Palmetto Banker 2018-1

PALMETTO SOUTH CAROLINA BANKERS ASSOCIATION

Winter Issue 2018-1

Banker

Mick Mulvaney South Carolinian and Acting Director of CFPB

enrollment now open

2018

South Carolina Bankers School JULY 8-13, 2018

LANDER UNIVERSITY

I

GREENWOOD, SC

2017 Graduates of The South Carolina Bankers School

The South Carolina Bankers School is the premiere educational event hosted by the SCBA and offers general educational experiences in the many phases of banking. The School fosters academic and social interactions with fellow bankers conducive to joint bank problem solving at the School and later in the workplace. Throughout the three year progressive course of instruction, students acquire a better knowledge of the total scope of their organizations and the role of the financial services industry in the economy. Bankers will spend one week each July at Lander University in a college setting to ensure the training received is of maximum benefit. Join the class of 2020!

For more information, please visit www.scbankers.org.

2009 Park Street I PO Box 1483 Columbia, S.C., 29202-1483 803.779.0850 I Fax: 803.779.0890

www.scbankers.org 2017-18 SC BA EXEC UTIV E CO M M ITTE E Chairman .......................................................................... R. Thornwell Dunlap, III, Countybank Chairman-Elect ...........................................................................David L. Morrow, CresCom Bank First Vice-Chairman ...................................................................... Samuel L. Erwin, IBERIABANK Treasurer .............................................................................. James A. Bennett, First Citizens Bank Past Chairman .........................................................................Robert R. Hill, Jr., South State Bank 2017-18 SC BA BOARD O F D IR E CTO R S 2nd Immediate Past Chairman ............................................... David M. Lominack, TD Bank, N.A. SCBA President & CEO ............................ Fred L. Green, III, South Carolina Bankers Association Directors ................................................Laurence S. Bolchoz, Jr., Coastal Carolina National Bank W. Jennings Duncan, The Conway National Bank Curtis T. Evatt, Oconee Federal Savings & Loan Scott M. Frierson, CresCom Bank Fleetwood S. Hassell, The Bank of South Carolina Jennifer T. Jones, CBL State Savings Bank Jan M. Malinowski, Palmetto State Bank Robert L. McKinney, Atlantic Community Bank S. Mark Munn, Bank of America K. Reid Pollard, Enterprise Bank of SC Charles F. Rivers, III, Pinnacle Financial Partners James B. Schwiers, GrandSouth Bank Samuel R. Small, Jr., First Palmetto Bank James B. Smith, Sandhills Bank David R. Torris, SunTrust Bank 2017-18 SC BA C OMM UN ITY B A N KE R S D IV IS IO N B OA R D Chairman ............................................................. Robert L. McKinney, Atlantic Community Bank Chairman-Elect .................................................................... Fred Gilmer, III, Southern First Bank Past Chairman .................................................................... K. Wayne Wicker, South Atlantic Bank Directors ............................................................. Marion E. Freeman, The Conway National Bank L. E. Griffin, Home Federal Savings & Loan James A. Kimbell, III, Coastal Carolina National Bank Richard N. McIntyre, First Reliance Bank Jamie O. Morphis, III, Carolina Bank & Trust Co. Barry L. Slider, First South Bank C. Kyle Thomas, Blue Ridge Bank 2017-18 SOUTH C ARO LIN A B A N KE R S S CH O O L B O A R D Chairman ..................................................................................Scott M. Frierson, CresCom Bank Chairman-Elect ....................................................... Ford P. Menefee, The Bank of South Carolina Past Chairman .................................................................. Edward McKelvey, Jr., South State Bank Directors ........................................................ Robert P. Hucks, II, Coastal Carolina National Bank Tyler B. Hudson, NBSC, a division of Synovus Bank Mary S. Jones, TD Bank, N.A. Joseph A. Painter, First Community Bank Marvin E. Robinson, Jr., Wells Fargo Annette L. Scott, Countybank J. Reeves Skeen, First Citizens Bank Tricia P. Springfield, Southern First Bank Robert L. White, Bank of Travelers Rest Course Coordinators ..........................................................James R. Clarkson, First Reliance Bank John C. Griggs, III, NBSC, a division of Synovus Bank W. David Keller, Coastal Carolina National Bank Francis A. Townsend, III, South State Bank 2017-18 Y OUNG BAN KE R S D IV IS IO N B O A R D O F D I R EC T OR S Chairman ......................................................................Jennifer T. Jones, CBL State Savings Bank Chairman-Elect .................................................... Charles K. Talbert, The Bank of South Carolina First Vice-Chairman ......................................................Elizabeth S. Steifle, Bank of Travelers Rest Past Chairman ....................................................................... Blake G. Taylor, Southern First Bank Directors .......................................................................... Thomas H. Anderson, South State Bank Allison B. Cranford, TD Bank, N.A. Rufus T. Dunlap, V, Countybank Casey L. Earl, United Community Bank Margi M. Fleming, The Citizens Bank Lauren D. Greene, NBSC, a division of Synovus Bank Jeremy R. Groom, First Reliance Bank Luther H. Holmes, III, Arthur State Bank Jamin M. Hujik, CresCom Bank Othniel W. Laffitte, GrandSouth Bank David P. Looper, Wells Fargo Jared A. Polk, Enterprise Bank of SC Jesse A. Smith, First Citizens Bank B. Oneal Staples, Ameris Bank H. Gibson Tucker, First Palmetto Bank The Palmetto Banker is a publication of the South Carolina Bankers Association. The magazine exists to serve its members by communicating news of interest, education and SCBA activities.

Items from members are welcome, however the editor reserves the right to refuse copy. With the exception of official announcements, the SCBA disclaims responsibility for opinions expressed and statements made in articles published in the Palmetto Banker.

Contents 5 6 9 10 11 12 14 15 16 18 20 22 24 25 26 28 31 32

President’s Message Director Mick Mulvaney Textbook Advocacy New Bank Members Banking at a Glance SC State Treasurer’s Message Impact of Tax Reform State of Credit Report Legislative Reception Legislative Preview SCBA BankPAC SCBA Washington Trip Education & Professional Development Women In Banking Young Bankers Division Associate Members Banking News Personal Transactions

SC B A St a f f President & CEO ............................ Fred L. Green, III Executive Vice President & CFO..... Donna S. Taylor Senior Vice President ...................... E. Anne Gillespie Senior Vice President ...................... Carolyn L. Bradley Senior Vice President & Counsel .... A. O’Neil Rashley, Jr., Esq. Director, Advertising & IT .............. M. Caroline Sheorn Administrative Assistant .................. Bonnie E. Nelson

President’s Message

New YEAR brings new

OPPORTUNITIES

Fred L. Green, III, President & CEO South Carolina Bankers Association

As a young boy, I remember time passing by at a much slower pace. The old saying “slow as Christmas” was very appropriate because as each new year began it seemed to take forever until the next Christmas.

expenditures, banks play a key role. Loan demand, which has been stagnant for years, will improve with an expanding economy. We have included three great articles on the tax cuts and some of the benefits we all expect to see.

Fast forward 50+ years and another old saying, “time flies,” is more appropriate. Looking back over 2017, there were many significant events, both personal and business, that have blurred because of the rapid pace of change and the perceived acceleration of time. Many of the changes we experienced last year give us great hope and optimism for the current year.

This edition of the Palmetto Banker highlights some of the more important issues and activities we expect to benefit from this year.

We are also optimistic that meaningful bank regulatory reform has an opportunity to be enacted this year. S.2155, The Economic Growth, Regulatory Relief and Consumer Protection Act, is a bipartisan bill that involves common sense improvements that will allow community banks to better serve their customers and communities. It will help more credit worthy borrowers and will also contribute to economic growth and job creation. Senator Tim Scott is one of the 23 co-sponsors on this important legislation.

One of our most enjoyable, important, and well attended events is our annual Legislative Reception. In addition to spending some time with old friends it is also a great opportunity to make new ones. We have this reception, always held on the first evening following the beginning of the legislative session, to thank all of our elected officials for helping make South Carolina a very pro-business state. The health of the banking industry is directly linked to the financial health of the customers we serve.

As always, there are bank-specific bills we work on to help maintain a vibrant banking environment. Neil Rashley’s article touches on some of these bills we are following at our Statehouse.

I’ll close this letter by thanking a friend for his service to South Carolina and our country. I met Mick Mulvaney early in his first term in Congress. As a member of the important House Financial Services Committee, Mick was very interested in hearing from our bankers about burdensome regulations and he always worked on new legislation that would help banks better handle their customers’ needs. President Trump recognized Mick’s many talents when he nominated him as OMB Director and later appointed him to serve as the Acting Director of the Consumer Financial Protection Bureau. Although Mick is pulling doubleduty, leading the OMB and the CFPB, he has made significant improvements over such a short period of time. Please take a few minutes to read his comments. You, too, will be proud of this fellow South Carolinian.

On a national level, the Tax Cut and Jobs Act enacted late last year is already having a significant impact on our economy.

As businesses expand, hire more employees, and make capital

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Cover story

SC BANKERS INTERVIEW WITH

Mick Mulvaney

By Fred L. Green, III, President & CEO, SCBA

Mick Mulvaney was nominated as Office of Management and Budget (OMB) Director by incoming President Donald Trump in December 2016 and confirmed by Senate vote on February 16, 2017.

Elected to the U.S. House of Representatives in 2010, he was the first Republican since 1883 to represent South Carolina’s 5th congressional district where he served until his confirmation as OMB Director. Mulvaney also served in the South Carolina General Assembly from 2007-2011, first in the House of Representatives and then the Senate.

President Trump appointed Mulvaney to serve as Acting Director of the Consumer Financial Protection Bureau. He assumed this office on November 25, 2017.

Why were you interested in taking over the Consumer Financial Protection Bureau (CFPB)?

How are you managing the dual roles leading both the Office of Management and Budget and CFPB?

I got interested in the CFPB while I was serving on the House Financial Services Committee, which leads oversight over the CFPB (or at least what extraordinarily limited oversight there is.)

