columbia Metropolitan Convention Center Columbia, South Carolina

Loran Adams Ashley Allen Elizabeth Anders Georgia Bank & Trust CresCom Bank McNair Law Firm Martinez, Georgia Charleston, South Carolina Columbia, South Carolina

Thomas Anderson David Astley Laura Austill First Palmetto Bank SouthCoast Community Bank Carolina Alliance Bank Columbia, South Carolina Mt. Pleasant, South Carolina Spartanburg, South Carolina

Nancy Batchelder Sarah Bell Lee Brantley The Bank of South Carolina Elliott Davis South State Bank Charleston, South Carolina Greenville, South Carolina Columbia, South Carolina

Lent Bridges Jay Brietz Stefania Brinkosova First Palmetto Bank Elliott Davis Sandhills Bank Columbia, South Carolina Charlotte, North Carolina North Myrtle Beach, South Carolina

Devon Brown Sandy Brown Tom Brown Banker's Dashboard Financial Consultant FTN Financial North Charleston, South Carolina Simpsonville, South Carolina Simpsonville, South Carolina

Amy Buckner Richard Burch Jeff Burgess Elliott Davis South Atlantic Bank Federal Deposit Insurance Corp. Charleston, South Carolina Myrtle Beach, South Carolina Charlotte, North Carolina

Lisa Burgess Ryan Byrd Randy Carmon Entegra Financial Corp. South State Bank Sandhills Bank Greenville, South Carolina Charleston, South Carolina North Myrtle Beach, South Carolina

Jason Caskey Jennifer Champagne Charlie Christy Elliott Davis Cornerstone National Bank CoastalSouth Bancshares, Inc. Columbia, South Carolina Easley, South Carolina Hilton Head, South Carolina

Lou Coines Ryan Collier Richard Cook Raymond James & Associates Elliott Davis Elliott Davis Chicago, Illinois Charlotte, North Carolina Charlotte, North Carolina

Nathan Crowe Jessica Cummins Lee Dixon Elliott Davis Security Federal Bank Palmetto Bancshares, Inc. Columbia, South Carolina Aiken, South Carolina Greenville, South Carolina

Sarah Donley Renee Douglas Mike Dowling First Community Bank First Bank of Georgia Southern First Bank Lexington, South Carolina Augusta, Georgia Greenville, South Carolina

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