Hello and Happy New Year! 2025 has started with a bang for Southern First - great activity and growth, adding new teammates, and celebrating our 25th anniversary as a company have us busy and excited. 

Speaking of excitement, the last few months and the current state of economic and political affairs is providing plenty of it! Recent elections bring much energy and volatility to the economic picture at times, and we'll spend this Update sharing our general takes (no mud-slinging, we promise) in hopes that it will help you find some clarity amidst it all. 

The outcome of Federal elections has brought about some incredibly rapid movement by the incoming officials to change...well, a LOT of things. For example, even as we write this, tariff announcements are impacting markets, then the announcements are changed after some negotiating, and things change again. While we don't expect this kind of volatility to appear every day for years, it is a dynamic we suggest that you factor into your plans and the way you expect markets to behave. Our view is that, when the headlines die down, much of the eventual landing spots of economic policy will be favorable to businesses and individuals. Regulation will decrease and more business investment will free up. Tax policy will be as helpful as politics will allow, and almost surely will not become more punitive. The market doesn't yet know how tariffs will ultimately hit the economy so we expect volatility and some nerves each time they come up. In the end, we recommend staying calm in the frenzy of news cycles and keeping a positive longer-term view of business conditions.

Chief among concerns with tariffs and other policies is how they will affect inflation and, in turn, interest rates. We believe the Federal Reserve is firmly in a patient, wait-and-see stance with rates and will stay that way unless inflation or labor force readings change meaningfully. With inflation below 3 percent, unemployment below 5 percent, and 2-3 percent growth in GDP, and none of those moving substantially in several months now, the data suggests the Fed can hold steady and that we are already in a "soft landing." They are clearly paying attention to any labor market worsening and this is the most likely catalyst to further rate decreases. Tariffs causing an increase in inflation is a much smaller risk and would take some time to appear in the economy, and even that would require them not being mostly negotiating tools. 

Sometimes lost in all of the buzz are the facts mentioned above about the health of our economy, and its comparison to the rest of the world. The US economy is undeniably the current envy of most other nations. Meaningful growth, lower inflation, and full employment is an incredibly strong position to be in when compared to almost all other major economies. Our strength, our long-term economic health, and even the US Dollar's reserve currency status sometimes gets questioned amidst our Federal deficits, and while this is a dynamic worth watching, there simply is no better option for global investment performance and security than the United States. This will be used as leverage in trade negotiations and other aspects, but when it all boils down we recommend keeping this strength in mind and taking the opportunities given to build on it at a personal or business level. 

In moments of reflection as we celebrate Southern First's 25th anniversary, we feel incredibly grateful for the opportunity we have been given. We are intent on taking full advantage by staying focused on providing Relationship Banking with Exceptional Service and Authentic Hospitality. We firmly believe that's what people value and will provide us another 25 years of incredible growth and performance. We humbly say THANK YOU for being part of the Southern First family and for the privilege to serve you!

by Cal Hurst, President