I had never seen a government bureaucrat act as arrogantly toward Congress as the Director of the CFPB did in our first hearing. It stunned me that a government worker could hold Congress in such disdain, and I wanted to try and figure out why. Of course it didn’t take very long to figure out the reason why was that he didn’t answer to Congress at all. The CFPB didn’t get any money from Congress, and its Director was only required to go before Congress I think once or twice a year. The bottom line is that he didn’t need Congress and was free to be as arrogant as he wanted to be, because he knew there was nothing we could do. It struck me as extraordinarily dangerous. In fact, I think I have described it previously as the very worst type of bureaucracy that you could have: one that is wholly unaccountable to elected officials and thus to the public. And since that structure was created – intentionally– by the Dodd Frank Act, I knew it would be almost impossible for Congress to change. When the President mentioned the possibility of becoming the acting director over there I jumped at the chance in order to try and see if I could fix it from the inside.

Being a father of 18-year-old triplets, my wife and I (mostly my wife) learned to manage a hefty workload a long time ago. But I won’t lie to you, it was a pretty hectic first month and a half working two jobs, going back and forth every single day between OMB and CFPB. Actually, folks don’t realize this, but the CFPB office is physically right across the street from OMB – I can see the OMB office out of the window at CFPB – so the commute is about 200 or 300 yards, which is nice. But it was a lot of time, no question. While I had few staff from OMB detailed over to work at the CFPB, I was the only political appointee inside the Bureau on the day that I took control of the operation. That’s 1,600 people working there and only one political appointment (to put that in perspective, there’s 500 people at OMB and I have probably 50 total political appointments.) Even other independent prudential regulators have many more political appointments than CFPB does. So it was a lot of work, and still is. Although now I have been able to put together a really, really good team over at CFPB. We’ve found some of the best minds on financial services in Washington, D.C., so we have a great group of people who want to make the CFPB more accountable to the people we serve. I have already seen my workload become more manageable since we have started transitioning those people in.

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What has changed at the Bureau since you became acting director?

I’d like to think that what has changed the most is the attitude.

I wrote a letter to everyone at CFPB that actually got published in the Wall Street Journal that explained my philosophy or my theory of how the CFPB should be run. The short version is that we are not going to push the envelope anymore; we are not going to be overly aggressive anymore; we are not going to bring down the weight of the federal government on the necks of its citizens except as an absolute last resort. We are going to be a lot more humble and prudential in the use of the tremendous authority – almost unparalleled authority – that the Congress has given the CFPB. So if one thing has changed, I hope it is the culture.

And I hope that it is permanent.

Additionally, for the first time, the CFPB asked for $0 from the Federal Reserve to cover the Bureau’s expenses for the 2nd quarter of 2018. I learned that the CFPB was sitting on way more money than necessary in its reserve fund. I didn’t think that was right – people could easily see it as a slush fund of sorts – so I decided to spend that down instead of asking for new money. I think it’s time for us to be better stewards of the funds we already have, instead of automatically asking for more money.

How does your prior experience in the housing industry shape your views leading the CFPB? Having been in the real-estate business, in the home building business, a closing attorney, and legal counsel to financial institutions, I hope I have a better feeling than some over how important credit is, how important access to capital is, how important the housing industry is, and how important wealth creation is for all Americans. Community banks, credit unions, small regional banks: these are the building blocks of capitalism in our country because they are the conduits and the source of capital for small business. While we hear a lot about the nation’s largest banks, and we hear a lot about the major corporations like Google and Amazon, we don’t hear nearly enough about small financial institutions and small businesses – but they are the fundamental building blocks of our economy. I think I have a pretty strong appreciation for that. Having been in small business for a long time, I have seen how powerful it is, and at the same time how fragile it is – that if you choke off access to capital for a small business it can wither very, very quickly. And that’s a unique career perspective that I can bring to the job.

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Cover story

What concerns you the most about the Bureau and how do you plan to fix those issues?

The most concerning aspect of the Bureau is its statutory structure. This is an agency that does not rely on Congress for one penny of its money, as it automatically gets its money directly from the Federal Reserve. This is an entity that owes almost zero oversight to Congress. This is an agency whose director has almost complete discretion over how it is run. The CFPB is the only agency that I know of where you have a single director who cannot be fired by the President except for cause, a director who has almost complete discretion over how the place is run, who has almost zero accountability to Congress, and who doesn’t even have to ask Congress for money. That is a formula for the perfectly unaccountable bureaucrat and the perfectly unaccountable bureaucracy. It is nearly absolute power in the bureaucratic world – and we all know the old adage about what absolute power does to people and to institutions.

The problem, of course, is that the Director can’t do anything to fix these problems. That’s because they are statutory, and fixing them requires Congress to change the law. So, I will be focusing on doing what I said before: changing the way the Bureau operates and changing the way we use all that power given to us (and me) by Congress.

Within the new regulatory era in Washington what actions are you taking at the CFPB to remove unnecessary red tape?

We are taking a close look at all of the rules that have gone out over the last several years at the CFPB. In fact, we are doing a look back at a couple different rules. I think the first one we

Mick Mulvaney South Carolinian and Acting Director of CFPB

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are starting on is the Qualified Mortgage Rule to see if its impact has been as expected, to see if there have been any unintended consequences, to see if their cost benefit analyses we did originally turned out to be anything close to being true, and to see if there are changes we can make to make those old rules better. Similarly, for new matters in the pipe line, we are adding in an extra layer of scrutiny as to whether or not the rules and regulations are as tailored as possible or if they are even necessary at all. So I think it is safe to say that though the CFPB is independent of the White House and the President, we are still bringing to the Bureau the same mentality the President has brought to other areas of government: we are looking for ways to deregulate before we are looking for new ways to regulate.

What has surprised you most about the Bureau?

Not much. Everything is pretty much what I expected – even down to the extravagant features within the office building.

Maybe that’s just it; it’s pretty much exactly what I expected.

As I’ve mentioned throughout this interview, there needs to be significant changes within the CFPB, as well as significant changes from Congress as to the law (Dodd-Frank) that created the CFPB. We’ve started by shifting the attitude and the mission of the Bureau, and are trying to restructure the organization and staff. But the bottom line is that it is my goal and duty to make this agency more efficient, effective, and accountable to the American people whom we serve.

aBa U P d at e

Textbook

Advocacy constructive feedback, not public condemnations or threats that could have derailed the effort.

Washington is anything but textbook these days, which can make the advocacy work of state and national trade associations a challenge. But the recent tax reform effort proves that certain staples of effective advocacy—functions at which ABA and the state associations happen to excel—have enduring value.

This approach made a difference.

Lawmakers, for example: •

All were on display as Congress and the administration worked together on a comprehensive package of tax reforms that we believe will help grow the economy and create jobs. They also will help banks, which previously had one of the highest effective tax rates of any business, better serve their customers and the broader economy.

Those staples of effective advocacy include building respectful relationships and coalitions, speaking with a unified voice, offering expert analysis and showing discretion on when and how to offer public criticism.

•

We were engaged in the tax reform debate from the very start, offering advice and insight on the potential effects of various provisions—such as the impact of limiting net interest deductibility— and coordinating closely with our state association allies. We also worked closely with other groups in the financial services industry, hosting daily calls to ensure our advocacy was united and effective.

At every turn in the legislative process, we worked respectfully with lawmakers to improve the bill. Recognizing the tightrope lawmakers were walking to create a comprehensive bill that would have sufficient support, we as an industry were careful to offer pragmatic,

Adopted a careful approach to limiting net interest deductibility, protecting banks’ small business, agriculture and real estate customers, whom we said would be harmed by more substantial limits.

Heeded concerns about the treatment of pass-through entities like Subchapter S banks and brought the rate closer in line to the “promised” rate.

•

Removed provisions that would have eliminated the benefits of deferred compensation plans.

•

Corrected an issue relating to income recognition for mortgage servicing rights and other transactions.

•

Steered clear of imposing a new bank tax as a means of paying for tax cuts.

•

Maintained a variety of tax credits, particularly the low-income housing and new markets tax credits that are so important to our communities.

The result is a final package that is largely aligned with ABA’s core principles for tax reform, with one notable exception: It misses the chance to level the playing field with credit unions and the Farm Credit System. While this is hugely disappointing, it’s not for lack of effort.

Bankers have made their views plainly

Rob Nichols, President and CEO American Bankers Association nichols@aba.com

clear to lawmakers for years. We articulated a sound rationale for including these tax-privileged competitors in reform and even offered public opinion research that showed Americans back the idea. In the end, lawmakers viewed this as too controversial to tackle in this bill, but we’ll keep up the fight.

Credit for much of what we did achieve goes to the bankers—from institutions of all sizes and from states across the country—who volunteered their time and expertise to the cause. (If you ever doubted whether association service was meaningful, I can put you in touch with the women and men on ABA’s tax committee who helped comb through each 500-page iteration of the tax bill to identify the potential effects on banks.)

Our policy experts and lobbying staff also made a tangible difference. Together, this banker-staff tax reform team artfully balanced the politics and policy behind a highly complex and highly charged legislative process, and they did so in a manner that kept the door open to congressional leaders and literally earned us a place at the table.

That gave us just a voice, of course, not the final say—and that’s as it should be.

Good public policy must consider the views of many. It just so happens the banking industry represents many— from our 2 million employees to the countless communities and customers we serve. That makes effective advocacy a must. I’m proud of ABA and the entire industry delivered.

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new Bank MeMBers

Welcome

The membership of the South Carolina Bankers Association includes bank members that do business in South Carolina and associate members that support our banks with valuable products and services. Market share data of banks doing business in South Carolina is on the following page. Total membership of the SCBA has 99% market share of deposits. Our South Carolina community bank members have 97% of the total deposits of South Carolina headquartered community banks.

One of the most important initiatives of the SCBA is to facilitate peer-to-peer interaction for our member banks and business-to-business interaction for our banks and associate members. An intangible benefit of membership in the SCBA is the lifelong relationships offered through attending and participation in our many events.

