Compensation Policy and Philosophy. Decisions with respect to compensation of the Company’s and the Bank’s executive officers, including the Chief Executive Officer and the other Named Executive Officers, as identified in the Summary Compensation Table, for fiscal year 20182019 were made by the Board of Directors of the Company and the Bank based upon recommendations by the Personnel Committee. Decisions regarding the non-equity compensation of the Company’s and the Bank’s executive officers that are not Named Executive Officers are made by the Chief Executive Officer in consultation with such officer’s supervisor. For these officers, the Chief Executive Officer is responsible for establishing the framework for how these individuals are compensated. The components of compensation of executive officers consist of a base salary, an annual cash incentive opportunity, any amounts contributed (and earnings) under the executive officer’s frozen Executive Salary Continuation Agreement (except for Mr. Oakley, who does not have an Executive Salary Continuation Agreement) prior to the freezing of the accrual of benefits under these agreements effective October 1, 2012, and thereafter under the SERP Agreements (as defined below) entered into in 2012, 2015, and 2016 and matching and profit-sharing contributions under the Company’s 401(k) plan (as well as health and disability insurance and other non-cash benefits similar to those of all employees of the Bank or Company). At times, these executive officers have also been awarded equity-based compensation in the form of time vested stock options or, as was the case in 2016 and 2018, cash-settled stock appreciation rights (“SARs”); however, the Personnel Committee and the Chief Executive Officer have historically focused on cash-based compensation that is currently paid out, using stock options and other equity-based awards primarily in connection with promotions or changes in duties. In 2018, Messrs. McDearman and Oakley were awarded stock options and Mr. McDearman was also awarded cash-settled SARs in recognition of each of them taking on additional responsibilities following the retirement of Elmer Richerson. In addition,2019, Mr. McDearman’ s base salary and bonus opportunity was further increased as describedhe began to assume additional responsibilities in more detail below,connection with Mr. Clemons’ retirement and as part of a plan to incrementally increase his compensation to the Company paid a special mid-year cash bonus to all employees in 2018, includinglevel of the Named Executive Officers.Bank's previous President. The Company utilizes the frozen Executive Salary Continuation Agreements and the SERP Agreements, each as described in more detail below, to provide for post-retirement or other post-termination payments to the Named Executive Officers. No member of the Personnel Committee served as an officer or employee of the Company or of any of its subsidiaries during 2018.

Annual Cash Incentive. Messrs. Clemons, McDearman, and Whitaker are eligible for an annual cash incentive payment, which we refer to as a bonus, pursuant to a percentage formula recommended by the Personnel Committee and approved by the Board of Directors that is based upon the Bank’s estimated after tax earnings for the fiscal year as of the date the bonus is paid. In 2018,2019, Mr. Clemons was eligible for a cash incentive payment equal to 1.29%1.25% of the Bank'sBank’s estimated after tax earnings, while Mr. McDearman was eligible for a cash incentive payment equal to .75%.96% of the Bank'sBank’s estimated after tax earnings. In total, Mr. Clemons and Mr. McDearman were paid cash incentive payouts totaling $419,265$473,071 and $244,087,$363,318, respectively, based on the estimated performance of the Bank in 20182019 as of the December 6, 20185, 2019 payment date. In 2018,2019, Mr. Whitaker was eligible for a cash incentive payment equal to .49%.47% of the Bank’s estimated after tax earnings. Mr. Whitaker was paid a cash incentive payment totaling $159,320$177,875 based on the estimated performance of the Bank in 20182019 as of the December 6, 20185, 2019 payment date. Though the structure of the annual cash incentive program for Messrs. Clemons and Whitaker was similar to the structure utilized in 2017, the percentage payouts that each Named Executive Officer could earn were lower in 2018 than in 2017 on account of the increased earnings potential of the Bank as a result of the reduction in the federal statutory corporate tax rate from 35% to 21% resulting from the Tax Cuts and Jobs Act, which was passed in December 2018. Mr. McDearman’s payout as a percentage of estimated after tax earnings was greater in 2018 than in 2017 as a result of his assumption of the duties of Executive Vice President of the Company and President of the Bank on January 1, 2018, though, in light of the reduction in the federal corporate tax rate resulting from passage of the Tax Cuts and Jobs Act, his payout percentage was lower than the percentage payout for the Bank’s prior president that retired as of December 31, 2017. The Bank’s estimated after tax earnings as of December 6, 20185, 2019 were $32.4$37.8 million.

