Palmetto Banker 2018-2

PALMETTO SOUTH CAROLINA BANKERS ASSOCIATION

Spring Issue 2018-2

Banker

South Carolina Bankers Annual Washington Trip APRIL 23-25, 2018

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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, South Atlantic Bank

S. Mark Munn, Bank of America

K. Reid Pollard, Enterprise Bank of SC

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, South Atlantic 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, Synovus

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, Synovus

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, Synovus

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

President’s Message

6

Washington, DC Trip 2018

9

ABA Update

10

Legislative Preview

12

De Novo Update

15

SBA Update

19

Student Lending

22

Education & Professional Development

24

South Carolina Bankers School

26

Young Bankers Division

32

Welcome New Members

37

Banking News

38

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 Snijders Administrative Assistant................... Bonnie E. Nelson

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President’s Message

We Can ALL MAKE A

Difference!

The last article written for our Palmetto Banker before going to print is the President’s Message. We do this so that I can comment on any breaking news or try to tie some of the following articles together. In this edition, I have an opportunity to do both.

As all of our members know and appreciate, the primary initative of the South Carolina Bankers Association is political advocacy for business in general and our industry in particular. We have greater impact and influence at our Statehouse and I am pleased to report we have had another successful legislative session.

In Washington, our influence and interaction with our Congressional Delegation is amplified by similar efforts of other state banking associations throughout the country. The alliance forged between all of the state associations and the American Bankers Association helps us deliver a clear and consistent message on important legislative issues.

In a later section in this quarter’s Palmetto Banker, we have a brief discussion about our annual Washington trip. As mentioned in that section, the primary mission of our visits with our delegation was to strongly encourage the passage of S.2155, the bipartisan financial regulatory reform bill passed by the Senate in March.

I’ll come back to this in a moment.

During the Washington trip, I was reminded on three separate occasions of the importance of all of us getting involved and staying involved on a consistent basis.

One of the key-note speakers at the Government Relations Summit was Mick Mulvaney, Acting Director of the CFPB. As Mick was finishing his comments, he thanked the entire audience for their involvement in legislative issues and he stressed its importance. He reflected on his time in Congress and said that with a very hectic schedule he would always find time to talk to

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

constituents from his district that came to see him and discuss their concerns and issues.

In a meeting with Congressman Clyburn and his banking Legislative Aid, we were reminded again about constituent involvement. Although the Congressman appreciated our conversation, we were told the heaviest weight on all issues is toward constituent contact. The constituent, whether a senior banking executive or an entry level team member, has a voice and a role in his decision making process.

The final reminder came from one of our bankers on the trip.

In a debriefing session following the visits, our member said that each time we visit, we seem to get a better audience and have a more substantive discussion. Each year we move the needle a little further. Consistent involvement is important.

As we go to press, there have been several statements from House Leadership that the House will pass S.2155 without amendment. There is also an understanding that other provisions on bank regulatory relief will be sent from the House to the Senate later, which gives us hope for even more favorable legislation in the future.

Let me try to bring these rambling thoughts together. We have been consistently lobbying for regulatory relief for many years.

We have met in person, placed phone calls, and written letters.

All of this has been effective, but we can do a better job. There are over 30,000 South Carolinians employed in the banking industry. Imagine how effective we can be by marshalling this army of bankers to contact their elected officials on issues that are important to our industry, our communities, and the livelihood of our workforce.

We can all make a difference.

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5

Cover Story

South Carolina Bankers ANNUAL WASHINGTON TRIP APRIL 23-25, 2018 Each year, South Carolina bankers travel to our nation’s capital during the South Carolina Bankers Association Annual Washington Trip. Several years ago we began taking this trip in conjunction with the ABA Government Relations Summit. This year, in addition to more than 35 South Carolina bankers, there were approximately 1,200 bankers from across the country gathering for this very important event.

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The event is always action packed, and this year was no exception.

During the three days in Washington on April 23-25, our bankers were able to meet with each member of the South Carolina congressional delegation and/or their legislative aids to discuss industry important issues. The primary issue we discussed, S.2155, offers the first opportunity for meaningful regulatory relief since the passage of Dodd-Frank. This Senate bill was passed with bi-partisan support and was sent to the House. Our mission was to thank our Senators for their support of this bill and to encourage our House members to support it without amendment.

We especially thanked Senator Scott for being a sponsor on the bill. “All of our bankers were very knowledgeable, engaged, and persuasive in their comments during our one-on-one meeting with the members of our delegation,” said Fred Green.

In addition to these important calls on Capitol Hill, everyone had time to de-brief and spend an enjoyable dinner Monday night at the Washington office of law firm Nelson Mullins Riley and Scarborough that was hosted by Nelson Mullins, Elliot Davis, and the Hovde Group. Tuesday’s dinner was hosted by the Federal Home Loan Bank of Atlanta. The group was also able to attend a luncheon with Representative Joe Wilson at the Capitol Hill Club, just one block from the U.S. Capitol.

Many veterans of this trip felt it was one of our best. We encourage all of our bankers to consider joining us next year on April 1-3, 2019.

“We all came away with a good feeling of support from all members.” SCBA CEO Fred Green said.

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7

Cover Story

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ABA U p d at e

NEW TOOLS TO TELL THE STORY

America’s

of

Banks

One of the reasons the banking industry is seeing an improved policy environment in Washington is because bankers have spent the last few years telling their stories.

They didn’t ask for regulatory relief because they were tired of red tape (even though they undoubtedly are). They asked for regulatory reform because rules were making it hard for their banks to make good loans to creditworthy customers and were diverting resources that could be better spent helping their communities thrive. Those stories – of how a perhaps well-intentioned but poorly executed provision in law was harming the people it was supposed to help – have made a difference.

ABA, too, has been telling bankers’ story.

We started our reputational campaign a couple years ago with a special website – aba.com/AmericasBanks – that offered data illustrating the role banks play in their communities and the economy. In April, we took our efforts up several notches with a reimagined site that really brings that data to life.

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

customer testimonials include praise for a bank’s mobile app, the support provided following a hurricane and the guidance that helped one couple buy their first home. As one customer put it when describing his raspberry farm’s decadeslong relationship with a local bank, “it’s super important to have a bank that understands the business, understands community, understands what we’re doing, our challenges and that Mother Nature plays a big role.”

Still more stories demonstrate banks’ commitment to local nonprofits and revitalizing a local neighborhood, and spotlight ways bank employees have gone above-and-beyond for their customers, including one who checked up on an elderly customer daily – including weekends and holidays – for more than 10 years.

Visit aba.com/AmericasBanks and you’ll find not only national statistics on how much banks have lent to small businesses, farms, homeowners and state and local governments, but also – for the first time -- an interactive map that allows you to see banks’ economic impact by state.

Data points include jobs, branch/office locations, mortgage, small business and small farm loans; customers and volunteer hours donated.

One must-see video on the site (under “Helping Communities”) is a special eightminute documentary ABA produced that demonstrates how three banks of very different sizes, all on one city block, collectively drive growth and renewal in downtown Denver. The focus is Denver – but it’s a story playing out in countless communities across America, providing a visual illustration of how bankers support the activities and growth of manufacturers, property developers, service businesses, nonprofits and others as those companies and organizations drive employment and opportunity in the city.

You’ll also find anecdotes, photos and videos most submitted by banks that show what their retail and business customers value most in them. Such

What you find on the America’s Banks site is just the beginning. We have more material we’ll be rotating in later, and we hope you’ll help us keep the content

fresh by sending similar videos, photos, customer testimonials or employee stories to AmericasBanks@aba.com.

We also ask that you help us amplify the good news by sharing the site far and wide. For help in doing this, please download our social media guide at aba. com/AmericasBanksGuide. By amplifying the story of America’s banks, you can help policymakers and the public better understand how banks deliver jobs, growth, safety and convenience.

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L e g i s l at i v e Preview

SANDIFER’S

Passion for Leadership

Continues in General Assembly

In 2009 his colleagues elected him as chairman of the Labor, Commerce and Industry Committee (LCI). The LCI committee wields considerable influence over business in South Carolina as it is assigned to handle legislative issues involving banking, insurance, public utilities, real estate, and other business and commerce. In fact, this session the committee has addressed many complex and controversial issues – insurance cybersecurity, credit union field of membership, subsidies for solar industry, and utility regulation. Utility issues proved to be the most difficult.

William E. “Bill” Sandifer, III

Elected in 1994 to represent House District 2 (Oconee County), William E. “Bill” Sandifer, III was part of the historic sweep that brought the first Republican majority to the House since the 19th century.