We are pleased to announce two new bank members to the SCBA. Please join me in welcoming South Carolina’s newest community bank – Beacon Community Bank and the newest southeastern regional bank – Capital Bank.

Beacon Community Bank opened its doors for business on January 8, 2018. The last South Carolina de novo bank was Coastal Carolina National Bank that opened in June 2009.

There has been a void of de novo activity nationwide with only five banks started between 2013-2017. So far this year, there have been only two de novos nationwide, with Beacon being one of the two.

Their office is located at 578 East Bay Street, Charleston, SC. Brooks Melton, President and CEO said “It’s tremendously exciting to be able to start a new bank in a great market like Charleston. We are fortunate to have attracted a great team of bankers and directors who share our vision to build a high quality, Charleston-based community bank. We are proud to be a member of the SCBA and are already taking advantage of their educational offerings.”

Capital Bank and First Tennessee Bank, which recently merged, announced Rick Manley, a North and South Carolina banker with more than 30 years of experience, as the new president of First Tennessee Bank’s Mid-Atlantic region. Bank branches in the market will continue to use the Capital and First Tennessee names temporarily, until systems are integrated in mid-2018.

After integration, all branches in the Mid-Atlantic market will assume the Capital Bank name. The combined organization will have $40 billion in assets, $32 billion in deposits, $27 billion in loans and more than 300 branches.

With the Capital Bank acquisition, First Tennessee will have offices in Charleston, Columbia, Greenville, and Spartanburg South Carolina. The acquisition allows the South Carolina markets to offer new services including; Wealth Management and Private Client services. As of June 30, 2017, the FDIC reports total deposits for the combined companies at $364 million in South Carolina.

Manley will be responsible for the entire footprint of First Tennessee’s Mid-Atlantic region. This region is essential for First Tennessee, and the acquisition makes them the fourth largest regional bank in the Southeast. Manley said, “We are delighted to become the newest member of the SCBA. I have always known the value SCBA provides it members on political advocacy and our parent company has a strong appreciation as well. I look forward to reconnecting with peers throughout the state.”

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Banking d ata

South Carolina Banking at a Glance South Carolina Banking Institutions

6/30/17

6/30/16

6/30/15

Total number of Banks in S.C. Institutions headquartered in S.C. Institutions headquartered out of S.C. S.C. Total Deposits Total Deposits for out-of-state banks Total Deposits for S.C.-headquartered banks Total number of bank offices in S. C.

84 55 29 $84.50 B $62.13 B $22.38 B 1274

86 58 28 $79.02 B $58.03 B $20.99 B 1287

90 63 27 $75.10 B $54.00 B $21.10 B 1324

3 $8.79 B

3 $7.54 B

1 $4.99 B

7 $4.56 B 45 $9.02 B $200.5 M $24.7 M

5 $3.26 B 50 10.17 B $203.5 M $24.2 M

6 $4.81 B 56 $11.30 B 201.9 M $23.2 M

South Carolina Chartered Banks Banks with over $1 billion in deposits Total S.C. deposits for these banks Banks with deposits greater than $500 million and less than $1 billion Total S.C. Deposits for these banks Banks with deposits less than $500 million Total S.C. Deposits for these banks Average size of these banks Smallest bank headquartered in S.C.

Largest Banks, by Deposits, in South Carolina Bank Wells Fargo Bank of America BB&T First-Citizens South State Bank TD Bank, National Association SunTrust Bank Synovus Bank United Community Bank CresCom Bank Southern First Bank Pinnacle Bank Regions Bank

State SD NC NC NC SC DE GA GA GA SC SC TN AL

S.C. Offices 147 80 110 143 89 66 43 38 32 24 9 26 25

Deposits* 17,037,908 12,737,327 8,134,523 7,474,249 6,083,377 4,120,244 3,177,955 3,008,715 1,454,724 1,418,913 1,288,931 1,189,364 1,100,069

Market Share 20.16% 15.07% 9.63% 8.84% 7.20% 4.88% 3.76% 3.56% 1.72% 1.68% 1.53% 1.41% 1.30%

* in thousands Source: FDIC Summary of Deposits, June 30, 2017

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treasUrer’s Message

CHANGES BRING

New Opportunities FOR SOUTH CAROLINIANS A change in federal law and a new state program offer additional opportunities to set aside money for students and individuals with disabilities.

“This means new opportunities for South Carolina families,” State Treasurer Curtis Loftis said. “Whether we’re discussing increasing opportunities for parents to send children to private or charter schools, or assisting families in providing for individuals with disabilities, this is good news for state residents.”

By Curtis Loftis, South Carolina Treasurer

Effective Jan. 1, federal tax law allows for the use of money in 529 plans – savings accounts that offer state and federal tax benefits – to withdraw up to $10,000 per student, per year, for expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, religious or charter school.

In addition, late last year the State Treasurer’s Office rolled out the South Carolina ABLE (Achieving a Better Life Experience) Savings Program, a 529A plan. An SC ABLE account is an investment account that allows eligible individuals with disabilities and their families to save money for their future without jeopardizing certain need-based benefits such as Medicaid and SSI. Withdrawals can be used to pay for eligible expenses – tuition, books and often room and board in the case of S.C.’s Future Scholar 529 education plan. Those with SC ABLE accounts can use funds for

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rent and housing, transportation, education, employment training, assistive technology and qualified disability expenses. Both plans are administered by the State Treasurer’s Office.

Contributions to 529 plans for the 2017 tax year can be made until the April 2018 tax-filing deadline.

South Carolina residents are eligible for a SC ABLE account if the onset of their disability occurred before the age of 26 and one of the following three criteria is met: •

They are eligible to receive Supplemental Security Income or Social Security Disability Insurance due to disability; • Have a condition listed on the Social Security Administration’s “List of Compassionate Allowances Conditions”; or • Certify they have a condition that meets the requirements of the program.

Factors to keep in mind with SC ABLE accounts include that the maximum annual contribution to a SC ABLE account is $15,000 and the lifetime contribution limit for an SC ABLE Account is $426,000.

Taxpayers may deduct up to 100% of the contributions made to both 529 and 529A accounts from their South Carolina state income tax returns.

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tax

reforM

I M PA C T O F TA X R E F O R M O N

Community Banks

By Beverly A. Seier, CPA, Tax Shareholder, Elliott Davis, LLC •

•

• Beverly A. Seier, CPA, Tax Shareholder with Elliott Davis LLC, is a financial services tax professional. Her experience includes federal and state corporate income tax planning; accounting for income taxes; payroll taxation and information reporting; and taxation and accounting for share based payments.

On December 22, 2017, the Tax Cuts and Jobs Act (“the Act”) was enacted, making numerous changes to the U.S. tax rules.

One of the most significant corporate tax reforms within the Act is the reduction of the corporate federal tax rate from the highest marginal rate of 35% to a flat 21% rate beginning in 2018. There are a number of additional changes in the Tax Act that will impact community banks as noted below: • Corporate alternative minimum tax (AMT) is repealed for tax years beginning after December 31, 2017.

Existing AMT credits can be utilized from 2018 to 2021 to the extent of regular tax, and 50% of any remaining AMT credits in excess of regular tax may be refundable, which is increased to 100% for tax years beginning in 2021.

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Dividends received deduction percentages are reduced from 80% to 65% and 70% to 50%.

Bonus depreciation increases from 50% to 100% expensing of qualifying assets purchased and placed in service after September 27, 2017, which now includes both new and used assets.

IRC Section 179 expensing is increased to $1 million with a phase-out threshold of $2.5 million.

Most meals are subject to the 50% limitation, but business-related entertainment expenses are now 100% disallowed.

Deductions for employee transportation fringe benefits (e.g., parking and mass transit) are disallowed.

Limitation on deduction for business interest in excess of 30% of the company’s adjusted taxable income, excluding depreciation or amortization, with the disallowed portion carried forward indefinitely.

Companies with annual gross receipts under $25 million over a three tax year period ending with the prior tax year are exempt.

Net Operating Losses (NOLs) generated in tax years ending after December 31, 2017 are no longer eligible for carryback, but are eligible for indefinite carryforward. NOLs generated in tax years beginning after 2017 would be subject to an 80% limitation.

Deduction for local lobbying expenses are repealed after December 22, 2017.

IRC Section 162(m) employee compensation limits of $1 million for covered employees of a publicly traded corporation are expanded to include

commissions and performance-based compensation (includes stock-based compensation), which were previously exempted.

Deferred Taxes As a result of the federal tax rate change, corporations are required to revalue their deferred tax assets (DTAs) and deferred tax liabilities (DTLs) in the period in which legislation is enacted. Under Generally Accepted Accounting Principles (GAAP), the result of tax rate changes on deferred taxes is reflected in tax expense for DTAs and tax benefit for DTLs from continuing operations in the period of enactment.

This also includes a revaluation of deferred taxes related to accumulated other comprehensive income (AOCI) items. AOCI items for banks typically consist of unrealized gains and losses on available for sale securities, minimum pension liabilities, and cash flow hedges, to name a few.

The revaluation of deferred taxes and the resulting impact to net income and capital can be significant. Tax planning prior to the enactment date by reducing DTAs or increasing DTLs may have assisted some companies with the tax rate impact to their bottom line. For most banks, one of the largest deferred tax assets relates to their allowance for loan loss, so the remeasurement adjustment may be substantial.

For example, if a bank has an allowance for loan loss of $1 million, it would incur additional federal tax (continued on p. 34)

ConsUMer a f fa i r s

Highlights from the

2018 STATE OF CREDIT REPORT

The South Carolina Department of Consumer Affairs is the State’s consumer protection agency, having over forty years of experience in protecting South Carolina consumers while recognizing those businesses that act honestly and fairly.

Our mission is to protect consumers from inequities in the marketplace through advocacy, mediation, enforcement and education.

Each year, the Department is required to report on the availability of consumer credit in this State, as well as agency enforcement actions and administrative interpretations. For the second year in a row, we are providing this information via a State of Credit Report.