Ms. Pominski and Mr. Oakley were eligible for, and received, a cash incentive payment determined by the return on assets (“ROA”) performance of the Bank, which payment was calculated on a basis consistent with the Bank’s other employees other than Messrs. Clemons, Whitaker, and McDearman whose cash incentive payments were calculated as described above. ROA is the quotient of the Bank’s 20182019 net earnings divided by the Bank’s average assets for 2018.2019. For 2018,2019, the ROA targets and related cash incentive payouts as a percentage of the base salary of both Ms. Pominski and Mr. Oakley were as follows:

Ms. Pominski and Mr. Oakley were each paid cash incentive payments totaling $43,140$49,198 and $40,147,$44,873, respectively, or 19.0%20.0% of their base salary, based on the Bank’s estimated ROA of 1.35% in 20181.41% for 2019 as of the December 6, 20185, 2019 payment date. The base salary percentage payouts for the various ROA targets for Ms. Pominski and Mr. Oakley were increased in 2018 from 2017 to align their incentive opportunities with the opportunity for increased performance and earnings by the Company in 2018 as a result of the Tax Cuts and Jobs Act.

401(k) Plan and Profit Sharing Contributions. All employees, including our Named Executive Officers and other executive officers participating in the Bank’s 401(k) Plan, receive a matching grant of $.35 from the Bank for each one dollar ($1) up to a maximum of 6% of the amount contributed each year by the employee to his or her 401(k) account. No employee was entitled to contribute more than $24,000$25,000 in 2018.2019. The Bank historically has also contributed additional funds into each employee’s 401(k) account under a profit-sharing arrangement. During 20182019 Messrs. Clemons, McDearman, Whitaker and Oakley and Ms. Pominski received contributions under the 401(k) Plan and profit sharing arrangement totaling in the aggregate $26,880, $26,880, $26,880, $25,089 and $26,880, respectively, as compared to $26,400, $26,400, $26,400, $24,245 and $26,022, respectively, as compared to $25,920, $25,920, $25,920, $22,246 and $24,579, respectively, in 2017.

Post-Termination Benefits. The Bank has entered into Executive Salary Continuation Agreements with certain of its senior executive officers, including Messrs. Clemons, McDearman and Whitaker and Ms. Pominski, which agreements were amended on December 30, 2008, November 23, 2012, and September 26, 2016. As discussed below, theThe Bank has not entered into an Executive Salary Continuation Agreement with Mr. Oakley. The Executive Salary Continuation Agreements were amended during 2008 to bring the agreements into compliance with the requirements of Internal Revenue Code Section 409A, along with simplifying the calculation of the benefits received at retirement. In November 2012, each of the Named Executives Officers, other than Mr. Oakley, and the Bank entered into an amendmentthese agreements was amended to the Named Executive Officers’ Executive Salary Continuation Agreements (the “Frozen Plans”) which at the time frozefreeze future benefit accruals thereunder as of October 1, 2012.2012 (the “Frozen Plans”). In addition, in November 2012, each of the Named Executive Officers and the Bank entered into SERP Agreements for the benefit of thethese agreements was amended to Named Executives Officers effective as of October 1, 2012 which agreement with Mr. Oakley was amended as described below (the “2012 SERP Agreements”). On May 22, 2015, additional SERP Agreements were entered into with Messrs. Whitaker, McDearman, Oakley and Clemons and Ms. Pominski (the “2015 SERP Agreements” and together with the 2012 SERP Agreements, the “SERP Agreements”). On September 26, 2016, the Executive Salary Continuation Agreements were amended to extend the period of benefit payments regarding the Executives’ retirement following age 65 under the Executive Salary Continuation Agreements such that benefits payable

In connection with entering into the amendments for the Frozen Plans in 2012, the Company subsequently discovered that due to an oversight Mr. Oakley’s Executive Salary Continuation Agreement had not been executed. To rectifyaddress this oversight, the Company and Mr. Oakley entered into an amendment to his 2012 SERP Agreement to increase the benefits payable to him thereunder infor each allowable termination scenario other than disabilityevent by an amount necessary to place Mr. Oakley in the same position as if his Executive Salary Continuation Agreement had been executed as the other executive officers with respect to the targeted percentage of base salary to be provided to him and the length of time he would be entitled to receive payments following various termination scenarios.

The Executive Salary Continuation Agreements and the SERP Agreements are unfunded arrangements maintained primarily to provide supplemental retirement benefits. The primary impetus for freezing the Executive Salary Continuation Agreements and establishing the 2012 SERP Agreements involvedwas attainment of a net decrease in compensation expense for the Bank of approximately $1.9 million over the life of the Frozen Plans as well asand the additional SERP arrangements, including similar agreements with Elmer Richerson, the former President of the Bank.