Rep. Sandifer quickly earned a reputation of bipartisanship and as an experienced, dedicated and passionate conservative who shapes public policy based on strong economic growth, high-quality education, efficient government and strong families.

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In the summer of 2017, SCANA announced it would not complete the construction of the V.C. Summer Nuclear Plant in Fairfield County.

Sandifer points out that this decision led to a dramatic fiscal impact on ratepayers – $10.2 million per day – and now, since SCANA has questioned its own viability, to difficult legislative debates and decisions on how to rectify the ratepayers’ problems as well as to more effectively regulate the utilities of South Carolina.

Sandifer says this last part is important; that even after addressing ratepayers’ concerns, his committee must still be sure that there is a system of “robust screening of Public Service Commission members as well as the Office of Regulatory Staff.” It is this heightened scrutiny he feels will lead to a healthier and more accountable utility industry.

In the wake of the SCANA controversy, Sandifer’s committee then had to deal with the issue of solar energy – particularly whether subsidies for the solar industry should be continued. He emphasizes that subsidized industries are a great concern to him as subsidies invariably force others (customers, shareholders, and other business competitors) to foot the costs of offering these services. He introduced legislation to end this practice and even though the subsidy legislation continues to move forward, he still feels strongly that the General Assembly should be careful when passing legislation that grants financial favors to one at the expense of another.

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Banking has been an important part of Sandifer’s career. For many years he served on the Seneca National Bank board and there he saw the impact of endless regulations and how they adversely affected how the bank could help its customers. He is a strong proponent of minimal regulations in order to provide strong financing for a community’s needs, while still maintaining a proper level of consumer protection regulation.

While he understands some of the need to pass new regulations after the financial crisis, he states that “Dodd-Frank made it very hard for community banks to operate” and that much of it needs to be rolled back.

This year he got the chance to voice his feelings on banking to members of SCBA’s Young Bankers Division. Sandifer hosted the group at the State House and led a substantive discussion on banking legislation and regulations as well as the utility issues at hand. He left impressed with the group’s “enthusiasm, knowledge and the desire to learn about the legislative process.”

Born in Aiken, South Carolina to Frances Harley Sandifer of Seneca and the late and former two term mayor of Seneca, William Edward Sandifer, Jr., he graduated from Seneca High School and then earned a degree from the Cincinnati College of Mortuary Science. Following graduation, he moved back to Seneca where he began his career as a mortician as the owner and operator of Seneca Mortuary. Rep. Sandifer is married to the former Sandra Prater of Townville and has four children and four grandchildren. Sandifer also served his country for 20 years in the South Carolina National Guard, retiring as a Major.

Even after these many years of serving and handling difficult, controversial and stressful issues, Chairman Sandifer remains fully committed to serving the people of District 2 and also leading in the House of Representatives.

“My passion for the job is greater than ever,” he emphasized. It is this passion he feels will help him lead his committee and the General Assembly through the important and difficult issues of tomorrow.

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De Novo U p d at e

By Neil Grayson and Ricky Davis, Nelson Mullins Riley & Scarborough LLP

Has the De Novo Dam

Broken?

Following nearly a decade of historically low numbers of de novo banks, bankers and investors – even regulators – throughout the country are once again excited by the opportunity presented by the formation of a new bank.

Prior to the Great Recession, it was not unusual for 100 to 150 de novo banks to open nationwide in any given year. This number declined greatly between 2007 and 2009 and virtually grinded to a halt in 2010, when the FDIC increased its enhanced supervisory period, during which a bank is prohibited from changing its business plan, from three years to seven years. This increased regulatory burden combined with the poor economic conditions made it harder for new banks to attract capital, and, as a result, only six de novo banks opened from 2010 to 2016. It was widely believed that the FDIC had implemented an unofficial moratorium on new banks.

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In 2016, the FDIC decreased the enhanced supervisory period to three years and signaled its increased willingness to consider de novo banks by holding seminars and publishing question-and-answer guidance to aid de novo groups in the drafting of their business plans. At this time, FDIC Chairman Martin J. Gruenberg stated, “De novo institutions fill important gaps in our local banking markets, providing credit and services to communities that may be overlooked by larger institutions.

The FDIC welcomes applications for deposit insurance.”

Five de novo banks opened in 2017, and in the first quarter of 2018 alone, three de novo banks, including Beacon Community Bank in Charleston, SC, have opened for business. Additionally, there are at least 20 publicly announced de novo bank groups nationwide in the formation process, three of which are in North Carolina. There are also many other groups – mostly comprised of bank

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management teams rather than potential directors/investors from a single market – privately considering the formation of a de novo bank.

All of this suggests that the de novo bank market is back. While it won’t look like the enormous de novo market in the late 1990s and early 2000s, there are certainly opportunities for new de novo banks to be formed.

The following are some observations of the developing new de novo bank market, drawn from our experience with two of the recently-opened de novo banks, two others that have been announced, and our current work with nearly a dozen other de novo bank groups in various regions of the country.

A detailed business plan and well-prepared regulatory application are essential.

Before the recession, it had become easy enough to form a new bank that many

successful de novo groups prepared their own regulatory applications without outside assistance. However, regulators have recently made it clear that a business plan with solid, detailed projections and a complete, thorough regulatory application are essential. As a result, it is more important than ever to engage an experienced bank consultant and legal counsel to assist with the application process, especially if the application will include novel issues or if the de novo bank group plans to have anything other than the traditional community bank model.

Regulators are welcoming de novo bank applications and are helpful in the application process. We are finding both state and federal regulators to be open, responsive, and encouraging during the formation process. This is not to suggest that the regulatory process in forming a new bank is easy, but the unofficial moratorium is definitely over. Most of the de novos are filing as state non-member banks without a holding company, but the Federal Reserve Banks are actively reaching out to encourage de novos to consider a Fed membership and the OCC has also spoken publicly about welcoming new banks.

Less capital is needed for regulatory approval than popular opinion suggests.

uncommon for de novo bank groups to raise their capital on their own locally without much trouble. New banks will still rely on their local markets for the majority of their capital, but it is much harder work than it used to be. Don’t expect institutional investors to invest in a traditional de novo bank. On the other hand, we have seen investment bankers successfully raise capital from their family office and high-net-worth clients.

Recruiting the management team and organizers/directors takes time and lots of effort. For

A few other observations: •

The at-risk capital required from the organizers of a de novo bank will typically be between $1.25 million and $2 million, depending largely on the timing of hiring the management team and purchasing or leasing the real estate for the bank’s office.

• Regulators are highly focused on the compensation of executive officers, including in particular any bonus incentives.

• Expect something unexpected to occur. Every de novo process hits a snag.

many de novo groups, this step is taking longer than expected. Individuals who caused a loss to the Deposit Insurance Fund are still banned. In addition, the financial crises, various scandals and data breaches have resulted in a lowered public opinion of banks in general and correspondingly the perceived prestige of serving on a local bank board. Sadly, it also remains difficult in some instances to put together a diverse board.

Expect at least nine to 12 months to open the bank.

However, much of this time will be spent finding the management team and the organizers. If the application is complete and well prepared, it could take as little as four to five months to receive regulatory approval.

Bankers and attorneys continue to express the belief that excessive amounts of capital are required to form a de novo bank, but this has not been the case compared to the de novo banks formed shortly before the recession. Beacon Community Bank, for example, was only required to raise $22 million to open, and Infinity Bank in the Greater Los Angeles market only needed $30 million to open. This suggests that a de novo bank with a traditional community bank model in an urban market can open with between $20 million and $25 million, although de novo banks opening with more than one office, with less traditional business models, or in larger metropolitan markets will be required to raise more capital.

Raising the capital is achievable, but hard work.

Before the recession, it was not S P R I N G 2 0 1 8 • PALMETTO BANKER

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SBA

U p d at e

&

COMMUNITY BANKS

SBA Lending

By: Peter Shand, President, Business Development Corporation

AN APPEALING OPPORTUNITY The last ten years have been filled with many challenges for the banking industry in South Carolina and the Southeast, but also with many opportunities. The survivors of the banking crisis found themselves with little loan demand, weakened borrowers, and very low interest rates when the lending environment was the riskiest in a generation. As banks began to search for ways to make more commercial loans while lowering their risk, many naturally gravitated toward offering Small Business Administration – SBA 7(a) – guaranteed loans.

The concept of SBA lending is certainly appealing; a lender would just need to obtain an SBA license, make sure that all program guidelines are met, and obtain the insurance afforded by a 75% guarantee from SBA and the US Government. On the surface this sounds like a simple way to grow the loan portfolio and bank earnings, and to provide financing for borrowers that otherwise would not qualify. In reality, there are a number of pitfalls and risks for banks to consider when taking on this line of business.

