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Policy Prohibiting Unreasonable Expenditures

Greer Bancshares Incorporated-Greer State Bank (collectively the "Company")

I. Introduction 

It has long been the practice of the Company to control its expenses and to avoid excessive expenditures. The Board of Directors (“Board”) has adopted this written policy to formalize this long-standing practice. 

II. General guideline applicable to all expenses 

Expenditures by the Company should be reasonable and reasonably related to the business of the Company to provide a wide array of banking products and services to the community that it serves. Expenses which are not reasonable and reasonably related to the business of the Company are prohibited. Expenditures must also comply with the Bank’s Accounts Payable Policy. 

III. Guidelines related to specific types of expenditures 

The following guidelines shall apply to the specific types of expenditures identified. Unless otherwise indicated, the advance approval of a Senior Vice President of the Company is required before any of the identified expenditures may be made. 

A. Entertainment or events. The following entertainment or events and related expenses are specifically permitted: 

1. Any entertainment or events included in the Company’s Board approved budget (no other advance approval needed); 

2. Continuing education for employees or directors designed to enhance their knowledge, skills, or capabilities; 

3. Events that provide meaningful opportunities for market and industry networking with vendors and banking professionals; 

4. Business development events and opportunities; 

5. Meetings, education, and conferences provided by trade organizations such as the American Bankers Association, S. C. Bankers Association, and other similar organizations; 

6. Meetings, education, and conferences provided by industry regulators and governmental organizations such as the FDIC, SEC, State Board of Financial Institutions, and other governmental entities; 

7. Company customer appreciation events or Company sponsored promotional events approved in advance by the CEO or CFO so long as no individual event exceeds $7500. Events in excess of this amount must be approved in advance by the Corporate Governance Committee or Board; 

8. Two annual celebrations for employees, employee recognition, team building, or morale that are approved in advance by the CEO or CFO so long as no individual celebration exceeds $7,500 in costs. Events in excess of this amount must be approved in advance by the Corporate Governance Committee or Board; 

9. Other entertainment or events approved in advance by the CEO or CFO so long as the specific entertainment or event does not exceed $7,500. Entertainment or events in excess of this amount must be approved in advance by the Corporate Governance Committee or Board; 

B. Office and facility renovations. The following office and facility renovations are specifically permitted: 

1. Construction costs, office improvements, or facility renovations included in the Company’s Board approved budget (no other advance approval needed); 

2. Routine maintenance and repairs; 

3. Maintenance or repairs necessary to comply with applicable laws or zoning ordinances or to provide a safe environment for Company employees or customers; 

4. Office or facility renovations approved in advance by the CEO or CFO, not to exceed $7,500. Advance approval of the Corporate Governance Committee or Board shall be required for such renovations in excess of $7,500. 

C. Aviation or other transportation services: The Company does not own any jets, airplanes, helicopters or other aviation equipment, and the Company shall not own any such equipment without advance approval of the Board. When air travel is appropriate in furtherance of the Company’s business, employees or directors shall fly coach class on a commercial airline. The use of any other transportation services, including automobile, bus, or rail, is permitted so long as such cost is reasonable and is for a purpose reasonably related to the Company’s business. 

D. Other similar items, activities, or events. Other items, activities, or events not explicitly identified, but which are similar to those outlined in Paragraphs A, B, or C shall be permitted with the advance approval of the CEO or CFO, not to exceed $7500. Expense for similar items in excess of this amount must be approved in advance by the Corporate Governance Committee or Board; 

IV. Miscellaneous 

A. This policy shall be filed, upon adoption, with the U. S. Treasury. If this policy is amended at any time prior to final re-payment of TARP funds, such amended policy shall be filed with the U.S. Treasury. 

B. This policy and any amendments thereto shall be promptly posted on the Company’s internet website. 

C. Any employee who becomes aware of violations of this policy, including, but not limited to, supervisors and Bank officers, should promptly report such violations to the Company’s Compliance Officer, 1111 W. Poinsett St., Greer, SC 29650. The Compliance Officer shall promptly, i.e., within ten business days after receipt, notify the chair of the Corporate Governance Committee of any reported violations of this policy. The Corporate Governance Committee shall review any reported violation at its next meeting, shall take such action as it deems appropriate, and shall notify the Board at the next Board meeting of the reported violation and the actions of the Corporate Governance Committee. 

D. The Board shall review this policy annually. Exceptions to policy may only be permitted either by the Company’s Corporate Governance Committee or Board of Directors. 

E. The Company’s CEO shall be responsible to assure the effective implementation of this policy. The Company’s CEO and CFO shall annually certify to the Board that prior approval for expenditures requiring prior approval pursuant to this policy was properly obtained with respect to each such expenditure. If the CEO or CFO is aware of violations of the prior approval requirements of this policy, they shall note such violations in their certification with a full explanation and any recommended corrective action. 

Adopted by the Board on 27th day of August, 2009