LUXURY EXPENDITURE POLICY

OVERVIEW
This policy fulfills the requirements under the American Recovery and Reinvestment Act of 2009 (ARRA) enacted February 17, 2009. ARRA requires each recipient of funds under the Capital Purchase Program (CPP) of the Troubled Assets Relief Program (TARP) to have in place a company-wide policy regarding excessive or luxury expenditures, as identified by the Secretary of the Department of the U. S. Treasury.

PURPOSE AND SCOPE

Seacoast Commerce Bank prohibits excessive or luxury expenditures on entertainment and events, office or facility renovations, aviation or other transportation services or other activities or events that are not reasonable expenditures for conferences, staff development, reasonable performance incentives or other similar measure conducted in the normal course of business operations of the Bank.

Renovations:

Office and facility renovations should be designed to: enhance operational efficiency, comply with applicable fire codes and ADA requirements, maintain a safe, sanitary and clean working environment, enhance the public image of the organization, improve employee morale, or such other worthwhile purpose as may be identified by the organization. Quantitatively, office and facility renovations must not be excessive in scope or expenditure, must be in line with industry standards, and need Board approval.   At no time should renovations be done that would have the appearance of being extraordinary or excessive from a shareholders perspective.

Entertainment:

Entertainment is defined as an activity that an Employee or Executive would use corporate funds for business development purposes relating to a current customer(s) or prospective customer(s) or to further enhance the company’s marketing efforts.  Our expectation is that all expenses incurred to the Bank would be for company purposes, and used to drive business to the bank. Occasional events such as taking customers or prospects on trips, playing golf, eating dinner, taking them to other events the customer/prospect would find pleasurable is a necessary part of the Company’s marketing efforts and is not deemed as “entertainment” or a violation of th

Luxury Policy. These expenses should be documented and detailed as to the benefit derived by the Bank.

Conferences:

We encourage our staff to attend conferences that are appropriate educational opportunities. These conferences should be related to the financial services industry and have a direct correlation to their job.

At times it may be appropriate and expected that a spouse would travel to these conferences with Company attendees.  For those conferences and educational opportunities where it is appropriate and expected that a spouse travel to and be a part of a conference, on behalf of the Company with the Company attendee, the Company will assume financial responsibility for the spouses travel expenses.  For those conferences and educational opportunities where it is not appropriate or expected that a spouse attend, the Company will not assume financial responsibility for a spouses travel.  Approval of Company financial responsibility for a spouses travel expense should be approved by the Chief Executive Officer (or Chairman in the case of CEO spouse travel) in advance.

Typically these conferences are sponsored by vendors, banking associations, or other industry related entities.

This policy considers reward conferences, whether paid for by the Company or other vendors, as a violation of this policy if the purpose is meant to be a reward, or would have no value of education to the employee or executive.

Employee Appreciation Events:

We feel that employee appreciation events (“holiday parties”) are part of an employee appreciation process.  Employee appreciation events should be local in geographic nature and should not be excessive in cost.

Board retreats should only be used for educational purposes, and should be kept in consideration, and looked at in the same view and discretion as all other expenses. Board education is a vital part of maintaining, and keeping a dynamic director base, and this policy should not limit a retreat that is focused on strategic planning or education.

Events and parties focused on customers for the purpose of attracting their business would not fall under this policy.

Travel Services:

Transportation for Company staff to outlying locations, including bank locations, conferences, business development purposes and merger and acquisition research, should be conducted in the most cost appropriate for the Company.

Documentation:

All Company expenditures, including those expenditures covered by this policy, shall be documented, supported by written invoice and receipts, and subject to audit in accordance with the standard, uniformly-applied Company policies and procedures.

Reporting Violations: Disciplinary Actions:

An employee or Director who learns of a violation of this policy shall promptly report the violation to the Chief Executive Officer.  Compliance with this policy is a condition of employment, and any violation thereof may result in disciplinary action.

Certification of Compliance:

The Chief Executive Officer and Chief Financial Officer shall certify at least annually that this policy is being followed and that the approval of any expenditures requiring prior approval of an executive officer or the Company’s Board of Directors was properly obtained with respect to each expenditure.