WHAT ARE THE RISKS? Compliance As lenders, we are frequently asked to

make loans with exceptions to our loan policy. Consideration is given to the strengths of the credit and a determination is made as to whether it makes sense to approve the loan with an exception. In SBA lending, we do not have such exception approval authority as lenders. If a loan does not comply with SBA’s most – current SOP – Standard Operating Procedures – the lender risks having its insurance claim denied or reduced (repaired). This is a hot topic in the lending industry, as numerous insured guarantees have been denied by SBA for improper underwriting, closing, servicing, or collection compliance. Even more concerning is the realization that some insured loan loss payments may be demanded to be sent back to SBA up to six years after the lender receives payment from SBA. Such insured loan claims are regularly audited by the SBA Office of Inspector General – OIG –, and any payments deemed in error after review by OIG can be required to be returned. In fairness to the lender, it is not an easy task to remember each and every program requirement, as the current Program SOP is 410 pages long and the current Servicing SOP is 162 pages long.

However, as the law will tell you, ignorance is no excuse, and lenders are expected to comply with all program provisions if coverage is to be maintained on guaranteed loans.

As part of the compliance consideration, it is important to understand that SBA

lenders are subject to an annual audit by SBA, at the lender’s expense and typically lasting one week. The bank’s appetite for yet another on-site examination by regulators must be evaluated as part of the decision making process.

Fraud It surprises many to learn that fraud is a big issue in SBA lending, both lender fraud and fraud committed by the borrower. Most lenders believe that the heavy amount of underwriting and borrower due diligence would prevent borrower fraud, but we have learned this is not true. We know of cases in which falsified financial documents were produced by the borrower and filed with the IRS, documents which falsely indicated they were qualified for SBA financing when they were in fact not qualified. The fraud is typically uncovered after the loan goes south and the lender begins to realize the facts used to approve the loan were not accurate. It is unclear for now how SBA will handle these cases, whether the guaranty will be honored or whether the burden of loss will be borne by the lender.

Merger The day may come when a bank decides that its best option is to be acquired by a larger institution. The acquiring bank will almost certainly perform due diligence to determine the quality of the loan portfolio, including the SBA portfolio.

More often we are seeing that experts

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SBA

U p d at e

are being brought in to assess the SBA portfolio, and will focus on such areas as compliance with SBA program requirements, documentation, and servicing quality, so that the risk of guaranty denial can be estimated. An estimate of moderate or high risk in this portfolio would likely affect the price being paid for the institution.

WHAT ARE THE REWARDS? A solid risk/reward assessment must be completed before a decision can be made as the whether to become an SBA lender.

Before we examine the options for SBA lending models, let’s first look at the reasons that a lender might consider taking on this line of business.

Premium Income There is an active secondary investor market for the buying and selling of SBA guaranteed loans. The loans that we as lenders originate can be sold to these investors, with attractive premiums paid for loans that meet the investor’s term and rate criteria such as floating rate loans with 10, 20, or 25 year maturities. Only the guaranteed portion is sold in the secondary market, leaving the unguaranteed portion, typically 25% of the loan, as risk exposure to the originating lender. This unguaranteed exposure must be underwritten for what it is: an unguaranteed, very likely undercollateralized, loan to a borrower that does not qualify for bank financing without a credit enhancement. Whether or not this risk is mitigated by the premium income is a question only the lender can answer.

Interest Income Many lenders elect to keep the full SBA loan on their books, both the guaranteed and unguaranteed portions. In these cases the lender stands to earn the interest income generated by the loan, at a rate that is likely to reflect the risk profile of the borrower who is unable to qualify for conventional bank financing. The paradox 16

is that many of these loans are at a floating interest rate tied to Prime rate, since SBA allows interest rates up to Prime+2.75%, and as rates move up the borrower is weakened further as its interest expense burden increases.

Banking Relationship Many times the best reason for a bank to make an SBA loan is to have the opportunity to land the borrower’s full banking relationship. Small businesses and business owners are excellent candidates for a community bank’s full range of banking product offerings, which can be more profitable to the bank than the loan itself. While we want to be careful not to condition the approval of credit on the acceptance of other bank products and services, it is usually obvious to the borrower that there is great value in establishing a full banking relationship with its lender.

WHAT ARE THE OPTIONS? There are three primary ways for a community bank to enter the SBA lending space: in-house lending, contracting with a loan service provider, and developing an outsource service relationship with an SBA lending partner. The amount of risk a community bank wishes to take on will determine its best choice of these three options.

In-House SBA has expressed an interest in expanding the number of distribution channels for its 7(a) program, especially in underserved areas. One way for this to be accomplished is by having more community banks obtain an SBA lending license and to begin offering SBA guaranteed loans.

The ramifications of becoming an in-house direct lender must be thoughtfully considered. To make this a profitable line of business, there must be a substantial investment made in technology and staff with the expertise

S P R I N G 2 0 1 8 • PALMETTO BANKER

needed to handle the intricacies of an SBA loan. These positions would include experienced loan officers/BDO’s, underwriters, credit approvers, and loan closers, each with the expertise needed to ensure the bank is in compliance with all program requirements. Technology investment is mainly through software purchases, needed to comply with the monthly Form 1502 portfolio reporting requirements of SBA. Many community banks have determined that their SBA loan volume would not be at a sufficient level to justify this investment. To venture into SBA lending with existing staff that does not have sufficient expertise may become a very expensive proposition.

Loan Service Provider One option to outsource a portion of the responsibility for SBA loans is to contract with a loan service provider, or LSP. Under this lending model, an LSP will perform the necessary functions for approval, closing, and servicing of an SBA loan, and is compensated by fees paid by the lender. In exchange, the lender owns the loan, and can sell it on the secondary market or book it in its portfolio. This option has appeal to some community banks without the volume needed to justify bringing SBA lending in-house.

There are a number of considerations when evaluating a relationship with an LSP. First is the lender’s desire to outsource a lending function, since this model places the risk of credit loss on the bank and not on the LSP. Many banks have determined this to be an uncomfortable position, as third parties have not historically been responsible for any part of the bank’s credit function.

A second consideration is the bank’s ability to comply with the SBA’s updated requirements (in 2018) for managing an LSP relationship. SBA requires lenders to exercise due diligence and appropriate level of oversight in its relationships with LSP’s, as well as monitoring the performance of all loans in which LSP’s provide assistance. The SBA also reminds community banks that they must comply with the requirements of their primary

regulator regarding third party vendors such as LSP’s. A third consideration is the question of how well you know the vendor/agent you are doing business with.

The majority of LSP’s are headquartered outside of the state of South Carolina, and have been involved in SBA LSP relationships for a relatively short period of time. Extensive due diligence on a potential LSP must be undertaken, so that a lender can be confident that all of SBA requirements have been met and the bank will not be put in a position in which its loan guaranty is denied.

Outsource Relationship The third option available to community banks is also one that has the longest history: outsourcing SBA loan opportunities to a third-party lender with which the bank has a fee-sharing agreement. Under this model, the community bank will develop a relationship in which SBA loans are

referred to the third party for processing; in return, the bank would receive a referral fee or would be allowed to purchase the guaranteed portion of the SBA loan once it is closed and fullydrawn. The bank faces no credit risk in this scenario, and has no compliance obligation with SBA. More importantly, the bank is able to establish a full banking relationship with the borrower, even though it was not able to approve the loan as an in-house bank loan. Additionally, once the borrower has established a satisfactory track record it will be natural for the bank to be able to finance future its needs without the need for an SBA guaranty. Many community banks in our state have opted for this model as the most sustainable long-term option with the least amount of risk to the bank.

BDC is the only outsource option in the state, and was established by the state of South Carolina for this purpose in 1958.

FINAL THOUGHTS The allure of large premium income and increased loan volume is appealing to many banks in South Carolina. This potential for income should be carefully weighed against the risks being incurred. At the end of the day, the decision of how to enter the SBA lending arena has a lasting impact on the community bank’s operations and ultimately its success.

With interest rates rising and margins increasing recently, many banks may opt to redeploy their lenders back into conventional lending and utilize outside partners to provide the needed SBA loan programs.

Save the Date

2018 Young Bankers Division Scholarship Golf Tournament Monday, October 1 • Columbia Country Club

South Carolina

Inspire their future.

With rates as low as 3.74%* we can help your clients with their student loan needs. We’ve been helping students pay for college for over 40 years. Their success is our end goal.

Partner with us. Learn more at scstudentloan.org. *APR rates range from 3.77%-7.10%. Rate shown includes a .25% reduction for automatic bank draft. Some restrictions apply.

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Student Lending

STUDENT LOANS

Good Bad? OR

There is no doubt that the student loan debt had increased exponentially over the past decade. According to a recent report in the Wall Street Journal, more than 44 million people in the United States have student loans averaging about $40,000 per student borrower. And, this amount continues to increase. Student loans fulfill a need for many and there is a place for them in our society.

Are student loans good or bad? Like any other loan they are good when used responsibly and bad when excessively borrowed. They are good when they help a student achieve dreams of a college degree, a fulfilled life, with meaningful work, and a better opportunity to repay the debt. The return on the investment of a college degree is also good. A college graduate earns on average $20,00025,000 over the person with only a high school diploma who makes on average approximately $35,000 a year. Student loans are bad when the funds do not help achieve the expected goal (graduation) or the payments on the debt place an unreasonable burden on the borrower.

As with any loan it is always best to borrow only as a last resort and to borrow as little as possible. There are many avenues to pay for a college education that can reduce or eliminate the need to borrow and all should be evaluated before deciding the course of action. Loans are

only one of many answers to achieving college dreams. Consider the following as you embark upon the journey.

Sara Fisher South Carolina Student Loan

interests a student, check with college or university about a bridge program specific to that school.

MAJOR

COLLEGE CHOICE

Choosing a major can be confusing and sometimes overwhelming. When deciding on a major, will the degree chosen enable you to find a job which will in turn provide a return on your investment (loans)? When entering the job force, will your compensation be sufficient to repay the debt? Too often, students borrow more than is needed creating a financial hardship after graduation. Or, the major chosen has limited job opportunities.

BRIDGE PROGRAMS These programs allow a student to begin their education at one of the state’s 16 technical colleges where the costs are substantially lower. After one to two years the student is guaranteed entry into their program of study at a specific college or University if certain credits and grades are earned. All sixteen technical colleges in South Carolina offer bridge programs to the University of South Carolina, Lander University, and Coastal Carolina University. Other technical colleges have unique bridge programs with specific SC Colleges and Universities. If this

In-state or out-of-state? What college will serve a student best? The College Scorecard (www.collegescorecard.ed.gov) is a resource to help guide a student to an appropriate decision. This tool is designed to assist students and their families by giving data on college costs, graduation rates, typical debt levels, and average salary after graduation. Typically, in-state schools will be more cost effective than out-of-state schools but not always.

In-state schools have state supported scholarships for those who qualify such as the Palmetto Fellows, LIFE, Hope, need based and Lottery Tuition Assistance (www.che.sc.gov).

SCHOLARSHIPS There are a plethora of scholarships available to students to attend college.

Some are needs based, some are merit based, and some are specific to the type of student or the major, such as a firstgeneration student or an education major who will teach in an underserved area of South Carolina. Scholarships are offered by colleges, corporations, individuals,

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Student Lending

the federal government and our state, as mentioned above. Searching for scholarships takes perseverance. Don’t just search for full scholarships. Small ones add up!

GRANTS Money that doesn’t have to be repaid is available based on both need and area of study. Provided mostly by the federal government with the Free Application for Federal Student Aid (FAFSA) being the application. Information and details can be found at www.studentaid.ed.gov.

advantages. Some of these advantages include possible deferment periods, forbearances, income-based repayment plans and the convenience of consolidating all federal loans into one loan. These differences vary and the amount the student can borrow is limited, so compare apples to apples. To receive a federal student loan, you must first complete the Free Application for Federal Student Aid (FAFSA).

LOANS

If additional funds are needed the parent can borrow through the Federal Direct PLUS Loan program or through a private educational loan. Again there are differences with the private sources often having much more advantageous interest rates and lower fees.

Finally, once a student has exhausted all other means of tuition assistance, loans may be needed to fill the gap. It is important first to look at federal loans, in the student’s name, as they offer several

So, are student loans good or bad?

They are good if a student borrows only what is absolutely necessary and finishes school. To borrow 100% of living expenses, tuition, and books, is often

onerous once out-of-school and repayment begins. Save as much as possible before attending college in a savings or a College 529 plan and manage your money while in school.

Planning is the key to insuring that any student loans that are needed will result in a “good” outcome.

At South Carolina Student Loan, we have long been in the business of providing counseling and loan assistance to South Carolina residents and those attending SC colleges or universities. We have a capable staff, ready to answer questions, and assist a student or parent of a student who is about to embark on a college journey. We have been in this business for 44 years and have served more than 450,000 students. It is our mission to provide programs of financial assistance to eligible students to pursue and obtain their educational goals.

Legal advice you can take to the bank.

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Jordan Crapps Columbia

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Gallivan White Boyd has an experienced team to assist your financial institution in complex matters including commercial foreclosures, contract disputes, construction lending, commercial collections, financial advisor complaints, workouts and lender liability matters.

Our attorneys have business degrees and business experience that gives them an understanding of banking and banking litigation.

How can we put our knowledge and experience to work for you?

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S P R I N G 2 0 1 8 • PALMETTO BANKER

Duffie Powers Greenville

Jim Dedman Charlotte

Charleston | Charlotte | Columbia | Greenville GWBlawfirm.com T David Rheney, Managing Partner | 864-271-9580

New look.

New name.

Same commitment.

Community Investment Corporation of the Carolinas is now Centrant Community Capital.

For more than a quarter century, we have operated as a partnership of financial institutions, leveraging the resources of the banking industry to finance the creation and preservation of affordable housing. Since 1990, when we served just one state, our legacy and reach as a mission driven lender has expanded steadily. Today, we are a regional funding resource, providing financing for properties across the Southeast.

It’s time for our name to match our vision.

www.centrant.org S P R I N G 2 0 1 8 • PALMETTO BANKER

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E ducation and P rofessional D evelopment

2018 Bank Directors & Managers WORKSHOP

By E. Anne Gillespie, Senior Vice President, SCBA

More than 50 bank directors, CEOs, and senior management attended the 2018 SCBA Bank Directors & Managers Workshop held on Wednesday, March 7, 2018 at the Inn @ USC Wyndham Garden in Columbia, South Carolina.

The workshop reflected current market conditions and regulatory concerns.

Never have the demands on bank boards been greater. The current regulatory and economic environments have conspired to create potential hazards for directors.

This year’s program focused on current issues facing boards. One of these issues arises from the continued consolidation of the industry. Boards are faced with the decision to sell or remain independent.

We explored the factors that the Board must consider from either side of the transaction. As the average age of a CEO is over 60 now, management succession continues to be an issue, with Boards having to plan for retirement and the unexpected need to replace senior officers and retiring Board members. As always, regulators are focused on credit quality and the Board has a definite role in assuring that credit quality is maintained.

Finally, strategic planning is a major responsibility of the Board, while the planning process is executed in conjunction with management; the Board is responsible for setting the direction of the bank. Specific topics covered were: • CEO performance evaluations • Board Loan Committees • M&A responsibilities • Strategic planning 22

The bank directors training update was presented by David L. Kemp. Mr. Kemp is president of Bankers Management, Inc. (BMI), formerly The Management Group. He has more than 30 years of management experience in consulting, training, credit administration, and new business development. His areas of expertise include commercial lending, consumer lending, portfolio management, real estate lending, workouts, and director responsibilities. Prior to forming BMI, Kemp served as vice president, director of credit services for Cannon Lending

S P R I N G 2 0 1 8 • PALMETTO BANKER

Schools. Before that, Kemp was vice president corporate finance with Citicorp North America where he was responsible for marketing investment and commercial banking services throughout the Southeast. Prior to joining Citicorp, Kemp held branch manager and commercial lender positions with First National Bank of Atlanta and with Citizens and Southern National Bank. He is a visiting professor and guest lecturer to many colleges and universities, as well as an instructor for education programs for a number of bankers associations.

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Bankers School

Bankers School

IMPORTANT PART OF A BANKER’S CAREER we can improve every year. This year we added CEO’s and their senior management teams from all of our banks for their input. Some of the takeaways from the survey include:

Scott M. Frierson, Chairman South Carolina Bankers School Executive Vice President, Upstate Market Leader, CresCom Bank

There are almost 3,000 bankers that are alumni of the South Carolina Bankers School during its 57-year history.

This year we expect over 160 first, second, and third-year students to participate in the 2018 SCBA Bankers School which will be held July 8-13 at Lander University in Greenwood.

There are more than 30 instructors, all professionals with expert subject matter experience. Instructors include senior level banking officers, university professors, and business professionals from other industries.

I am honored to be this year’s Chairman of the Board of the South Carolina Bankers School and am very proud of our board, our instructors, and our students for making this one of the premier banking schools in the nation.

Each year at the conclusion of the school, we evaluate the curriculum, the instructors, the facilities, and the “student experience.” Each year we make adjustments based on this feedback so 24

“We have a large number of SCBS graduates in our bank. More than twenty employees, out of a total staff of ninetyseven have attended the school. We continue to receive positive feedback on the overall learning experience, BankSim model and networking that it provides to our graduates for future interaction. The school has become a great reward and motivational tool that we use for ‘up and coming’ bankers in our organization.”

“Graduates feel honored to be selected to attend and are very thankful for the bank’s additional investment in their advancement. Our bank has started a nomination process in which candidates across different areas and departments of our bank are nominated to attend.

Our Human Resources Department/ Training Team works to determine the appropriate amount of students to enroll on an annual basis.”

“We get very positive feedback on the curriculum and peer learning opportunities. We see results in the level of engagement our associates bring back to the job. We send ‘up and comers’ and I believe our investment in them underscores the bank’s commitment to cultivate and retain talented people.”

The goal of the school is to educate bankers, regardless of their current role, on how banks are run successfully. We feel

S P R I N G 2 0 1 8 • PALMETTO BANKER

it gives every student an opportunity to better understand the bigger picture and to have a feel for how they can contribute to the success. In addition to a more traditional classroom curriculum for the first two years, the third year is devoted to a bank simulation program.

The BankExec program requires students to work as a team, to make decisions on running a bank, and to explain those decisions in delivering an annual report at the end of the session.

Of course, another intangible benefit is the relationships created by interacting with other bankers throughout the state.

Over the three-year program, there are many informal peer groups created that last years, if not decades.

I hope every bank will consider sending bankers who you think would benefit from a greater understanding of how your institution operates to this year’s school.

This year’s graduation ceremony is scheduled for Thursday, July 12. We hope many of you can attend, especially if students from your bank are graduating from the school.

For more information on the SC Bankers School, scan or contact Carolyn L. Bradley, carolynbradley@scbanker.org.

BANKING FOR JUSTICE

Thank you so much to our Prime Partner* First National Bank of South Carolina for making justice a priority in South Carolina.

We are also grateful to our Benchmark Banks** Bank of the Ozarks Arthur State Bank Bank of Travelers Rest Bank of Clarendon Bank of Greeleyville SunTrust Bank

Through your support victims of domestic violence, veterans, homeless families and human trafficking victims are getting the help they desperately need.

JOIN THESE BANKS WHO BELIEVE IN JUSTICE FOR ALL BY BECOMING A PRIME PARTNER OR BENCHMARK BANK TODAY! *PRIME PARTNER: Prime Partners pay interest on IOLTA accounts based on an index rate equal to 75% of the Federal Funds Target Rate or .75%, whichever is higher. ** BENCHMARK BANK: Prime Partners pay interest on IOLTA accounts based on an index rate equal to 65% of the Federal Funds Target Rate or .65%, whichever is higher.

PO Box 608, Columbia, SC 29202 | scbarfoundation.org | 803.765.0517 | Follow us @scbarfoundation

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Young Bankers Division

Palmetto Scholarships

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. Hundreds of thousands of dollars have been awarded over the years to deserving students through money raised by the Young Bankers Division Scholarship Golf Tournament, the fundraising efforts of students of the South Carolina Bankers School and a significant transfer of funds into our foundation. To reinforce our commitment to education and assist students with the ever-increasing cost of higher education, the South Carolina Bankers Association will continue our scholarship giving with the SCBA Palmetto Scholarship. A key component of the program is the emphasis on

offering scholarships to the children of employees of SCBA-member banks who are college students or to those students who are part-time employees of a SCBA-member bank.

We understand that many students today often find themselves burdened by significant debt upon graduation.

By offering scholarships to children of member bank employees, we seek 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.

Additionally, the SCBA Board of Directors decided to honor the memory of two

members of the South Carolina banking family whose lives were tragically taken during a bank robbery in August of last year. We have established two $2,500 scholarships named after Katie Skeen and Donna Major of CresCom Bank.

The scholarship committee selected two individuals from the pool of applicants who received the Katie Skeen Scholarship and the Donna Major scholarship respectively.

We are pleased to announce this year’s winners and will celebrate their accomplishments at a reception on Tuesday, May 22 at the Palmetto Club in Columbia.

Congratulations to the following KATIE SKEEN SCHOLARSHIP Kenneth Turrentine II, Horry Georgetown Technical College, son of Chardetta Turrentine, CresCom Bank

DONNA MAJOR SCHOLARSHIP Kaitlyn Coleman, North Greenville University, daughter of Angela Coleman, CresCom Bank

PALMETTO SCHOLARSHIP RECIPIENTS Will Monts, Clemson University, son of Michelle Pennell, Atlantic Community Bank Emma Coen, Clemson University, daughter of Elaine Coen, BB&T Scott and Stringfellow Caroline Black, Clemson University, daughter of Ben Black, Bank of America Brittney Desmond, University of South Carolina, daughter of Jacqui Desmond, Bank of America Chandler Keith, Newberry College, son of Beth Keith, Bank of America Ariana Mount, University of South Carolina, daughter of Douglas Mount, Bank of America Jennifer Quindlen, University of South Carolina, daughter of Darlene Quindlen, Bank of America Taylor Ramsue, College of Charleston, daughter of LaTasha Gandy, Bank of America Leanne Schutz, Coastal Carolina University, daughter of Dawn Schutz, Bank of America Sam Steele, Clemson University, daughter of Terry Steele, Bank of America Lauren Lucas, University of South Carolina, daughter of Desiree Lucas, Bank of Clarendon TaylorAnn Rainey, University of South Carolina Upstate, daughter of Stephanie Rainey, Bank of Travelers Rest Katherine Thomas, Clemson University, daughter of Kyle Thomas, Blue Ridge Bank

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Congratulations to the following PALMETTO SCHOLARSHIP RECIPIENTS (CONTINUED) Devan Trout, North Greenville University, daughter of Dennis Trout, CBL State Savings Bank Ashley Gibson, Winthrop University, daughter of Carol Gibson, Community First Bank Hannah Walter, University of South Carolina, daughter of Matthew Walter, Countybank Will Young, College of Charleston, son of Lynn Turner, Countybank Jackson Boyd, The Citadel, son of Jim Boyd, CresCom Bank Nate Foster, Clemson University, son of Joel Foster, CresCom Bank Hunter Paramore, University of South Carolina – Beaufort, daughter of Charles Paramore, Farmers and Merchants Bank of SC Brant Shuler, Clemson University, son of Arthur Shuler, Farmers and Merchants Bank of SC Jacey Sohm, Wofford College, daughter of Howie Sohm, Farmers and Merchants Bank of SC Michelle Murray, Limestone College, daughter of Pamela Rhoads, First Reliance Bank Victoria Cannon, Presbyterian College, daughter of Lesley Cannon, GrandSouth Bank Carl Strickland, Clemson University, son of Mike Strickland, GrandSouth Bank Beale Wood, Clemson University, son of John Wood, GrandSouth Bank Ashley Cooper, Winthrop University, daughter of John Cooper, Greenwood Capital Associates, LLC Brooke Ellison, Winthrop University, daughter of William Ellison, Merrill Lynch Tessa Dunaway, North Greenville University, daughter of Susan Barkley, Pickens Savings and Loan Peyton Sutley, Clemson University, daughter of Shannon Sutley, Sandhills Bank Stephen Humphreys, University of South Carolina, son of Steve Humphreys, South Atlantic Bank Will Pickens, The Citadel, son of Ken Pickens, South Atlantic Bank Chelsea Alford, Furman University, daughter of Elizabeth Carriere, South State Bank Abbie Kline, College of Charleston, daughter of Katie Moore, South State Bank Chelsea McKelvey, Furman University, daughter of Edward McKelvey, South State Bank Anjali Patel, University of South Carolina, daughter of Utpala Patel, South State Bank Riley Pharr, Clemson University, son of Leslie Francis, South State Bank Molly Phillips, Clemson University, son of Amanda Phillips, South State Bank Tyler, Pitre, University of South Carolina, son of Darlene Pitre, South State Bank James Rode, Winthrop University, son of Kathryn Rode, South State Bank Brittany Shelley, Coastal Carolina University, daughter of Rebecca Shelley, South State Bank Rachel Spitzmiller, College of Charleston, daughter of Mike Spitzmiller, South State Bank Emily Washburn, Wofford College, daughter of Kenneth Washburn, South State Bank Marshall Westbrook, Wofford College, son of Andy Westbrook, South State Bank Julia Derrick, University of South Carolina, daughter of Bob Derrick, Synovus Addison Blome, Coastal Carolina University, daughter of Geoff Blome, TD Bank, N.A. Chris Brown, Clemson University, son of Jeff Brown, TD Bank, N.A. Ashlyn Huffman, Bob Jones University, part time employee, TD Bank, N.A. Benjamin Jenkins, University of South Carolina, son of Benjamin R. Jenkins, III, TD Bank, N.A. Taylor More, University of South Carolina Upstate, part time employee, TD Bank, N.A. Quin-Tasia Utsey, University of South Carolina – Aiken, daughter of Shawnette Lincoln, The Citizens Bank Caroline Sweatt, Southern Wesleyan University, daughter of Roger Sweatt, The Conway National Bank

TO LEARN MORE, VISIT OUR WEBSITE

Victoria Baker, Columbia International University, daughter of Kristina Baker, United Community Bank Caroline Currey, Clemson University, daughter of John Currey, United Community Bank Banks Lucas, Clemson University, daughter of Christie Manning, United Community Bank Shelly McComb, daughter of Rory McComb, United Community Bank Will Holstein, Clemson University, son of Elizabeth Holstein, Wells Fargo Forrest Redden, Clemson University, son of Rick Redden, Wells Fargo

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Young Bankers Division

2018 Young Bankers Division RECAP

educate tomorrow’s banking and business leaders, promote leadership development, enhance career development and create networking opportunities among the emerging leaders in the banking industry.

Jennifer T. Jones Chairman, Young Bankers Division President and CEO, CBL State Savings Bank

It has been a great privilege and honor to serve as the Young Bankers Division Chairman for the 2017-2018 year and an exciting time to be a young banker. As my term comes to an end, I would like to highlight a few of our accomplishments.

As most of you know, education remains one of our key focal points. Whether our members are in classrooms teaching financial literacy, helping award scholarships to the children of employees of member banks or attending SCBAsponsored career-development and networking events, education remains the hallmark of the Young Bankers Division.

The acquisition and dissemination of knowledge is vital to our efforts, our industry and the future of South Carolina.

Once again, the 2018 Young Bankers Division Annual Conference proved a rousing success. On March 2-4, close to 200 bankers, associates, spouses and guests attended the event held at The Westin in Savannah, GA. The Young Bankers experienced Savannah for the first time, where all enjoyed the history, beauty and charm of the beloved coastal city. The Division gathers annually to empower and 28

Attendees had the opportunity to hear about a wide range of topics including leadership, economic development, work-life balance and legislative and regulatory issues from top-notch speakers such as William R. “Will” Johnson, Shareholder, Haynsworth Sinkler Boyd, P.A., Greyson E. Tuck, Attorney and Consultant, Gerrish Smith Tuck and Sharon B. Cook, First Vice President/Chief Marketing Officer, Federal Home Loan Bank of Atlanta. The regulatory panel featured 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 which was moderated by John T. Moore, Nelson Mullins Riley & Scarborough, LLP and General Counsel to the SCBA. Participants were so engaged during the panel an additional forty-five minutes was allotted for questions and answers.

Allyson Powell, WYFF, gave an emotional and inspirational testimony during Saturday’s prayer breakfast.

The Young Bankers Division Annual Conference is a fantastic opportunity to make new friends, establish, cultivate and maintain client relationships and learn about the critical issues facing financial institutions today. One of the most important initiatives of the SCBA is to facilitate peer-to-peer interaction for our member banks and business-to-business

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interaction for our banks and associate members and every business session or activity throughout the weekend created an opportunity for just that. Michael Boozer, president of associate member Integrated Financial Solutions, said he sees the conference as an investment in the future of his company. “All vendors want access to CEOs, presidents and senior management. The reason that I have some of the access that I enjoy today is due to the fact that I met the people currently in those positions back when they were active in Young Bankers,” he said. “If a bank decides to send an employee to the conference, and invest in that person, they obviously see that person as a young bright member of their staff. They expect that person to take on a leadership role in their organization. It is much better to develop a relationship with that person before they are being pulled in a million different directions.”

Charles K. “Chase” Talbert, The Bank of South Carolina, was elected to serve as Chairman of the Young Bankers Division Board for the 2018-2019 SCBA year and he is excited to announce the 2019 Conference will take place March 8-10 at The Omni Grove Park Inn, Asheville, NC. The SCBA’s main initiative is government relations which is why it makes the most sense for the Young Bankers to get involved in the Association’s grassroots efforts early in one’s career. The SCBA engages in state, federal and grassroots lobbying to promote favorable legislation for our members and works closely with the American Bankers Association and with the Alliance of State Bankers Associations on federal issues and have frequent dialogue with our state’s Congressional delegation. The young

bankers are the future of this industry and need to be active and involved in all that goes on. On February 22nd, over twenty Young Bankers, representing fourteen member banks, visited the South Carolina State House to advocate for the banking industry. This event will continue to help build relationships with our state lawmakers, provide an avenue to learn the workings of the legislative process, and gives young bankers the opportunity to visit our state Capitol in Columbia.

The group met with Senator Ronnie Cromer, chairman of the Senate Banking committee, Senator Thomas Alexander, chairman of the Senate Labor, Commerce and Industry committee, Senator Shane Massey, Senate Majority Leader and Representative Bill Sandifer, chairman of the House Labor, Commerce and Industry committee. The group was

also recognized in the balcony by both the House and the Senate. Margi Fleming, Vice President, The Citizens Bank, said, “this visit gave us a great opportunity to learn about the political process, meet key members of the House and Senate, and to see how we can get involved. It is critical for bankers to be involved in the process, not only because it affects our industry, but it directly impacts our customers who turn to us for financial direction and advice.”

Banking Careers 101 is designed to recruit students who have an interest in banking and to learn more about the banking industry as a whole. Our goal is to tell our story and to recruit and attract bright, young talent to become part of this rewarding industry as their career. This year, close to 160 students representing

23 colleges and universities from across the state attended Banking Careers 101.

This event is not only beneficial for the students, but it can also be very beneficial for the banks. Rhonda Midgette, Professional in Human Resources and Vice President at TD Bank believes so!

Two weeks after this year’s event, Midgette says “we have at least ten students of interest and five in our direct pipeline at this point. This is a continuation of my practice to make the most of the opportunity to connect with bright young minds that truly represent the future of banking not just in SC but nationwide.

The event is always well organized and the students are better prepared to engage each year. My previous hires have all worked out well. I am looking forward to additional placements in the future.”

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Young Bankers Division

This past fall we had a very successful golf tournament which raised a record number of funds which are dedicated to the Palmetto Scholarship. Hundreds of thousands of dollars have been awarded over the years to deserving students through money raised by the golf tournament, the fundraising efforts of students of the South Carolina Bankers School and a significant transfer of funds into our Education Foundation. The SCBA understands that many students today often find themselves burdened by significant debt upon graduation. By offering scholarships to children of bank employees, 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. Additionally, the SCBA Board of Directors is honoring

30

the memory of two members of the South Carolina banking family whose lives were tragically taken during a bank robbery this past year. We have established two $2,500 scholarships named after Katie Skeen and Donna Major of CresCom Bank. The scholarship committee will select two individuals from the pool of applicants who will receive the Katie Skeen Scholarship and the Donna Major scholarship. All recipients will be named and awarded at a reception this May. Just like the Annual Conference, another important part of the Young Bankers Division is the networking events that we hold with other young professional groups, including young lawyers and young accountants. These typically take place in different areas of the state after hours with a speaker of common interest.

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Among the benefits of attending these events is the opportunity to make contacts with individuals who can provide sales and referral opportunities, and with whom bankers can turn to when they have clients who need other professional services.

For more than 60 years we’ve been an essential part of the SCBA, and thanks to the hard work of our board members and the support of our institutions we look forward to contributing to our banks, the industry and the state as a whole for many years to come. The Division has a bright future ahead. Keep an eye on the SCBA website for all information concerning the Young Bankers Division.

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New

M e mb e r s

Welcome

We are fortunate to have an active and engaged roster of Bank and Associate Members and proudly welcome these new members: t NEW

BANK MEMBER The South Carolina Bankers Association welcomes Aquesta Bank as its newest member. Aquesta Bank is a full service community bank headquartered in Cornelius, North Carolina. Aquesta Financial Holdings, Inc. is the holding company and is publicly traded under the symbol “AQFH.” Aquesta entered South Carolina in the Greenville and Charleston markets with loan production offices.

t NEW

ASSOCIATE MEMBERS Tony Webb

VP Sales & Marketing

PO Box 1743

Suwanee, GA 30024

770.855.2989 TWebb@ATMResponse.com

www.atmresponse.com

Darren Smith Vice President 2200 Gateway Centre Blvd., Suite 220 Morrisville, NC 27560 919.795.1633 darren@atmusa.com www.atmusa.com

ATM USA is one of the leading and most trusted ATM providers in the U.S. Our outsourcing solution allows financial institutions of all sizes to return the focus on their clients and core business by removing the burden of ATM management. Our program reduces capital and operational costs, improves customer service and gains new competitive advantage. We help our partner gain visibility, ensure positive brand experiences, and deliver convenience to their clients.

Lisa Hutchinson Training Specialist 40 S. Main Street Statesboro, GA 30458 912.764.9091 lhutchinson@agsouthfc.com www.agsouthfc.com

AgSouth Farm Credit provides loans for land, equipment and production agriculture, crop insurance, leasing and home mortgages. The association serves 93 counties in South Carolina and Georgia and is headquartered in Statesboro, Ga. AgSouth is a customer-owned cooperative with over 8,700 member borrowers.

Over the last 25 years the cooperative has averaged a return of more than 27% of interest back to its customers. For more information on our products and services visiting AgSouthFC.com

Kevin N. Molony 212 Newberry Street, NW Aiken, SC 29801 803.335.1449 kevin@angellmalony.com www.angellmolony.com

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ATM Response is an armored car company providing custom cash logistics and ATM maintenance solutions for Financial Institutions throughout the southeast. Founded in 1982 and based in Suwanee, Georgia, ATM Response offers a wide range of service offerings including Cash Delivery from the Federal Reserve, ATM Maintenance Programs and ATM Balancing and Replenishment.

S P R I N G 2 0 1 8 • PALMETTO BANKER

With offices in both Aiken and Greenville, Angell Molony, LLC is dedicated to the enforcement of judgments across the state of South Carolina. The firm’s partners, Kevin N. Molony and Aaron J. Angell, work on a 100% contingency basis, covering all costs and expenses of the collections process. By utilizing an extremely thorough asset search program and applying the ever-changing South Carolina collection laws, the attorneys at Angell Molony have successfully collected on both large and small judgments for multiple banks throughout the state.

Guy M. Dabbs, IV

Attorney 288 Meeting Street, Suite 200

Charleston, SC 29401 843.818.4308 gdabbs@barnwell-whaley.com www.barnwell-whaley.com

Established in Charleston in 1938, Barnwell Whaley Patterson & Helms, LLC has offices in both North and South Carolina and represents and counsels businesses and professionals throughout the United States.

Widely respected for their work, the firm’s attorneys counsel businesses ranging from startups to global corporations. Primary areas of counsel include general business and corporate law, commercial transactions, commercial real estate, intellectual property, and complex litigation. For additional information, visit www.barnwell-whaley.com.

Collin D. Mackie Regional Vice President 84 Villa Rd.

Greenville, SC 29607 864.414.1739 cmackie@cbfunding.com www.cbfunding.com

Capital Business Funding provides working capital solutions and credit management services for small to mid-size businesses throughout the state of South Carolina. The majority of our clients are introduced to us when looking to fund a start-up company, a business with high growth opportunities, or are in the process of implementing a turnaround plan.

The expertise and experience of Capital Business Funding, in addition to our services, allow companies to outsource credit management & collection, eliminate potential ad debt expense, focus on the talent and resources of their core business, and provide working capital to support various business, economic, and industry opportunities.

C. Randy Drescher, Jr.

President C O N S U LTA N T S 4592 Hancock Way SW

Lilburn, GA 30047 678.570.5999 rdresherk4hs@mindspring.com

Randy Drescher is an experienced Bank Consultant, and has been involved in banking for 43 years. Randy has an extensive background specializing in loan review, analysis, and credit and collateral documentation in all forms. He is familiar with loans of essentially all types and sophistications – commercial loans (working capital loans, asset-based loans, commercial finance, and factoring); consumer loans (auto financing, home equity, purchase money mortgages, etc.); real estate lending (residential and commercial construction, land acquisition and development – residential/ commercial); commercial real estate – owner-occupied, credit-tenant; international lending – commercial letters of credit; and specialized lending such as agricultural lending, oil/gas lending, and leveraged buy-outs. Prior to his 27 years of consulting, Randy served for 16 years as a National Bank Examiner with the Office of the Comptroller of the Currency (OCC).

Bank Examiner

Lee Prickett Partner 110 W. North Street Greenville, SC 29601 864.335.8488 lprickett@hplplaw.com www.hplplaw.com

Craig Dewey Managing Director 111 Bulifants Blvd.

Suite D Williamsburg, VA 23188 757.645.3975 craigd@srpretire.com

Holder Padgett Littlejohn + Prickett, LLC provides a range of default related services to banking institutions throughout South Carolina.

This includes commercial and residential foreclosures, post judgment collection proceedings, loss mitigation support and related bankruptcy representation. HPLP also has a robust construction law practice and is available to assist in issues related to mechanics liens and other construction related matters. HPLP strengthens client relationships through its commitment to providing the highest quality representation on all matters, with a focus on reducing the timeline to close files.

Strategic Retirement Partners is a nationwide independent retirement plan consulting firm that advises employers and plan fiduciaries in the understanding and fulfillment of their responsibilities to the plan, participating employees, and beneficiaries. We currently consult on over 500 corporate and non-profit plans representing the retirement aspirations of tens of thousands of employees. It’s a huge responsibility – one that we wake to every day with a renewed and unparalleled commitment to excellence, supported by the latest technology, deep research capabilities, operational efficiencies and a craftsman-like focus on detail. We invite you to review our website to learn more about our areas of specialization, our unique value proposition and contact us for assistance.

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New

M e mb e r s

Welcome

Todd Taylor President 700 N. Hurstbourne Pkwy Suite110 Louisville, KY 40222 502.412.2524 todd@tayloradvisor.com www.tayloradvisor.com

John C. Justice, Jr. Business Development Officer 220 King St., Ste. 3C Charleston, SC 29401 843.323.8869 cjustice@sobanco.com www.sobanco.com

Roy Page CEO 555 Fayetteville Street Suite 300 Raleigh, NC 27601 888.871.3729 x.101 roy@thirddegreeadv.com

Taylor Advisors, Inc. is a balance sheet consulting firm and SEC Registered Investment Advisor based in Louisville, Kentucky, serving only financial institutions. We help our clients navigate financial challenges to increase profitability while managing risk. With a holistic view of how financial institutions function and which methods lead to long-term success, we develop strategies finely tuned to every bank we partner with. Our consulting services entail providing strategies, education, and documentation in many areas: capital, interest rate risk, liquidity, and investments. Our firm is independent and objective, and we always act in our clients’ best interest. These characteristics are critical to our role as investment advisors because they help clients achieve best trade execution, product suitability, and most importantly, transparency.

The Southern Bank specializes in providing receivable based lines to commercial customers through its altLINE platform. Working alongside the client’s incumbent banking relationship, altLINE extends flexible working capital in circumstances where traditional lines of credit may not be a fit. With a branch footprint limited to Northeast Alabama, The Southern Bank does not compete with referring banks. Instead, altLINE compliments a lender’s traditional product mix by offering a more professional, cost effective, and transparent alternative when compared to the typical independent factoring company or online lender. A referral to a reliable, fully regulated, bank partner helps bankers establish themselves as a trusted advisor in their customers’ eyes and improves customer loyalty.

Third Degree exists to help financial institutions, navigate the everchanging industry landscape and realities of regulatory mandates. We are an implementation-based marketing firm rooted in the financial sector with experts in the most relevant aspects of the digital ecosystem. From data analytics to social reputation we know how to harness the tools available today to best position your financial institution for success. Our experience in the financial sector provides us with a unique perspective and ability to meet you where you are, regardless of where you find yourself today. Knowing how, when and why consumers choose their financial partners is the root of our research based approach to problem solving in the financial channel.

NOTIFICATION OF NON-RENEWING ASSOCIATE MEMBERS As the 2018 calendar year begins, the SCBA reports the following companies did not renew their membership: The SCBA reports the following companies did not renew their membership and ask that you please update your listings to reflect these changes: Acumen IT; BBVA Compass Bank; Catawba Regional Council of Governments; Golden Eagle Insurance; Vizaline 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.

For more information about Associate Membership, please contact SCBA Senior Vice President Carolyn Laffitte Bradley by email at carolynbradley@scbankers.org To view our Associate Membership Directory, click here.

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S P R I N G 2 0 1 8 • PALMETTO BANKER

The Banker Suite Looking for New Non-Interest Fee Income?

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• Stay fully compliant with all 8 points of the Interagency Guidance to help you service more real estate loans in-house.

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• Navigate changes made through the Dodd-Frank Act while saving time and money. We’re all about putting the power back in your teams’ hands.

Schedule a Presentation Today.

Jason Pruitt | jpruitt@crsdata.com 770.883.6609 | crsdata.com/banking ©2016 CRS, Courthouse Retrieval Systems. All Rights Reserved.

The Banker Suite is property of CRS Data, Inc.

S P R I N G 2 0 1 8 • PALMETTO BANKER

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A/R Funding welcomes Scott Chaffee as Regional Vice President covering the Carolinas. Scott has more than thirty years of experience in various aspects of the commercial finance industry.

For more information about A/R Funding and Invoice Factoring, call Scott in our Greenville, SC office at (864) 250-2107 or on his cell phone at (864) 423-6385.

SCOTT CHAFFEE

Our Business is the Ability to Build Yours.

schaffee@arfunding.com

Buildin g S t r e n g t h

for another100 years!

Mauldin & Jenkins provides a full range of services including audit, tax, internal audit, risk management, compliance, loan review, information technology and consulting advice to publicly and privately held financial institutions throughout the Southeast. For 100 years, M&J's financial institution expertise has represented a pool of resources that allows us to customize services to meet your institution's specific needs.

With the addition of Derrick, Stubbs & Stith, LLP in Columbia, SC our resources have only grown stronger. Our Columbia office provides a wide variety of services to a broad range of clientele by employing specialists in a variety of industries and using our regional network.

Our professionals provide the exceptional service that has allowed our Firm to enjoy a “Century of Success.”

Audit | Accounting | Consulting | Technology | Tax Services 803-799-5810 | mjcpa.com

508 Hampton Street| 1st Floor | Columbia, SC 29201 36

S P R I N G 2 0 1 8 • PALMETTO BANKER

Banking News

CLB STATE SAVINGS BANK SC Secretary of State, Mark Hammond has named CLB State Savings Bank of Greer as a South Carolina Centennial Business, having been in business for more than 110 years. Secretary Hammond is recognizing Centennial Businesses for their many contributions to the state of South Carolina. “These businesses serve a dual purpose of fostering growth and innovation while providing employment opportunities to the citizens of our state.”

COASTAL CAROLINA NATIONAL BANK Coastal Carolina National Bank has announced the opening of a new brank in the Upstate Greenville, South Carolina market. Clinton McKinney is CCNB’s Vice President/Greenville City Executive and will focus primarily on commercial banking relationship management.

COASTALSOUTH BANCSHARES Dawsonville, GA-based First Citizens Financial Corp. is to merge into Hilton Head Island SC-based CoastalSouth Bancshares Inc., in a deal valued at approximately $11.6 million. Following the deal completion, Foothills Community Bank, a unit of First Citizens, will become part of CoastalSouth’s unit, CoastalStates Bank. The deal is expected to close in the third quarter.

COUNTYBANK On January 25, 2018, Countybank honored its five year pledge to match employee giving to the Greenwood Genetic Center with a check for $20,000.

FIRST CAPITAL First Capital Bancshares, Inc., the holding company for First Capital Bank, has announced the relocation of its corporate headquarters to Charleston, SC. The offices will be located at 304 Meeting Street and plans call for the new headquarters and banking office to open for business this Spring. Newly appointed chairman Harvey Click said Charleston provides more lending, deposit and growth opportunities. He added that the bank’s reinvention will bring its digital offerings up to par as well.

FIRST CITIZENS BANK First Citizens Bank has donated $100,000 to the International African American Museum which is to break ground later this year.

FIRST PALMETTO BANK First Palmetto Bank, a subsidiary of First Palmetto Financial Corp., on February 16 agreed to purchase Sandhills Bank’s branch in Bethune, SC. Upon closing of the transaction, the acquired branch will operate as a branch of First Palmetto Bank, increasing the bank’s branch network to 23 locations across South Carolina.

FIRST RELIANCE BANK First Reliance Bancshare, Inc. announced the completion of the acquisition of Greenville-based Independence Bankshares, Inc., effective January 23, 2018 Independence National Bank was merged with First Reliance Bank, with First Reliance Bank continuing as the surviving bank.

SOUTH ATLANTIC BANK South Atlantic Bancshares Inc. on April 2 closed its acquisition of another South Carolina-based community bank, Atlantic Bancshares Inc. Myrtle Beach-based South Atlantic Bank had $514.8 million in assets at the end of 2017; Atlantic Community Bank of Bluffton had $85.1 million. Atlantic Community President and CEO Robert McKinney joins South Atlantic as regional executive for the Bluffton/Hilton Head region. Atlantic Bancshares board member Edgar Woods joins the South Atlantic board.

STATE ETHICS COMMISSION Sam Erwin, Executive Vice President and Regional President of IBERIABANK, was appointed by the General Assembly to the South Carolina State Ethics Commission on March 22, 2018. The State Ethics Commission is the state agency responsible for the enforcement of the Ethics Reform Act of 1991 by ensuring compliance with the state’s laws on public official financial and campaign disclosure and also lobbying activities of other individuals and organizations.

STATE BOARD OF FINANCIAL INSTITUTIONS The State Board of Financial Institutions announces that Wayne Wicker, Chairman and CEO of South Atlantic Bank, and Barry Ham, President of Bank of Clarendon have been appointed as new members to the Board.

The Board also announces that Justin Strickland, President of Southern First Bank, has been reappointed to a second term. All three were recently nominated

by Governor McMaster and the Senate reviewed and confirmed the nominations on May 9, 2018. The State Board of Financial Institutions is responsible for the supervision, licensing, and examination of all State chartered banks, savings and loan associations, savings banks, credit unions, trust companies, development corporations, consumer finance companies, deferred presentment companies, and regular check cashing companies. State Treasurer Curtis Loftis sits as ex officio chairman to the Board.

UNITED COMMUNITY BANK United Community Bank was recently recognized as one of America’s best 100 performing banks by Forbes magazine for the fifth consecutive year.

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Personal

Transactions

ANDERSON BROTHERS BANK

FIRST RELIANCE BANK

Mitsy Lewis has joined the bank as a Consumer Loan Officer. Ms. Lewis will be based in the Dillon office.

Ben Brazell has been promoted to the role of President, South Carolina. He will oversee sales management and community development for all South Carolina markets, as well as leading the growth initiatives of branch and market expansion, strategic acquisitions, and is responsible for the profitability of the SC sales platform.

Jeff Williamson has joined the Conway Main Street office as a Loan Officer.

Mitsy Lewis

Robert Woodbury has joined the bank as Programmer/Analyst. Mr. Woodbury is based in the bank’s IT department in Mullins.

Jeff Williamson

BB&T BB&T Regional president Mike Brenan was chosen Community Builder by the Michael J. Mungo Foundation.

He received a $1000 donation to the charity of his choice.

CAROLINA ALLIANCE BANK Louis A. Philyaw has joined the bank’s mortgage division as Vice President, Mortgage Lender.

Robert Woodbury

CRESCOM BANK

Louis A. Philyaw

Erik Gray has joined CresCom Bank as a commercial loan officer and vice president based at the Wilmington branch.

Cindy Register has joined CresCom Bank as a branch manager and assistant vice president and will serve the Tabor City, NC market.

FIRST CAPITAL Aaron Brewer has joined the Bank as its President.

Dita Meholli-Brown

Frank J. Cole, Jr. has been named Chief Executive Officer.

Dan Zuar

Matt Simpson has joined the bank as Vice President and Chief Credit officer.

FIRST PALMETTO BANK Thomas Anderson has been promoted to Chief Financial Officer.

SOUTH STATE BANK Jackie Smith has joined the company as director of Public Relations.

Jeff Reeves has joined South State as a commercial banker focused on middle market customers.

TD BANK David Lominack is the 2017 recipient of the Ann C. Sherard Young Supporter of the Arts Award which was presented at the Metropolitan Arts Council annual meeting on March 26, 2018.

UNITED COMMUNITY BANK After almost 35, years of service, CEO, Jimmy Tallent will retire from his current position effective June 30, 2018. Tallent will move into the new role as Executive Chairman of United’s Board of Directors.

Lynn Harton, President and CEO of United’s banking subsidiary, will become CEO of United. Mr. Harton was named CEO of United Community Bank in August 2017 and was elected to the Board of Directors in February 2015.

WELLS FARGO Dita Meholli-Brown and Dan Zuar have been named Relationship Managers serving the Charleston, SC area.

Elizabeth Burwell

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S P R I N G 2 0 1 8 • PALMETTO BANKER

Elizabeth Burwell will serve as Business Banking Manager for its local BBG team in Charleston.

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 • PO Box 1483 Columbia, SC 29202-1483

Look forward to seeing everyone...

Annual Convention & Trade Show • June 10-13, 2018 T he C loister

and

T he L odge

at

S ea I sland , G eorgia