By Carri Grube Lybarker, Administrator, SC Dept. of Consumer Affairs

creditors, 59%, filed rates of 49.99% or less, a marked decrease from 2015 when 79% of filers filed for a maximum rate of less than 50%. For credit sales, creditors in Colleton County filed the overall highest max rate filing at 400%, while Lee County creditors, on average, filed the highest average maximum rate at 54.25%.

Union County had the highest average maximum rate filed for consumer loans at 113.55% and Aiken creditors filed the highest maximum rate at 561%. While this analysis focuses on filings by South Carolina creditors, it is important to note that the highest average maximum rate filings (160.73%), and the overall highest

max rate filed (780%), for consumer loans were made by lenders located outside South Carolina operating online.

The supervised lending industry, lenders making consumer loans in excess of 12% APR, advanced nearly $2.2 billion dollars to South Carolina consumers in 2016.

For the 2017 maximum rate filing year, approximately 26% of supervised lender filings intended to impose rates in excess of 100% APR, and approximately 2% of non-supervised lender filings included rates in excess of 100% APR. (continued on p. 30)

Data contained in the report originates from filings and annual reports received by the Department and the South Carolina Board of Financial Institutions’ Consumer Finance Division and is presented in four main categories: interest rates and creditors, consumer lending, mortgage lending and credit counseling.

A majority of the report is focused on the filings received by the Department for maximum rate and credit grantor notification. Generally, creditors must file credit grantor notification when annual gross volume of business exceeds $150,000. Maximum rate filings are required for those creditors intending to charge South Carolina consumers an annual percentage rate (“APR”) in excess of 18%. In 2017, the Department received 4,402 credit grantor filings, a small decrease from the year prior. During the same time period, five percent more companies filed maximum rates with the Department ranging from less than 1% APR to 780% APR. The majority of WINTER 2018 •

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L e g i s L at i v e reCePtion

01.09.18

L to R: Fred Green, SCBA; Senator Kevin Johnson

L to R: Chip Amaker, BB&T; Mark Hammond, South Carolina Secretary of State; Harry Jeffcoat, Wells Fargo; Frank Smith, BB&T

L to R: Bob Davis, Commissioner of Banking, South Carolina Board of Financial Institutions; Curtis Loftis, South Carolina State Treasurer; Thornwell Dunlap, President and CEO of Countybank and Chairman, SCBA

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On January 9th the South Carolina Bankers Association hosted its annual Legislative Reception. In line with tradition, the reception was held on the evening of the first day of the legislative session. This reception allowed our members to discuss issues of importance to our industry and to thank our elected officials for their continued support. With 400 guests in attendance, this is always one of our best attended events.

L to R: Jared Polk, Enterprise Bank of SC; Mason Garrett, GrandSouth Bank; Janeen Hughes, South Carolina Board of Financial Institutions Below L to R: Bob Davis, Commissioner of Banking, South Carolina Board of Financial Institutions; Kim Wilkerson, Bank of America; David Morrow, President and CEO of CresCom Bank and Chair-Elect, SCBA; Nancy Morrow

L to R: James Bennett, First Citizens Bank, and Treasurer, SCBA; Representative Kirkman Finlay

L to R: Fred Green, SCBA; Senator Nikki Setzler; Neil Rashley, SCBA

L to R: Representative Tommy Pope; Fred Gilmer, Southern First Bank; Representative Gary Simrill

L to R: Senator John Scott; Fred Green, SCBA

L e g i s L at i v e Preview

SECOND YEAR OF

Legislative Session

By Neil Rashley, Senior Vice President and Counsel, SCBA

The South Carolina General Assembly reconvened on January 9th for the second year of the 2017 - 2018 session; a session with significant leadership changes as Governor Haley resigned to become the U.S. Ambassador to the United Nations, Lieutenant Governor Henry McMaster then became the Governor and Sen. Kevin Bryant was elevated to Lieutenant Governor since he was the Senate’s president pro tem.

For 2018, all constitutional officers will be up for re-election and this will be the first year that there is no candidate or separate race for Lieutenant Governor.

Now, there will be a joint ticket for the Governor and the Lieutenant Governor.

2018 will also be a re-election year for the House of Representatives.

The General Assembly’s main accomplishment during the first year of the session was passage of the Transportation Infrastructure Fund bill, H3569. Generally the bill raised the gasoline tax as well as other fees to provide funding for the state’s roads and bridges. This year one of the main subjects will be utility regulation due to SCANA’s decision to stop building the V.C. Summer nuclear plant. The General Assembly will debate requiring SCANA to refund customers and also whether the state’s utility, Santee Cooper, should be sold due to its financial condition after partnering with SCANA in the nuclear project.

Credit Unions – Field of Membership Expansion SCBA’s lobbying efforts as well as letters, email and phone calls from community bankers resulted in the credit unions abandoning the bill’s original language and offering an amendment that significantly changed the bill. The most significant change was reestablishing the Board of Financial Institution’s power to approve field of membership changes – a change SCBA insisted on – however the amendment still sought to give credit unions greater ability to expand and SCBA remains opposed to the amendment as a whole. In particular, S337’s proposed amendment:

In banking, the first year of the session was dominated by S337, the credit union bill that sought to expand field of membership dramatically and remove

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•

Increases the threshold number of potential members where a credit union must get Board approval from 250 to 3000; and •

Allows credit unions to offer check cashing, money orders and remittances to nonmembers within a field of membership.

regulatory approval for expansion. There were other banking issues handled and below is a recap of the most significant bills. Bills must be passed by adjournment on May 10, 2018 to be effective.

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Allows state credit unions to accept membership from “communities” of any size, including entire counties, throughout the state; •

•

Allows state credit unions to offer membership if the credit union has the “ability to serve” a community, group or association.

This would still mean having an “electronic banking presence” such as a website or mobile banking to enable membership instead of a physical presence;

The credit unions state the bill is needed to “strengthen the state charter” but S337 actually incentivizes larger federal credit unions to convert charters or merge into state credit unions to take advantage of more permissive field of membership rules – all to the disadvantage of South Carolina’s community banks. The bill is still pending in the Senate Banking committee with another subcommittee hearing expected in late January or early February. SCBA remains opposed to S337 and encourages its membership to contact their local senator and express their opposition.

Enacted Legislation In the first year of the session three bills were enacted affecting banking. S279 established a licensing and regulation system for appraisal management companies in accordance with new federal regulations that required a system in the state by 2018. Two bills dealt with statutory exemptions for consumers in bankruptcy: H3176 established a full exemption for funds in an IRA; while H3429 established a firearm exemption up to $3000 totaling no more than three firearms. H3429 also included a $50,000 homestead exemption for a surviving spouse’s interest in a residence.

Legislation Still Pending Since this is the second of the year of the session, bills from last year will continue in the place they were when they first year ended.

Mortgages and Appraisals – The Senate passed and sent to the House S261, a bill that authorizes Property Assessed Clean Energy (PACE) loans. PACE loans are made to businesses to finance upgrading to energy-efficient systems and are paid through an assessment on the property tax bill. The PACE lien would be senior to an existing mortgage but the mortgagee must consent to this lien position as well as the loan – positions advocated by SCBA. SCBA is opposed to residential PACE loans and this has not been proposed. The House will take up S261 in 2018. Also in mortgages, H3004 reduces the time required to file a mortgage satisfaction from three months to thirty days.

both of these bills to preserve banks’ rights to establish reasonable and fair provisions of arbitration to settle claims – provisions that are much better for all parties than costly litigation.

Grassroots Advocacy SCBA looks forward to another successful session but it can do so only as long as South Carolina’s bankers maintain their positive relationships with local members of the General Assembly. These relationships build goodwill with our legislators and help SCBA in its advocacy for fair and reasonable laws and regulations in South Carolina. SCBA encourages all bankers to be engaged with their local officials. Information on members of the General Assembly and pending legislation can be found at www.scstatehouse.gov.

Financial Exploitation of Vulnerable Adults – Although no bill has been introduced yet, Sen. Thomas Alexander (R – Oconee) has shown a strong interest in addressing this problem in South Carolina. SCBA is presently involved with working groups at the South Carolina Bar and AARP that are reviewing these statutes for possible revision. SCBA continues its position that there should be no mandatory reporting for bankers unless there is actual evidence of fraud.

Arbitration Agreements – Two bills concerning arbitration agreements are still pending in the House Judiciary committee and a third was prefiled in December of 2017. H3202 would make an arbitration agreement void if the consumer had no meaningful choice in negotiating the terms of the arbitration agreement or the agreement did not provide a guaranteed benefit to the consumer. H3203 states that any contract that is subject to arbitration must have a prominent notice in the contract that it is subject to arbitration. SCBA will closely follow WINTER 2018 •

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SCBA BankPAC

By Donna S. Taylor, South Carolina Bankers Association

As a banker, you should constantly look at how legislation impacts your bank – identifying the risk it may pose to your business, customers and employees.

However, have you stopped to think about political risk? In today’s regulatory environment, you must consider and re-evaluate your approach to this risk.

To address political risk, it is critical that the industry support candidates who believe in a competitive, fair-banking climate. They will spend months considering proposed legislation that impacts a bank’s bottom line. The risk of not supporting them is detrimental to our

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business, our employees and our customers. This is why supporting BankPAC is so important. SCBA BankPAC allows us to speak with one collective voice, which affords our industry a greater ability to leverage resources and support candidates who promote pro-banking policies. Together we can support candidates who believe that banks drive economic growth and make dreams come true. You can assist in this effort by contributing to SCBA BankPAC’s 2018 Campaign. Your contributions are essential and we need your help more than ever.

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For more information on how to contribute and who to contact, please visit our website at www.scbankers.org.

SCBA BankPAC had a great year in 2017 with 51 banks/companies participating, raising over $73,000.

Thank You.

SOUTH CAROLINA BANKERS ASSOCIATION POLITICAL ACTION COMMITTEE SAYS

Thank you to the following institutions, their directors and employees who supported the banking industry by contributing to the 2017-18 SCBA BankPAC campaign raising over $73,000. Your support is graciously appreciated.

Abbeville First Bank Ameris Bank Anderson Brothers Bank Arthur State Bank Atlantic Community Bank Bank of Travelers Rest Bank of Walterboro Bank of York BB&T Blue Ridge Bank Carolina Alliance Bank Carolina Bank & Trust Co. CBL State Savings Bank Clover Community Bank Coastal Carolina National Bank CoastalStates Bank Community First Bank, Inc. Countybank CresCom Bank Dedicated Community Bank Entegra Bank Enterprise Bank of South Carolina Farmers and Merchants Bank of SC First Citizens Bank First Community Bank First Reliance Bank

GrandSouth Bank Home Federal Savings and Loan Association HomeTrust Bank IBERIABANK Independence National Bank Kingstree Federal Savings and Loan Association NBSC, a division of Synovus Bank Palmetto Heritage Bank & Trust Palmetto State Bank Pickens Savings and Loan Association, FA Regions Bank Sandhills Bank Security Federal Bank ServisFirst Bank South Atlantic Bank South Carolina Bankers Association South State Bank Southern First Bank Spratt Savings and Loan Association The Bank of Clarendon The Citizens Bank TIB - The Independent Bankers Bank United Community Bank Wells Fargo Woodruff Federal Savings and Loan Association

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2018

SCBA WASHINGTON TRIP This year’s SCBA Washington Trip/ABA Government Relations Summit, set for April 23-25, 2018, promises to provide an interesting insight into changes in the nation’s capital.

“The Washington Trip is one of the most important events we have each year. It creates a great opportunity to make a difference legislatively,” said SCBA President and CEO Fred Green.

For those arriving early on Sunday evening, we’re planning a casual dinner, similar to that of recent years. In addition, we are arranging a dinner with several

members of our Congressional delegation on Monday evening.

officials in Washington who help shape national policy.

Following lunch on Tuesday, we’ll spend the afternoon on the Hill visiting with our delegation. The Federal Home Loan Bank of Atlanta is sponsoring a dinner that evening.

For more information about attending the conference, contact the ABA at 800.226.5377 or Anne Gillespie at the SCBA at 803.779.0850.

Last year, the SCBA Washington trip enjoyed a healthy turnout, with some 30 bankers making the trip to the nation’s capital to meet with members of the state’s Congressional delegation.

The trip is valuable because it offers a rare opportunity for bankers valuable face time with elected

SCBA WASHINGTON TRIP

April 23-25

Our annual Washington, D.C. trip offers bankers the chance to travel to our nation’s capital this spring, talk with members of our state delegation, meet with regulators and make certain those in power understand our concerns.

Don’t miss out on this unique opportunity to make your voice heard.

For more Information, please contact Anne Gillespie at 803.779.0850, or agillespie@scbankers.org.

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Attendees will be able to stay at the Washington Marriott Marquis. A room block has been reserved for SCBA/ABA members. Rooms should be reserved by Monday, April 9 to take advantage of ABA preferred rates. Reservations received after April 9th will be accepted on a space-available basis at the prevailing rate.

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Education and Professional DEVELOPMENT As the state’s banking advocate, the SCBA represents institutions of all sizes and charters offering government relations representation on behalf of the industry and extensive education/training programs while also providing numerous products and services for banks, their employees and their customers.

The SCBA has numerous standing committees which represent many areas of banking. The general sharing of time and talent by bankers contributes to a stronger banking community in South Carolina.

Committees are asked to:

•

Provide input to the SCBA on matters affecting the banking industry and committee’s functional area of banking •

Identify possible legislative/ regulatory issues

•

Provide input on education and training needs •

Provide a forum for the exchange of ideas and for networking that will benefit each committee member and his/her bank

To that end, we are pleased to provide our members with the most timely and relevant educational conferences, seminars and professional development events.

Our events serve as a forum for our membership to exchange ideas with peers from around the state while gaining information needed to keep their financial institutions on the path of success and are designed to promote ultimate interaction between bankers, associate members and vendors. All are well attended and allow the chance to meet face to face with South Carolina’s industry leaders in a relaxed and informal setting.

It seems as if a new regulation or law is introduced on a monthly, if not weekly, basis. This is why the SCBA has partnered with Total Training Solutions. Webbased training offers a major advantage over other methods. A webinar can be created and offered incredibly fast. We rely on the expertise of our presenters – the best in the financial industry – to understand new regulations inside and out before the ink is even dry on the paper they were drafted on. Whatever your online training needs may be, TTS can assist you. They have webinars ranging from customer service to sales to underwriting – and everything in between.

We thank all of our bankers who devote their time and provide their input to the SCBA in serving on our committees.

To learn more about our committees and to stay up to date on all of our events and webinars, please visit our website, www.scbankers.org.

SCBA EDUCATION CALENDAR MARCH 2018 2-4 Young Bankers Division Annual Conference

APRIL 2018 17-18 Certified Banking Security Manager Workshop

The Westin Savannah Harbor Golf Resort and Spa Savannah, GA

Marriott Downtown Hampton & Main Streets Columbia, SC

7 Directors and Managers

19 Spring Compliance

Workshop

Inn @ USC Wyndham Garden Columbia, SC Audience: Directors, CEOs and senior management

Conference

Columbia, SC

23-25 ABA/SCBA Government

21 Economic Developers Conference

Columbia, SC

Relations Summit

Washington Marriott Marquis Washington, DC

MAY 2018 1 Trust & Wealth Management Conference & Trade Show Marriott Downtown Hampton & Main Streets Columbia, SC

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MAY 2018 3 Asset Liability

Management Conference Marriott Downtown Hampton & Main Streets Columbia, SC

JUNE 2018 10-13 Annual Convention & Trade Show The Cloister Sea Island, GA

JULY 2018 8-13 South Carolina

Bankers School Lander University Greenwood, SC

e dUCation and P rofessionaL d eveLoPMent

2018 WOMEN IN BANKING

Leadership Symposium

By E. Anne Gillespie, Senior Vice President, SCBA

More than 80 individuals turned out for the fourth annual Women in Banking Leadership Symposium, a joint effort of the South Carolina and North Carolina Bankers Associations, held November 6 - 7, 2017 at the Renaissance Charlotte Southpark Hotel, Charlotte, NC. Speakers from across the nation, including some of the country’s top bankers and business executives, were on hand to relate experiences.

The symposium got off to a great start with a presentation by Dorothy Savarese, Immediate Past Chairman, American Bankers Association; President & CEO, Cape Cod Five Mutual Company of Orleans, Massachusetts. We were extremely honored to have her as she

was the first female chairman of the American Bankers Association.

Among others who spoke were Tammy Bond, Executive Coach at The Team Optimizer, Dubuque, IA; Sharon Cook, Chief Marketing Officer, Federal Home Loan Bank of Atlanta, Atlanta, GA; Sarah House, Vice President and Economist at Wells Fargo Securities, Charlotte, NC; Rebekah Lowe Certified Leadership Coach at FizzyWorks, Asheville, NC; Kathleen Murphy, President & CEO at Maryland Bankers Association, Annapolis, MD; and Dawn Thompson, Senior Government Relations Manager at Live Oak Bank, Wilmington, NC. The symposium also featured a leadership panel, which included Laura Bunn,

Triangle Market President at First Tennessee Bank, Raleigh, NC; Meredith Manning, Vice President and Senior Deputy General Counsel at BlueCross BlueShield, Columbia, SC; and Mze Wilkins, Columbia Market President at Ameris Bank, Columbia, SC. The panel was moderated by Barbara Rehm; Special Advisor at Promontory Financial Group, Washington, DC. The speakers had great messages about how they found mentors and sponsors to help them move up in their companies and then became both mentors and sponsors themselves. Attendees enjoyed hearing about the speakers’ life experiences. Much appreciation to all who attended and to the generous sponsors!

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yoUng Bankers division

Palmetto Scholarship

By Carolyn L. Bradley, Senior Vice President, SCBA One of the most important initiatives of the SCBA’s Young Bankers Division is its scholarship program. Once again, this past summer and fall, the fundraising efforts of both the South Carolina Bankers School third year class and the Young Bankers Division Board of Directors proved to be a great success. Due to the efforts of these groups each year and the significant transfer of funds into our Foundation, hundreds of thousands of dollars have been awarded to deserving students. To reinforce its mission to education and assist students with the ever-increasing cost of higher education, the South Carolina Bankers Association stands committed to offering the SCBA Palmetto Scholarship to the children of employees of SCBA-member banks who are college students.

For more than a century, the SCBA has been blessed with the strong support of its member institutions and their employees.

The Bankers Association believes giving scholarships to deserving children of bank employees helps demonstrate both its appreciation to member banks and their employees. It also serves as a means for building a path to a better, more prosperous South Carolina.

Palmetto Scholarship regardless of their major. I thought I was prepared for all of my daughter’s college expenses until the time came for her summer internship. I had not thought to calculate the cost of what the university would charge for her internship credits. Thankfully, she was awarded a Palmetto Scholarship! It covered nearly all of the cost of her internship credits!”

The submission process for consideration of the SCBA Palmetto Scholarship involves completing the application found on the SCBA’s website in the Young Bankers Division section under “Scholarships” (handwritten and/or incomplete applications will not be processed).

Applicants must also upload a resume and letter of recommendation from a dean or professor.

This past summer, two members of the South Carolina banking family lives’ were tragically taken during a bank robbery.

The SCBA Board of Directors is honoring the memory of Katie Skeen and Donna Major of CresCom Bank by establishing two $2,500 scholarships named after each respectively. The scholarship committee will select two individuals from the pool of applicants who will receive the Katie Skeen Scholarship and the Donna Major scholarship.

The application deadline is March 16, 2018. Unfortunately, applications submitted after this date will not be considered. The Scholarship Committee will review and grade the applications and the recipients will be announced in the spring. A dessert reception and check presentation will be held sometime in May. Visit our website to learn more at www.scbankers.org.

To be considered for the SCBA Palmetto Scholarship, students must: Be a resident of South Carolina; •

Have a parent who lives in South Carolina and works for a SCBA member bank in South Carolina OR be a part-time employee at a member bank working a minimum of 20 hours per week; •

Be a full-time junior or senior undergraduate at an accredited four-year college or university in South Carolina during the fall semester of 2018; •

Have a minimum grade-point average of 3.0 on a 4.0 scale; •

Be active in his or her school and community, demonstrate a solid work ethic, and possess strong leadership abilities, good teamwork and a desire to succeed; and •

Submit a resume and letter of recommendation from a dean or professor when completing the online application. If you are a part time employee, you must also have a letter of recommendation from senior management.

The SCBA understands that many students today often find themselves burdened by significant debt upon graduation which is why the SCBA seeks to help students pursue higher education while also laying the foundation for the next generation of South Carolina’s leaders. Each scholarship is $1,000.

•

Sandy Hooker, Banking Officer/ Procurement Manager of South State Bank said, “I am so glad that SCBA now offers the opportunity for member banks’ employees’ children to apply for the 26

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The 2018 Young Bankers Division ANNUAL CONFERENCE March 2-4 The Westin Savannah Harbor Golf Resort & Spa Savannah, GA

Jones

Johnson

For more information about the Conference or the Young Bankers Division, please visit www.scbankers.org.

Calling all emerging leaders!

Tuck

By Carolyn L. Bradley, Senior Vice President, SCBA

The 2018 Young Bankers Division Annual Conference will be held March 2-4 at The Westin Savannah Harbor Golf Resort & Spa, Savannah, Georgia. The Conference is the premier event for the Young Bankers Division where future leaders of the banking industry have the opportunity to hear from industry experts, to learn more about the current state of the industry and to network with peers and develop business leads.

Chairman of the Division, Jennifer T. Jones, President and CEO of CBL State Savings Bank, is thrilled to announce the 2018 Conference knockout lineup of speakers. William R. “Will” Johnson, Shareholder, Haynsworth Sinkler Boyd, P.A. will discuss the future of economic development in the Palmetto State; Greyson E. Tuck, Attorney and Consultant, Gerrish Smith Tuck, will talk about emerging trends in the banking industry which will help participants identify how they can position themselves to be successful as a bank leader in tomorrow’s banking industry; Sharon B. Cook, First Vice President/Chief Marketing Officer, Federal Home Loan Bank of Atlanta, will address work-life balance; and attendees will have the opportunity to hear from a regulatory panel featuring Jeffrey L. “Jeff” Burgess, Field Supervisor – FDIC, Robert L. “Bob” Davis, Commissioner of Banking - South Carolina Board of Financial Institutions, M. Scott “Scotty” Duncan, Jr., Assistant Deputy Comptroller – Office of the Comptroller of the Currency and Paul S. Frey, Federal Reserve Bank of Richmond.

Emerging leaders will also have the distinct privilege to hear from the keynote speaker James C. Ballentine, Executive Vice President of Congressional Relations and Political Affairs for the American Bankers Association (ABA). Mr. Ballentine, a 17 year veteran of ABA, leads

Cook

the association’s Congressional Affairs and advocacy team and is responsible for managing and directing ABA’s political operations. Chairman Jones said, “I am excited to have Mr. James Ballentine join us this year at the Young Banker Division Conference. I had the pleasure of meeting him while attending an ABA event in Washington, DC last fall. During our time together, I immediately knew he would be an excellent keynote speaker for the 2018 conference. I truly believe attendees will quickly find Mr. Ballentine is a genuine advocate for bankers around the country and a powerful resource for all emerging leaders in the banking industry.”

On Saturday morning, Allyson Powell, co-anchor of WYFF News 4 Today, will start the day and lead the prayer breakfast. Allyson and her husband, Landon, made national headlines when they lost their infant daughter, Izzy, to a rare autoimmune disease, hemophagocytic lymphohistiocytosis, or HLH, which causes the immune system to attack even healthy cells.

Participants can hear Allyson’s story and learn how to find “Joy in Tragedy.”

Burgess

Davis

Duncan

Frey

Networking events that take place after the business session on Saturday afternoon include a golf outing or a riverboat cruise down the Savannah River. Get ready to “shuck and shake” to the tunes of The Reggie Sullivan Band with a Southern Style Oyster Roast Saturday night.

While our speakers are credible and their content relevant, one of the biggest takeaways you will leave the Conference with is the relationships that you form while there. Our goal is to empower and educate tomorrow’s banking and business leaders while also encouraging personal, professional and community development.

Ballentine

Powell

(continued on p. 33)

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a s s o C i at e MeMBers

Welcome

Our associate members are a valuable resource for the SCBA and our member banks. We are fortunate to have an active and engaged roster of Associate Members and proudly welcome these new members: The Appalachian Development Corporation (ADC) provides funding for the growth and development of businesses in South Carolina. This is accomplished using the U.S. Small Business Administration (SBA) 504 program and with revolving loan funds.

Financial institutions who partner with the ADC can mitigate credit risk by improving the loan-to-value of a project, improving debt service and position thereby themselves to obtain more

business by offering loans to qualified borrowers through reduced equity requirements. Statewide, the ADC administers long-term, fixed rate, subordinate financing for capital assets using the SBA 504 Program. Through the Appalachian Loan Fund (ALF), the ADC provides locally controlled sources of low cost, fixed rate financing for thirteen counties extending northwest from Fairfield, Newberry and Greenwood Counties.

EnviroSouth, Inc. provides a broad range of environmental due diligence services to bankers and property investors throughout South Carolina. Since their founding in Greenville in 2001, EnviroSouth has consistently provided their clients with common-sense answers and have become known for their “on time”, “on budget”, and “no surprises” service. The discovery of environmental concerns during a Phase I ESA can

quickly derail a loan. Their practical environmental solutions for borrowers and financial institutions has resulted in EnviroSouth being highly regarded by the commercial banking community as deal savers, not deal breakers. EnviroSouth’s unique ability to simplify the complex world of environmental science makes the maze of regulatory and financial considerations much easier to navigate.

Joel Stewart Sales Engineer 9 Industrial Park Drive, Suite 114 Oxford, MS 38655 662.371.0035 jstewart@mtrade.com www.mtrade.com

Mortgage Trade focuses on improving the way organizations buy, sell and analyze whole loans. We offer mortgage processing as a service along with document processing, whole loan analytics and mortgage performance metrics. Mortgage Trade has extensive experience working with the country’s largest banks which

led to the development of our premier solution, the Clean Room. Our solutions and personalized “white glove” service add value by improving the quality of our clients’ loan processing, underwriting and delivery.

John Carson Director 3414 Peachtree Rd NE, Suite 825 Atlanta, GA 30326 404.520.8826 jcarson@monarchprivate.com www.monarchprivate.com

Monarch Private Capital (MPC) is an investor and syndicator of state and federal tax credits. Headquartered in Atlanta, MPC transacts tax credits in more than 15 states, in addition to Federal credits. In addition, MPC is one of the largest, and most reputable, firms brokering South Carolina’s real estate rehabilitation credits. MPC invests in projects which generate transferable state

and federal tax credits in the following industries: Low Income Housing, Film & Entertainment, Alternative Energy Production Facilities and Historic, Mill & Abandoned Building Rehabilitation.

MPC has sold tax credits since 2005, placing over $1 billion credits without any investor losses. Our clients include financial institutions, insurance companies, high net worth individuals, etc.

J. Connally Bradley Executive Director 880 S. Pleasantburg Drive, Ste. 3E Greenville, SC 29607 864-382-2358 cbradley@adcloans.com www.adcloans.com

Thomas F. “Tom” Donn President 3440 Augusta Road Greenville, SC 29605 864.236.9010 tdonn@envirosouth.com www.envirosouth.com

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Formed in 2000 by a team of IT bank executives and regulatory specialists, NETBankAudit is a unique audit and network security testing firm specializing in providing GLBA, FFIEC, SOX and Consumer Affairs assessment, audit and network vulnerability testing services to community financial institutions.

Functioning as an “extension of our client’s internal audit function,” we serve each client individually based on circumstances, needs, and budget

constraints. Quality of service, focus and affordability has allowed us to grow to over 600 clients, supported by our audit services. We base our services on proven audit, assessment, and vulnerability testing solutions designed specifically for regional and community–based financial institutions. NETBankAudit’s goal is to address technology risk management and compliance concerns, while reducing regulatory uncertainty.

Daniel J. “Dan” Roderick, Sr. CEO 375 Northridge Drive Atlanta, GA 30350 713.432.0914 droderick@strunklp.com www.strunklp.com

Strunk implements Enterprise Risk Management solutions and non-interest income programs exclusively for community banks. Risk Manager, our ERM software – created by bankers for bankers – completes comprehensive risk assessments covering hundreds of key risk indicators for all primary areas of risk as well as specific risk categories (such as ACH, BSA, Cybersecurity, Concentrations, Fair Lending, Info Security). Generate

assessments in hours not weeks and easily create reporting for the board or examiners. Risk Manager also streamlines the management process for bank policies, audit plans, and staff training. Affordable, comprehensive, and fast - with a money back guarantee! Our non-interest income programs - Overdraft Privilege and Value Checking - increase customer loyalty with a proven track record of significant results.

Cameron Corbin SVP, Chief Strategy Officer 1801 Bayberry Court, Suite 202 Richmond, VA 23226 804.822.9653 ccordbin@tblnetworks.com www.theblinkylight.com

TBL Networks provides a wide range of advanced technology solutions with a focus on Private Cloud as a Service, Unified Communications, Cyber Security, Data Center and Disaster Recovery.

Located in Richmond, VA, TBL Networks understands the banking community needs a technology advisor who understands how businesses should evolve but also how they are audited.

When you engage TBL, you’re working

with highly trained technology specialists that care about your organization and reputation just as much as you do. They handle your advanced technology needs and do it in the way that’s best for your business. TBL takes the time to understand your company, your people, and your strategy, so that they can put together a solution that aligns with your objectives. TBL is here to help your organization reach new heights.

Windsor Advantage provides banks with a comprehensive outsourced SBA 7(a) and USDA lending platform. Since 2010, Windsor has processed more than $1.6 billion in government guaranteed loans and currently services a portfolio in excess of $1.2 billion (as of October 31, 2017) for more than 75 lenders nationwide.

With over 150 years of collective

government guaranteed lending experience, cutting-edge technology and rigid controls, Windsor Advantage is uniquely qualified to assist clients with implementing a thoughtful and profitable lending initiative. Windsor Advantage has a team of 30 professionals with offices in Charleston, South Carolina; Chicago, Illinois; and Indianapolis, Indiana.

Elizabeth Nicolas Sr. Relationship Management Officer 1940 Duke Street, 2nd Floor Alexandria, VA 22314 800.243.0416 (521) enicolas@netbankaudit.com www.netbankaudit.com

Shawn T. Andrews Managing Director 525 King St., Suite A Charleston, SC 29403 312.465.7845 sandrews@windsoradvantage.com www.windsoradvantage.com Notification of Non-Renewing Associate Members As the 2018 calendar year begins, the SCBA reports the following companies did not renew their membership: BDS Yarmouth & Choate, Reliance Trust Company and SIB-Fixed Cost Reduction. Please update your listings to reflect these changes. We thank these companies for their past support and would welcome each of them to rejoin.

With all of the evolving financial industry changes, we are thankful for business alliances that meet our members’ needs.

The SCBA is dedicated to supporting and promoting cutting-edge industry providers to our member banks.

To view our Associate Membership Directory, click here.

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Consumer Affairs (continued from p. 15) The supervised lending industry, lenders making consumer loans in excess of 12% APR, advanced nearly $2.2 billion dollars to South Carolina consumers in 2016.

For the 2017 maximum rate filing year, approximately 26% of supervised lender filings intended to impose rates in excess of 100% APR, and approximately 2% of non-supervised lender filings included rates in excess of 100% APR. Other highlights of the 2018 State of Credit Report include: (1) The average credit score of consumers applying for a mortgage in 2016 fell below 700 for the first time since 2012, and the average APR dropped to 4.22%, the lowest since 2012; (2) Credit repair companies accounted for approximately 22% of credit counseling organizations in South Carolina, these companies are responsible for 94% of all new contracts with consumers in this State in 2016; (3) While the average contract duration for traditional debt management companies was nearly 8 times longer than credit repair contracts in 2016, the average fees collected for debt management services are only

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MAXIMUM RATE FILINGS BY RANGE (2017)

n Supervised Lender Filings

n Non-Supervised Lender Filings

18% or Less 18.1-29.99% 30-36.99% 37-49.99% 50%-99.99% 100-199.99% 200-299.99% 300% +

30% higher than that for credit repair services ($237 vs. $183).

To view the 2018 State of Credit Report in its entirety, including rankings of highest maximum rate filings by county and recently issued administrative interpretations, visit www.consumer.sc.gov and click the

PALMETTO BANKER

“About Us” tab. The 2017 State of Credit Report can also be viewed on this site and contains a historical perspective on the consumer marketplace in South Carolina with information spanning several decades, beginning in the mid-1980s.

Banking news

ANDERSON BROTHERS BANK Anderson Brothers Bank donated $2,500 to the American Cancer Society, Dillon County Relay for Life to kick off its 2018 year. “It is due to overwhelming acceptance of Anderson Brothers Bank to Dillon County with the Latta office that we are enthusiastic to expand our horizons toward the city of Dillon,” said Johnny Floyd, VP Marion and Dillon County Executive of Anderson Brothers Bank.

“We are extremely proud of our Latta Branch employees and know that they will do an exceptional job representing Anderson Brothers Bank as well as Dillon County Relay for Life.”

BLUE RIDGE BANK Blue Ridge Bank is pleased to announce the grand opening of its new office located at 200 W. Windsor Street, Westminster, SC. A ribbon cutting ceremony was held on January 2.

SOUTH ATLANTIC South Atlantic Bancshares, Inc. announced the signing of a definitive merger agreement with Atlantic Bancshares, Inc. under which South Atlantic will acquire Atlantic Bancshares. The transaction is expected to close

by April 30, 2018 SOUTH STATE BANK South State Corp. completed its acquisition of Charlotte, NC-based Park Sterling Corp. As part of the deal, Park Sterling Bank merged with South State Bank. Park Sterling CEO James Cherry and former Park Sterling director Jean Davis have joined South State’s board. As a result of the merger, South State has added 53 locations to its footprint.

THE CITIZENS BANK The Sumter Branch hosted a Bake Sale to raise additional money for Toys for Tots during the holiday season.

CAROLINA ALLIANCE BANK CAB Financial Corporation and Carolina Alliance Bank announced effective October 23, 2017, they have consummated their corporate reorganization into a Bank Holding Company. The bank will continue to operate as Carolina Alliance Bank, and be managed by its current Board of Directors and executive officers.

COASTAL BANKING CO. Florida-based First Federal Bancorp agreed to acquire Beaufort, SC-based Coastal Banking Co., Inc. The deal is expected to close in the first quarter of 2018.

CRESCOM BANK Washington, NC-Based First South Bancorp Inc. and Charleston, SC-based Carolina Financial Corp. have secured regulatory approvals for their merger. Data system conversion is scheduled for the first quarter of 2018, after which First South Bank’s branches will rebrand as CresCom Bank.

CresCom raised $1,800 in donations for the Angel Tree fund at Myrtle Beach Intermediate School. The donations were used to purchase gifts for under privileged children who attend the school this past holiday season.

FIRST COMMUNITY BANK First Community Corp. completed its merger with Easley, SC-based Cornerstone Bancorp effective October 20, 2017. Immediately after the closing, Cornerstone National Bank merged into First Community Bank.

FIRST RELIANCE BANK The FDIC and the South Carolina Board of Financial Institutions have approved the pending mergers of Independence Bancshares Inc. and unit Independence National Bank into First Reliance Bancshares Inc. and unit First Reliance Bank. The merger was completed on January 19, 2018

Grant Heustess was awarded The Citizens Bank Scholarship at Francis Marion University for the 2017-2018 academic year.

UNITED COMMUNITY BANK United Community Banks, Inc. and NLFC Holdings Corp. announce a definitive agreement for United to acquire NLFC, including its wholly-owned subsidiary, Navitas Credit Corp.

WELLS FARGO Wells Fargo is helping to provide tuition assistance for veterans and their families by giving $25,000 to the Midlands Technical College Foundation. The money will go towards MTC’s Quickjobs program. “We are pleased to continue our support of MTC’s Quickjobs programs,” said Holt Chetwood, Wells Fargo Midlands market president. “Wells Fargo has a long history of supporting veterans and their family members and is committed to building better communities by working with educational organizations like MTC to create a competitive workforce and a sustainable economy.”

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PersonaL

transaCtions Nate Ellis

AMERIS BANK H. Richard Sturm has been appointed Director of Commercial Banking. Prior to his promotion, Sturm served as Regional President.

Mze Wilkins has been promoted to Regional President. Prior to her promotion, Wilkins served as market president.

ANDERSON BROTHERS BANK Jessica Gleason has been promoted to Branch Operations Coordinator of the Marion, SC Main Street Office.

Debbie Guyette and Nate Ellis have joined Anderson Brothers Bank as Commercial Lenders for Horry County serving the Myrtle Beach area.

Marie Maslich has joined Anderson Brothers Bank as Branch Operations Coordinator/Customer Service Representative based in Conway, SC.

BANK OF CLARENDON Kendall Stewart will succeed retiring Executive Vice President and Chief Financial Officer W. Louis Griffith at Manning, SC. Mr. Griffith retired on January 26, 2018.

BLUE RIDGE BANK Shannon D. Musgrave has been named Vice President, Branch Manager, and Loan Officer at its Seneca office.

CAROLINA ALLIANCE BANK Andrew L. Howard has joined its Greenville office as Senior Vice President, Relationship Manager.

John D. Kimberly has been appointed as Chief Executive Officer to succeed retiring John S. Poole, effective January 1, 2018.

John Poole announced his retirement on December 31, 2017. After graduating from the University of South Carolina (BS 1974/MBA 1976), John Poole began his banking career at Bankers Trust in

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Andrew Howard

John Kimberly

John Poole

Spartanburg. He worked there through its merger with NCNB and until 1992 when he joined Carolina Southern Bank as its president and CEO. After Carolina Southern was acquired by the National Bank of South Carolina, John became president and CEO of the Spartanburg Area Chamber of Commerce until 2006 when he joined Mr. Robert Harley in founding Carolina Alliance Bank. He led Carolina Alliance as its president and CEO and later as the first CEO of its holding company, CAB Financial Corporation, until his retirement on December 31, 2017.

COUNTYBANK

Asked to comment on John’s retirement, John Kimberly, who follows him in the leadership role at Carolina Alliance, said, “John was a tireless, enthusiastic, and honorable leader for our company for eleven years. We all feel very fortunate to have worked with him. In a similar fashion, he has advocated for the Spartanburg community. The list of his many contributions to the community throughout his career is simply too long to recite.”

Amanda Diehl has been promoted to Senior Vice President.

John Poole has been a very active participant in the South Carolina Bankers Association his entire career. He has been Chairman of several major committees, has served on the Board of Directors, and was recognized early in his career as the 1991 Outstanding Young Banker of the Year.

David Swofford has joined the Spartanburg office as Vice President, Mortgage Lender.

COASTAL CAROLINA NATIONAL BANK W. David Keller has joined the CCNB team as Senior Vice President, Midland Market Executive.

Ric Speihs has joined the bank as the President and Chief Executive Officer of the Bank’s wholly-owned subsidiary, CoastalStates Mortgage, Inc.

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Jim Fowler has been named Executive Vice President of Corporate Banking and Strategic Initiatives.

Crystal Peterson has been promoted to Treasury Services Officer.

Chris Roberts has been promoted to Senior Vice President.

CRESCOM BANK David Couey has joined the bank as the new Commercial Loan Officer and Vice President in the Charleston area.

David Renaker has joined the bank’s Columbia branch as Commercial Loan Officer and Vice President.

FIRST COMMUNITY BANK “Rodger Anthony retired from First Community Bank following a transition period, in which he worked to ensure that the merger between First Community and Cornerstone National was a success,” stated Mike Crapps, President and CEO of First Community.

Rodger has enjoyed a stellar 46 year banking career, with 39 of those years serving as CEO. After graduating from Wofford College, Rodger served in the Vietnam War. He began his banking career in 1971. In 1998 he organized Cornerstone National Bank and served as the bank’s only CEO until its merger with First Community in October, 2017.

Mike Crapps continued, “Rodger is a banker with great experience and expertise. More importantly, he is a man of great integrity with a servant’s heart who cares deeply for his family, employees, friends, and his local community.”

James Heffner has been hired to lead the new Downtown Augusta Office in his role as a commercial banker. The opening of the Augusta office is planned for the early spring of 2018 and will be located at 771 Broad Street.

David Swofford

Alan Lomax

FIRST RELIANCE BANK David Barksdale has joined First Reliance Bank as President of North Carolina.

Alan Lomax has joined First Reliance Bank as City Executive for the WinstonSalem, NC market.

Larry Miller has retired after a wonderful 47 year career in banking. He began his banking career with South Carolina National in 1971. He later worked at Southern Bank and Trust, First Federal, and South Trust. In 2004, Larry became a founding director, President and CEO of Independence National Bank.

Independence National Bank merged into First Reliance Bank on January 22nd.

Rick Saunders, President/CEO of First Reliance Bank said, “Larry has built a community bank that aligns well with our banks business model and culture.

Rick Ryan

THE CITIZENS BANK

We seem to be like minded about focusing on the customer first. The merger will provide expanded products and services to their existing customers but the most important element is the relationship style of community banking that both banks have had in common from the outset. Larry has been a great help with the merger transition and we couldn’t be more grateful for all he’s contributed,” said Saunders.

Rick Ryan has joined the bank as a Professional and Business Development Vice President in the Florence Market.

UNITED COMMUNITY BANK Bill Durrell has joined the Greenville team as Commercial Relationship Manager.

WELLS FARGO Sam Sugg has been promoted to Raleigh Market President.

SOUTH SATE BANK Thomas H. Anderson has been named Senior Vice President, Charleston area.

WOODRUFF FEDERAL

Trent Drafts has been named Senior Vice President, Charleston area.

Kelly York has been named Senior Vice President, Savannah region.

Steve Scott, President and Chief Executive Officer, has retired as of December 29, 2017. He will continue on as the Chairman of the Board of Directors.

Morgan C. Smith has taken over the position of President and Chief Executive Officer, effective January 8, 2018.

Young Bankers Division (continued from p. 27) What makes the Division unique is the ability for each to compete fiercely by day but to come together and to interact socially with each other to share ideas, challenges and opportunities. Chairman Jones said, “I, along with the Young Bankers board, am delighted with the slate of speakers for the 2018 conference. We spent much time selecting these dynamic speakers so attendees will be able to take back valuable resources to their individual banks and everyday life. The 2018 conference promises informative industryspecific topics and unlimited amount of networking opportunities all the while being in the beautiful city of Savannah!”

The Young Bankers Division was established in 1955 and has continued to grow and prosper for more than 60 years.

The SCBA has long been recognized as having one of the best Young Bankers Division because of the initiatives and the impact the group has made throughout the state. Executive management teams view this group as the emerging leaders and future of their respective institutions.

In very broad terms, the Young Bankers Division mission focuses on education.

Whether it’s actually teaching financial literacy in the classrooms, awarding scholarships to bank employees’ children to help fund their education or simply by attending events hosted by the SCBA where there are opportunities to learn and network with others to further develop their careers. The SCBA’s Young Bankers Division is noted for several initiatives, just to name a few: • Promoting financial literacy and fiscal responsibility awareness throughout the state • Hosting a golf tournament to raise money for the Palmetto Scholarship to award to the children of employees of SCBA-member banks • Recruiting and attracting potential bank employees through an event called Banking Careers 101 in which college students are brought together to learn about opportunities in banking • Advocating on behalf of the industry by visiting the South Carolina State

House and attending the Annual Washington Trip.

The Young Bankers Division is also known for its networking and fellowship opportunities. The friendships developed at the various events will provide personal and professional dividends for many years to come. Many bankers who were active in the Young Bankers Division have advanced to become C-suite executives and key decision makers within South Carolina’s financial institutions and have remained involved with the SCBA as officers, directors and committee chairmen—complete evidence of the Division’s relevance and success.

For more information about the Conference or general questions about the Young Bankers Division, please visit the SCBA’s website, www.scbankers.org.

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Tax Reform (continued from p. 14) expense of up to $140,000 or 14% to revalue that deferred tax item, assuming a rate change from the maximum 35% federal rate to a flat 21% rate. Companies with large federal net operating loss carryovers also took a big hit to their bottom line when revaluing them to 21%. So, the greater a company’s net deferred tax assets, the larger revaluation adjustment to its 2017 federal tax expense.

through to their shareholders. However, with the temporary S Corporation 20% deduction against qualifying business income and reduction in C Corporation rates from 35% to 21%, many S Corporations are reviewing their tax structure and preparing an analysis of C versus S Corporation status.

Companies have had the most difficulty understanding the tax rate adjustment on AOCI items being reflected in tax expense.

This presentation creates a “dangling” debit or credit and required companies to further track these items over the long term, which is an onerous process. The American Bankers Association requested relief for reclassifying the stranded tax effects of items in AOCI to the Financial Accounting Standards Board (FASB) in December 2017 and again in January 2018 to the Bank Regulators.

Beginning in 2018, corporate effective tax rates will be reduced as a result of the lower 21% federal tax rate. Historically, tax planning for tax exempt income, bank owned life insurance and federal tax credit investments were utilized to lower a company’s effective tax rate. Since these investments create reduced tax benefits in a lower tax rate environment, it’s prudent to review the impact on any current or future investments to determine the new tax benefit for your company.

Planning Opportunities

As federal tax rates and related federal tax expense decrease, state tax credits may become more beneficial to community banks. Commercial banks doing business in South Carolina are currently taxed on 4.5% of their net income, so as net income increases as a result of lower federal income tax expense, its SC bank tax will also increase. Some of the most popular credits among SC banks are the New Jobs Tax Credit, Textile Revitalization Credit, Abandoned Buildings Revitalization Credit and Community Development Corporation Investment Credits.

As a result, the FASB met on January 10, 2018 and issued Proposed ASU Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows companies to reclassify the stranded effects in other comprehensive income to retained earnings as a result of the change in the tax rates under the Act. Comments are being accepted through February 2nd, but we expect it will be finalized in February 2018.

Due to the immediate attention needed to address the disproportionate tax effect in AOCI for 2017 Call Report purposes, the FDIC issued Financial Institution Letter FIL-6-2018 on January 18, 2018. This allowed institutions to apply the FASB’s proposed reclassification guidance for Call Report purposes as of December 31, 2017. In addition, it allowed companies to consider its net operating loss carryback potential for computing its regulatory capital as of December 31, 2017.

What can you do now?

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•

•

S Corporations S Corporation banks do not have deferred taxes to revalue as their income is passed

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WINTER 2018 •

PALMETTO BANKER

Review 2018 budgets and tax expense for proper reduction in effective tax rate.

Review tax planning for post-2017 tax years, as it may be different than historical planning.

If expanding infrastructure or building branches, cost segregation studies are still beneficial to segregate the property into more assets that qualify for the new 100% expensing. These studies can still be performed for the 2017 tax year by the filing of the extended due date.

•

•

•

If creating new jobs, determine if there are any available job tax credits, as some states require precertification.

If donating or investing in your community, determine if there are any associated tax credits available.

If purchasing or creating software, inquire about sales tax solutions and potential research & development tax credits.

Other than the initial hit to tax expense and regulatory capital due to the revaluation of deferred taxes in 2017, community banks will be in a more favorable tax environment starting in 2018. This will allow banks and their customers the opportunity to expand and grow. Many companies have plans to reward their employees with increased pay and bonuses as well as investing in their communities, by way of donations, investments and expansion via branch construction and newly created jobs.

Media, including the ABA, has highlighted companies’ post-tax reform actions on wage increases, bonuses and community investments.

There is heightened expectation for increased credit quality as a result of tax reform and the focus of less regulation on the banking industry. Bank economists have projected U.S. economic growth will continue to expand and tax reform will increase consumer savings and business investment.

This is an exciting time for community banks! As you plan ahead for 2018 and future years, please remember that as “taxing” as 2017 was on your institution, there are many opportunities available for continued tax planning.

7th Annual Community Bankers Conference

Foundations for the Future: Lending Strategies for Success April 11-13, 2018 | Four Seasons Resort, Orlando, FL Join us for the 7th Annual Community Bankers Conference at the Four Seasons Resort Orlando at Walt Disney World Resort, April 11-13, 2018. This event, and location, is the perfect place to get away from your day-to-day responsibilities in order to think strategically about your bank.

Register using the code 7CBC100 for $100 off your registration fee.

> Learn more: marketintelligence.spglobal.com/CBC-ST

Copyright Š 2018 by S&P Global Market Intelligence. All rights reserved.

2009 Park Street • PO Box 1483 Columbia, SC 29202-1483

Save the Date!

S outh C arolina B ankerS a SSoCiation AnnuAl Convention & trAde Show June 10-13, 2018 t he C loiSter and t he l odge S ea i Sland , g eorgia Convention fees are $545 for members and associates ($425 for spouses/guests). Cloister room rates are $425 to $405 ++ per evening.

Exhibitor Booth Fees: Member=$1500, Preferred Vendor=$1375, Non-member=$2750.

The Tuesday evening dinner dance will be a black tie affair!