Per these supplemental benefit agreements, upon an Executive’s separation from service with the Bank for any reason other than death or disability after reaching age sixty-five (65), he or she is entitled to receive a percentage of his or her then current base salary from the Executive Salary Continuation Agreement, as amended, and the SERP Agreements payable in equal monthly installments for 180 months beginning the month following the month in which the executive’s retirement occurs, except that Mr. Oakley will only receive payments under his SERP Agreements.occurs. Following the end of the 180-month period, if the named Executive Officer’sExecutive’s employment was terminated as a result of normal retirement, this payment will continue for the remainder of the executive’s life. The targeted annual normal retirement benefit is a percentage30% of base salary payable to the Named Executive Officers in equal monthly installments upon such separation from service equal to 30% of his or her base salary for the executive’s life, commencing on the first full day of the month following the Named Executive Officer’s separation from service with the Bank. If the Named Executive Officer’s employment is terminated for any reason other than normal retirement, then payments under the Executive Salary Continuation Agreement will not extend beyond 180 months.

If a Named Executive Officer retires after the later of twenty (20) years of service or age 55, but prior to reaching age 65, his or her retirement will be considered an “early retirement” under the frozen Executive Salary Continuation Agreement as amended, (other than Mr. Oakley, who does not have an Executive Salary Continuation Agreement) and the 2012 SERP Agreement if he or she has attained the age of 55 and has been continuously employed by the Bank for twenty (20) years. If a Named Executive Officer’s retirement qualifies as an “early retirement,” thenAgreement. Upon such event, he or she shall be entitled to receive a benefit equal to the executive’s then accrued balance under the Executive Salary Continuation Agreements, as amended, and the 2012 SERP Agreement,plans, payable in equal monthly installments for 180 months beginning the month following the month in which the executive’s early retirement occurs, except that Mr. Oakley will only receive payments under his 2012 SERP Agreement. In the case of early retirement, followingoccurs. Following the end of the 180-month period, the 2012 SERP Agreement will continue a portion of the early retirement payments for the remainder of the executive’s life. In the event that the Named Executive Officer separatesof a separation from service with the Bank prior to his or her reaching age 65 for any reason other than death or disability or a change in control, the 2015 SERP Agreement for the Named Executive Officer will terminate and such executive will not be entitled to any of the benefits under the 2015 SERP Agreement.benefits. Mr. McDearman and Ms. Pominski areis entitled to an annual “early termination” benefit payable for 180 months under the frozen Executive Salary Continuation Agreement, and each of Mr. McDearman and Mr. Oakley and Ms. Pominski is entitled to an annual “early termination” benefit payable for life under the 2012 SERP Agreement if his or her employment is terminated for any reason other than death, disability or retirement by the executive’shis voluntary action or by the Bank other than for cause. At December 31, 2018,2019, this annual benefit was $2,525 and $2,558 under the frozen Executive Salary Continuation Agreement for Mr. McDearman and Ms. Pominski, respectively,was $3,093 and was $2,387, $2,022, and $3,987$2,620 under the 2012 SERP Agreement for Mr.McDearman,Mr. McDearman and Mr. Oakley, and Ms. Pominski, respectively. These payments commence at normal retirement age under the Executive Salary Continuation Agreement and upon separation from service under the 2012 SERP Agreements. Each of Messrs. Clemons and Whitaker and Ms. Pominski was eligible for early retirement as of December 31, 20182019 and would not receive these “early termination benefits”.

In the event that a Named Executive Officer becomes disabled prior to reaching age 65, the Bank is obligated to pay to the executive an annual benefit equal to 60% of the Named Executive Officer’s base salary and bonus at the time of disability under the terms of the Executive Salary Continuation Agreement, as amended, and the 2012 SERP Agreement, payable in equal monthly installments until the Named Executive Officer’s 65th birthday, except that Mr. Oakley will only receive payments under his SERP Agreements.birthday. Following that date, the disability benefit under the Executive Salary Continuation Agreement is reduced to the Named Executive Officer’s normal retirement benefit under the Executive Salary Continuation Agreement for the number of months necessary for a total of 180 monthly payments to have been made to the Named Executive Officer thereunder, and the disability benefit under the 2012 SERP Agreement will be reduced to the normal retirement benefit under the 2012 SERP Agreement, which shall be paid annually for life thereunder. In addition, the Named Executive Officer is entitled to receive payment under the 2015 SERP Agreement in an amount equal to a percentage of his or her normal retirement benefit. The percentage of the Named Executive Officer’s normal retirement benefit payable is calculated based on the ratio of the account balance on the date of separation from service as a result of disability to the projected account balance at normal retirement age (65) multiplied by the amount payable at normal retirement age. This benefit will commence at normal retirement age and continue for the remainder of the Named Executive Officer’s life.

In the event that the Named Executive Officer dies before he or she has a separation from service with the Bank, his or her beneficiary is entitled to receive a payment equal to the amount of the liability that should at that time have been accrued by the Bank under generally accepted accounting principles for the Named Executive Officer under the Executive Salary Continuation Agreement and SERP Agreements (or in the case of Mr. Oakley, solely under the SERP Agreements) payable in a lump sum no later than thirty (30) days (or in the case of the 2015 SERP Agreement, 60 days) from the date of Named Executive Officer’s death. In addition, the Named Executive Officer’s beneficiary is entitled to receive under a split dollar life insurance arrangement (the “Split Dollar Benefit”) a death benefit the amount of which as of December 31, 20182019 was approximately equal to $1,238,931, $372,957, $500,080, $371,846$2,090,263, $458,000, $800,000, $549,382 and $270,702,$335,000, in the case of Messrs. Clemons, McDearman, Whitaker and Oakley, and Ms. Pominski, respectively. In the event that the Named Executive Officer dies after retirement benefit payments have commenced under the Executive Salary Continuation Agreement and SERP Agreements, but before he or she has received 180 monthly payments, the Bank will continue to pay the Named Executive Officer’s beneficiary those payments until a total of 180 monthly payments have been made to the Named Executive Officer and/or his or her beneficiary.

The amounts payable to the Named Executive Officers’ beneficiary under the Executive Survivor Income Agreements or the Director Survivor Income Agreement, as applicable, vary and, in some instances, are reduced based on the age of the Named Executive Officer at the time his or her employment or service on the Board of Directors is terminated. As of December 31, 2018,2019, the amount payable under the agreements with each of the Named Executive Officers was $400,000. The Bank will pay the benefits due under the Executive Survivor Income Agreements and the Director Survivor Income Agreement from its general assets, but only so long as one of the Bank’s general assets is an enforceable life insurance policy on the Named Executive Officer’s life that was issued by Massachusetts Mutual Life Insurance Company and Midland National Life Insurance Company.

Fuel Allowance. In addition to the above-described compensation, the Company provides a company owned car for each of Messrs. Clemons, McDearman, and Whitaker, each of whom is entitled to also use such car for personal use. The Company provides a fuel allowance for such personal use based on the amount of miles driven for personal use multiplied by the affective federal mileage reimbursement rate. In 2018,2019, these allowances totaled $1,489, $1,644,$1,670, $1,754, and $1,952$4,454 for each of Messrs. Clemons, McDearman, and Whitaker, respectively. Mr. Oakley was provided an auto allowance for 20182019 totaling $6,000 for business use of his personal vehicle.

The Personnel Committee has reviewed and discussed the Compensation Discussion and Analysis (the “CD&A”) for the year ended December 31, 20182019 with management. In reliance on the reviews and discussions referred to above, the Personnel Committee recommended to the Boards of Directors of the Company and the Bank, and each of the Boards of Directors has approved, that the CD&A be included in the proxy statement for the Annual Meeting.

Had a Named Executive Officer been terminated on December 31, 2018,2019, such officer would have received the full amount of his or her annual cash incentive payment earned for the year ended December 31, 2018.2019. These amounts are reflected in the Summary Compensation Table below.

The following table provides information as to annual, long-term or other compensation during the 2016, 2017, 2018 and 20182019 fiscal years for Mr. Clemons, the Company’s Chief Executive Officer during 2019, Ms. Pominski, the Company’s Chief Financial Officer, and the three (3) most highly compensated executive officers of the Company or the Bank other than the Chief Executive Officer and Chief Financial Officer with total compensation over $100,000 for the year ended December 31, 2018.

The following table summarizes certain information regarding grants of plan-based awards to the Named Executive Officers in 2018:

The following table provides information related to options exercised for each of the Named Executive Officers during the 20182019 fiscal year. The Company has not issued restricted stock or warrants to its Named Executive Officers. The Company granted cash-settled SARs to certain of its Named Executive Offices in 2016 and 2018 and twenty percent (20%) of those awards vested in both 2017, 2018, and 20182019 for the 2016 grant and in 2019 for the 2018 grant.

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information for the year ended December 31, 2018:

We completed the following steps to identify the median of the annual total compensation of our employee whose compensation placed the employee at the median of all our employees and to determine the annual total compensation of our median employee and CEO: