What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-03-08 compared with 2021-03-09 · 864 added, 925 removed, 389 unchanged (82% of the section changed)

Any of the following risks could harm our business, results of

operations and financial condition and an investment in our

The risks discussed below also include forward-looking statements,

and our actual results may differ substantially

Any of the following risks could harm our business, results of operations and financial

condition and an investment in our

The risks discussed below also include forward-looking statements, and our

actual results may differ substantially

from those discussed in these forward-looking statements.

Operational Risks

Market conditions and economic cyclicality may adversely affect

our industry.

Market conditions and economic cyclicality may adversely affect our industry.

We believe the following,

among other things, may affect us in 2022:

The COVID-19 pandemic disrupted

the economy beginning late in the first quarter of 2020, and continues.

The COVID-19 pandemic disrupted the economy beginning late in the first quarter

of 2020, and continues.

Auburn University, government

1 unchanged sentence

were limited.

Supply chains continue to be disrupted and unemployment spiked

and remains high.

Supply chains continue to be disrupted and unemployment spiked and remains

Hotels, motels, restaurants,

2 unchanged sentences

have offset certain of the pandemic’s

adverse economic effects, and are continuing.

The Federal Reserve is maintaining a targeted

federal funds rate of

0-0.25%, and has provided stimulus by buying bonds and providing

market liquidity.

Legislation is pending to

provide an additional $1.9 trillion of fiscal stimulus, and foreclosure

moratoria have been extended.

and timing of any future changes in monetary and fiscal policies and

their effect on us cannot be predicted.

Market developments, including unemployment, price levels,

stock and bond market volatility,

including those resulting from COVID-19 and the pace of vaccination

and expected declines in serious COVID-19

cases, continue to affect consumer confidence levels and

economic activity.

Changes in payment behaviors and

payment rates may increase in delinquencies and default rates,

which could affect our earnings and credit quality.

Our ability to assess the creditworthiness of our customers and

those we do business with, and the values of our

adverse economic effects.

Inflation is running at levels unseen in decades and the Federal Reserve is

contemplating raising target interest rates and reducing its securities

The nature and timing of any future

changes in monetary and fiscal policies and their effect on us cannot be

Market developments, including unemployment, price levels, stock and

bond market volatility, and changes,

including those resulting from COVID-19 and the pace of vaccination and expected

declines in serious COVID-19

cases, and Russia’s invasion of Ukraine affect

consumer confidence levels, economic activity and inflation.

Changes in payment behaviors and payment rates may increase in delinquencies and

default rates, which could

affect our earnings and credit quality.

Our ability to assess the creditworthiness of our customers and those we do business

with, and the values of our

assets and loan collateral may be adversely affected and less

1 unchanged sentence

government responses.

The accounting for loan modifications and deferrals may provide

only temporary relief.

The process we use to estimate losses inherent in our credit exposure

or estimate the value of certain assets

The accounting for loan modifications and deferrals may provide only temporary

The process we use to estimate losses inherent in our credit exposure or estimate the

value of certain assets

requires difficult, subjective, and complex judgments, including

2 unchanged sentences

to repay their loans or the value of assets.

The end of the LIBOR reference rate is currently scheduled for

most tenors by June 30, 2023, although U.S.

regulators informed banks November 30, 2020 that they should

stop using LIBOR for new loans and contracts and

derivatives, including hedging, and involves risks of potential marked

disruption and costs of compliance and

New hedges may not be as effective as hedges based

The end of the LIBOR reference rate is currently scheduled for most tenors by June 30, 2023,

although U.S.

regulators informed banks November 30, 2020 that they should stop using LIBOR

for new loans and contracts and

derivatives, including hedging, and involves risks of potential marked disruption and costs

of compliance and

New hedges may not be as effective as hedges based on LIBOR.

Nonperforming and similar assets take significant time to resolve

and may adversely affect our results of

operations and

and may adversely affect our results of operations

financial condition.

Our nonperforming loans were 0.10% of total loans as of December 31,

31, 2020, and had no other real estate owned

Twenty-five percent, or

$117.0 million, of our total loans were in hotels/motels,

retail and shopping centers

and restaurants, and $31.4 million of these had COVID-19 modifications

to require interest only payments.

performing assets may adversely affect our net income

in various ways.

not record interest income on nonaccrual

loans or OREO and these assets require higher loan administration

and other costs, thereby adversely affecting our income.

Decreases in the value of these assets, or the underlying collateral,

or in the related borrowers’ performance or financial

condition, whether or not due to economic and market conditions beyond

our control, could adversely affect our business,

results of operations and financial condition.

In addition, the resolution of nonperforming assets requires commitments

time from management, which can be detrimental to the performance

of their other responsibilities.

Our non-performing

assets may be adversely affected by loan deferrals and

modifications made in response to the pandemic and the moratoria

on foreclosures and evictions.

There can be no assurance that we will not experience increases in

nonperforming loans in

2021, and we had $0.4 million in other real estate

owned (“OREO”).

Non-performing assets may adversely affect our net income in various

not record interest

income on nonaccrual loans or OREO and these assets require higher loan administration

and other costs, thereby adversely

affecting our income.

Decreases in the value of these assets, or the underlying collateral, or

in the related borrowers’

performance or financial condition, whether or not due to economic and

market conditions beyond our control, could

adversely affect our business, results of operations and

financial condition.

In addition, the resolution of nonperforming

assets requires commitments of time from management, which can be detrimental

to the performance of their other

responsibilities.

Our non-performing assets may be adversely affected

by loan deferrals and modifications made in response

to the pandemic and the moratoria on foreclosures and evictions.

There can be no assurance that we will not experience

increases in nonperforming loans in the future, much of which is affected

by the economy and the levels of interest rates,

Our allowance for loan losses may prove

inadequate or we may be negatively affected by credit

risk exposures.

We periodically

review our allowance for loan losses for adequacy considering economic

conditions and trends, collateral

values and credit quality indicators, including past charge

-off experience and levels of past due loans and nonperforming

be certain that our allowance for loan losses will be adequate

over time to cover credit losses in our

inadequate or we may be negatively affected by credit risk exposures.

We periodically review

our allowance for loan losses for adequacy considering economic conditions and

trends, collateral

values and credit quality indicators, including past charge-off experience

and levels of past due loans and nonperforming

certain that our allowance for loan losses will be adequate over time to

cover credit losses in our

portfolio because of unanticipated adverse changes in the economy,

including the continuing effects of the pandemic

fiscal and monetary response to COVID-19 loan modifications

and deferrals, market conditions or events adversely

affecting specific customers, industries or markets,

and changes in borrower behaviors.

Certain borrowers may not recover

fully or may fail as a result of COVID-19 effects.

If the credit quality of our customer base materially decreases,

profile of the market, industry or group of customers changes

materially or weaknesses in the real estate markets worsen,

borrower payment behaviors change, or if our allowance for loan

losses is not adequate, our business, financial condition,

including our liquidity and capital, and results of operations

including the continuing effects of the pandemic and

fiscal and monetary response to COVID-19, loan modifications and deferrals,

market conditions or events adversely

affecting specific customers, industries or markets, including

disruptions of supply chains and war, and changes

borrower behaviors.

Certain borrowers may not recover fully or may fail as a result of COVID

If the credit

quality of our customer base materially decreases, if the risk profile of the

market, industry or group of customers changes

materially or weaknesses in the real estate markets worsen, borrower payment

behaviors change, or if our allowance for

loan losses is not adequate, our business, financial condition, including our liquidity

and capital, and results of operations

could be materially adversely affected.

accounting standard for estimating loan losses, is effective for

the Company beginning January 1, 2023, and its effects upon

the Company have not yet been determined.

CECL, a new accounting standard for estimating loan losses, is effective

Company beginning January 1, 2023, and its effects upon the Company

have not yet been determined.

Changes in the real estate markets, including

the secondary market for residential mortgage

loans, may continue to

the secondary market for residential mortgage loans,

may continue to

adversely affect us.

The CFPB’s mortgage and servicing

rules, including TRID rules for closed end credit transactions,

enforcement actions,

reviews and settlements, affect the mortgage markets and

our mortgage operations.

The CFPB’s mortgage and servicing rules,

including TRID rules for closed end credit transactions, enforcement actions,

reviews and settlements, affect the mortgage markets and our

mortgage operations.

The CFPB requires that lenders

determine whether a consumer has the ability to repay a mortgage loan

have limited the secondary market for and liquidity

determine whether a consumer has the ability to repay a mortgage loan have limited

the secondary market for and liquidity

of many mortgage loans that are not “qualified mortgages.”

4 unchanged sentences

Act’s (the “2017 Tax

Act”) limitations on the deductibility of residential mortgage interest

and local property and other taxes and federal moratoria

on single-family foreclosures and rental evictions could adversely

Act”) limitations on the deductibility of residential mortgage interest and state

and local property and other taxes and federal moratoria on single-family

foreclosures and rental evictions could adversely

affect consumer behaviors and the volumes of housing sales,

mortgage and home equity loan originations, as well as the

value and liquidity of residential property held as collateral by lenders

such as the Bank, and the secondary markets for

value and liquidity of residential property held as collateral by lenders such as the Bank, and

the secondary markets for

single and multi-family loans.

1 unchanged sentence

similarly adversely affected.

Fannie Mae and Freddie Mac (“GSEs”), have been in conservatorship

since September 2008.

Fannie Mae and Freddie Mac (“GSEs”), have been in conservatorship since September

Since Fannie Mae and

Freddie Mac dominate the residential mortgage markets, any

changes in their operations and requirements, as well as their

respective restructurings and capital, could adversely affect

the primary and secondary mortgage markets, and our

residential mortgage businesses, our results of operations and

the returns on capital deployed in these businesses.

Freddie Mac dominate the residential mortgage markets, any changes in their

operations and requirements, as well as their

respective restructurings and capital, could adversely affect the

primary and secondary mortgage markets, and our

residential mortgage businesses, our results of operations and the returns on capital

deployed in these businesses.

timing and effects of resolution of these government sponsored

enterprises cannot be predicted.

Weaknesses in real

estate markets the FHFA’s

Weaknesses in real estate

markets the FHFA’s

moratoria on foreclosures and real estate owned evictions may adversely

affect the length of time and costs required to

manage and dispose of, and the values realized from the sale

contractually obligated to repurchase

affect the length of time and costs required to manage and dispose

of, and the values realized from the sale of our OREO.

We may be contractually

obligated to repurchase

mortgage loans we sold to third parties on terms unfavorable

As part of its routine business, the Company originates mortgage loans

that it subsequently sells in the secondary market,

As part of its routine business, the Company originates mortgage loans that it subsequently

sells in the secondary market,

including to governmental agencies and GSEs.

In connection with the sale of these loans, the Company makes customary

representations and warranties, the breach of which may result in

the Company being required to repurchase the loan or

Furthermore, the amount paid may be greater than the fair value of the

loan or loans at the time of the repurchase.

Although mortgage loan repurchase requests made to us have been

limited, if these increased, we may have to establish

representations and warranties, the breach of which may result in the Company

being required to repurchase the loan or

Furthermore, the amount paid may be greater than the fair value of the loan or loans at the time

of the repurchase.

Although mortgage loan repurchase requests made to us have been limited, if these increased,

we may have to establish

reserves for possible repurchases and adversely affect our results of operation

3 unchanged sentences

us to incur additional costs and risks.

The CFPB’s residential mortgage

servicing standards may adversely affect our costs to

service residential mortgage loans,

and together with the Basel III Rules and the effects of

lower interest rates from COVID-19 stimulus, may decrease the

The CFPB’s residential mortgage servicing

standards may adversely affect our costs to service residential

mortgage loans,

and together with the Basel III Rules and the effects of lower interest rates

from COVID-19 stimulus, may decrease the

returns on, and values of, our MSRs.

This could reduce our income from servicing these types

of loans and make it more

difficult and costly to timely realize the value of collateral

securing such loans upon a borrower default.

The soundness of other financial institutions could adversely affect

This could reduce our income from servicing these types of loans and

difficult and costly to timely realize the value of collateral securing

such loans upon a borrower default.

In contrast, rising

interest rates would be expected to reduce mortgage refinancings and extend the duration

The soundness of other financial institutions could adversely affect us.

We routinely execute

1 unchanged sentence

including brokers and dealers,

central clearinghouses, banks, including our correspondent banks

and other financial institutions.

central clearinghouses, banks, including our correspondent banks and other

financial institutions.

Our ability to engage in

routine investment and banking transactions, as well as the quality and

values of our investments in holdings of other

obligations of other financial institutions such as the FHLB, could

be adversely affected by the actions, financial condition,

and profitability of such other financial institutions, including

the FHLB and our correspondent banks.

routine investment and banking transactions, as well as the quality and values of our investments

in holdings of other

obligations of other financial institutions such as the FHLB, could be adversely affected

by the actions, financial condition,

and profitability of such other financial institutions, including the FHLB

and our correspondent banks.

Financial services

institutions are interrelated as a result of shared credits, trading, clearing,

counterparty and other relationships.

defaults by, or failures of, the

institutions we do business with could adversely affect our

holdings of the equity in such

other institutions, our participation interests in loans originated

by other institutions,

institutions are interrelated as a result of shared credits, trading, clearing, counterparty and

other relationships.

defaults by, or failures of, the institutions

we do business with could adversely affect our holdings of the equity in

other institutions, our participation interests in loans originated by other institutions,

and our business, including our

4 unchanged sentences

business, earnings, and financial condition.

Commercial real estate, or CRE, is cyclical and poses risks of possible

loss due to concentration levels and risks of the

assets being financed, which include loans for the acquisition and development

of land and residential construction.

federal bank regulatory

agencies released guidance in 2006 on “Concentrations

Commercial real estate, or CRE, is cyclical and poses risks of possible loss due to concentration

levels and risks of the

assets being financed, which include loans for the acquisition and development of land and

residential construction.

federal bank regulatory agencies released guidance in 2006 on “Concentrations

in Commercial Real Estate Lending.”

guidance defines CRE loans as exposures secured by raw land,

land development and construction loans (including 1-4

guidance defines CRE loans as exposures secured by raw land, land development

and construction loans (including 1-4

family residential construction loans), multi-family property,

4 unchanged sentences

more of the source of repayment comes from third party,

non-affiliated, rental income) or the proceeds

non-affiliated, rental income) or the proceeds of the sale,

refinancing, or permanent financing of the property.

5 unchanged sentences

Excluding owner occupied commercial real estate, we had

of our portfolio in CRE loans at year-end 2020 compared

to 48.0% at year-end 2019.

50.0% of our portfolio in CRE loans at year-end 2021 compared to 43.6% at year-end 2020.

The banking regulators

continue to give CRE lending scrutiny and require banks with

higher levels of CRE loans to implement improved

underwriting, internal controls, risk management policies and

portfolio stress testing, as well as higher levels of allowances

for possible losses and capital levels as a result of CRE lending growth

and exposures.

continue to give CRE lending scrutiny and require banks with higher levels

of CRE loans to implement improved

underwriting, internal controls, risk management policies and portfolio

stress testing, as well as higher levels of allowances

for possible losses and capital levels as a result of CRE lending growth and exposures.

Lower demand for CRE, and

1 unchanged sentence

CRE lending could adversely affect our CRE loans and sales

of our OREO, and therefore our earnings and financial condition,

including our capital and liquidity.

At year-end 2020, 25% of our total loans were CRE

loans to hotels/motels, retail and shopping centers and restaurants,

businesses that have been severely affected by the effects

Our future success is dependent on

our ability to compete effectively in highly competitive markets.

The East Alabama banking markets which we operate

are highly competitive and our future growth and success will

of our OREO, and therefore our earnings and financial condition, including our capital and

At year-end 2021, 21% of our total loans were CRE loans to

hotels/motels, retail and shopping centers and restaurants,

businesses that were severely affected

by the effects of COVID-19.

Our future success is dependent on our ability

to compete effectively in highly competitive markets.

The East Alabama banking markets which we operate are

highly competitive and our future growth and success will

depend on our ability to compete effectively in these markets.

We compete for loans,

deposits and other financial services

with other local, regional and national commercial banks, thrifts, credit

unions, mortgage lenders, and securities and

We compete for loans, deposits

and other financial services

with other local, regional and national commercial banks, thrifts, credit unions,

mortgage lenders, and securities and

insurance brokerage firms.

1 unchanged sentence

Many of our competitors

offer products and services different from

us, and have substantially greater resources, name recognition and

offer products and services different from us, and

have substantially greater resources, name recognition and market

presence than we do, which benefits them in attracting business.

In addition, larger competitors may be able to

and deposits more aggressively than we are able to and have broader

and more diverse customer and geographic bases to

In addition, larger competitors may be able to price loans

and deposits more aggressively than we are able to and have broader and more diverse customer

and geographic bases to

Out of state banks may branch into our markets.

Failures of other banks with offices in our markets could

lead to the entrance of new,

Fintech and other non-bank competitors also complete for our

customers, and may partner with other banks and/or seek to enter the payments system.

Failures of other banks with offices

in our markets could also lead to the entrance of new,

stronger competitors in our markets.

Our success depends on local economic conditions.

Our success depends on the general economic conditions in the

geographic markets we serve in Alabama.

economic conditions in our markets have a significant effect

on our commercial, real estate and construction loans, the

ability of borrowers to repay these loans and the value of the collateral

securing these loans.

Our success depends on the general economic conditions in the geographic

markets we serve in Alabama.

economic conditions in our markets have a significant effect on our

commercial, real estate and construction loans, the

ability of borrowers to repay these loans and the value of the collateral securing these loans.

Adverse changes in the

economic conditions of the Southeastern United States in general,

or in one or more of our local markets, including the

continuous effects from COVID-19 and the timing,

strength and breadth of the recovery from the pandemic,

negatively affect our results of operations and our

profitability.

economic conditions of the Southeastern United States in general, or in one or

more of our local markets, including the

continuous effects from COVID-19 and the timing, strength

and breadth of the recovery from the pandemic, could

negatively affect our results of operations and our profitability.

Our local economy is also affected by the growth of

automobile manufacturing and related suppliers located in our

markets and nearby.

automobile manufacturing and related suppliers located in our markets and

Auto sales are cyclical and are affected

adversely by higher interest rates.

Attractive acquisition opportunities may not be available

to us in the future.

While we seek continued organic growth, we also may

consider the acquisition of other businesses.

Attractive acquisition opportunities may not be available to us in

While we seek continued organic growth, we also may consider

the acquisition of other businesses.

We expect that other

2 unchanged sentences

financial services businesses.

This competition could increase prices for potential acquisitions that

we believe are

This competition could increase prices for potential acquisitions that we believe are

Also, acquisitions are subject to various regulatory approvals.

2 unchanged sentences

we believe is in our best interests, and regulatory

approvals could contain conditions that reduce the anticipated

benefits of any transaction.

approvals could contain conditions that reduce the anticipated benefits of any transaction.

Among other things, our

5 unchanged sentences

equity per share of our common stock.

Future acquisitions and expansion activities

may disrupt our business, dilute shareholder

Future acquisitions and expansion activities may

disrupt our business, dilute shareholder

value and adversely affect our

1 unchanged sentence

We regularly evaluate

potential acquisitions and expansion opportunities, including new

branches and other offices.

potential acquisitions and expansion opportunities, including new branches and

other offices.

extent that we grow through acquisitions, we cannot assure you that

we will be able to adequately or profitably manage this

Acquiring other banks, branches, or businesses, as well as other geographic

and product expansion activities,

Acquiring other banks, branches, or businesses, as well as other geographic and product

expansion activities,

involve various risks including:

1 unchanged sentence

unanticipated costs and delays;

risks that acquired new businesses will not perform consistent with

our growth and profitability expectations;

risks of entering new markets or product areas where we have

limited experience;

risks that acquired new businesses will not perform consistent with our growth

and profitability expectations;

risks of entering new markets or product areas where we have limited experience;

risks that growth will strain our infrastructure, staff, internal

1 unchanged sentence

additional personnel, time and expenditures;

difficulties, expenses and delays of integrating the operations

and personnel of acquired institutions;

difficulties, expenses and delays of integrating the operations and personnel of

acquired institutions;

potential disruptions to our business;

9 unchanged sentences

technological changes with frequent introductions of new technology

driven products and services and growing demands for mobile

and user-based banking applications.

driven products and services and growing demands for mobile and user-based

banking applications.

In addition to allowing

us to analyze our customers better,

the effective use of technology may increase efficiency

and may enable financial

institutions to reduce costs, risks associated with fraud and

compliance with anti-money laundering and other laws, and

us to analyze our customers better, the effective

use of technology may increase efficiency and may enable

institutions to reduce costs, risks associated with fraud and compliance

with anti-money laundering and other laws, and

various operational risks.

1 unchanged sentence

have increased their participation in the lending and

payments businesses, and have increased competition in these

Our future success will depend, in part, upon our

ability to use technology to provide products and services that

meet our customers’ preferences and create additional

payments businesses, and have increased competition in these businesses.

future success will depend, in part, upon our

ability to use technology to provide products and services that meet our customers’ preferences

and create additional

efficiencies in operations, while avoiding cyber-attacks

and disruptions, and data breaches.

The COVID-19 pandemic

increased remote work has accelerated electronic banking activity

and the need for increased operational efficiencies.

and disruptions, data breaches and anti-money laundering

The COVID-19 pandemic and increased remote work has accelerated

electronic banking activity and the need

for increased operational efficiencies.

may need to make significant additional capital investments in technology,

including cyber and data security,

not be able to effectively implement new technology

-driven products and services, or such technology may prove less

effective than anticipated.

Many larger competito

rs have substantially greater resources to invest in technological

improvements and, increasingly,

non-banking firms are using technology to compete with traditional

lenders for loans and

other banking services.

and we may not be able to effectively implement new technology

-driven products and

services, or such technology may prove less effective than anticipated.

Many larger competitors have substantially greater

resources to invest in technological improvements and, increasingly,

non-banking firms are using technology to compete

with traditional lenders for loans and other banking services.

As a result, our competition from service providers not

located in our markets has increased.

Operational risks are inherent

in our businesses.

Operational risks and losses can result from internal and external

gaps or weaknesses in our risk management or

Operational risks and losses can result from internal and external fraud;

weaknesses in our risk management or

internal audit procedures;

errors by employees or third parties,

including our vendors, failures to document transactions

errors by employees or third parties, including our

vendors, failures to document transactions

properly or obtain proper authorizations;

failure to comply with applicable

regulatory requirements in the various

failure to comply with applicable regulatory requirements

in the various

jurisdictions where we do business or have customers;

failures in our

estimates models that rely on;

failures in our estimates

models that rely on;

equipment failures,

1 unchanged sentence

or other essential utility outages;

continuity and data security system failures, including those caused by

computer viruses, cyberattacks, unforeseen

problems encountered while implementing major new computer

systems or, failures to timely and properly

patch existing systems or inadequate access to data or

poor response capabilities in light of such business continuity and

continuity and data security system failures, including those caused by computer

viruses, cyberattacks, unforeseen

problems encountered while implementing major new computer systems or,

failures to timely and properly upgrade and

patch existing systems or inadequate access to data or poor response capabilities in

light of such business continuity and

data security system failures;

or the inadequacy or failure of

systems and controls, including those of our vendors or

or the inadequacy or failure of systems and controls,

including those of our vendors or

counterparties.

The COVID-19 pandemic has presented operational challenges

to maintaining continuity of operations of

customer services while protecting our employees’ and customers’

The COVID-19 pandemic presented operational challenges to

maintaining continuity of operations of

customer services while protecting our employees’ and customers’ safety.

In addition, we face certain risks inherent in the

ownership and operation of our bank premises and other real

-estate, including liability for accidents on our properties.

Although we have implemented risk controls and loss mitigation actions,

and substantial resources are devoted to

ownership and operation

of our bank premises and other real-estate, including liability for accidents on our properties.

Although we have implemented risk controls and loss mitigation actions, and substantial

resources are devoted to

developing efficient procedures, identifying and rectifying

weaknesses in existing procedures and training staff,

possible to be certain that such actions have been or will be

effective in controlling these various operational risks

evolve continuously.

Potential gaps in our risk management policies and internal

audit procedures

weaknesses in existing procedures and training staff and

potential environmental risks, it is not possible to be certain that such actions

have been or will be effective in controlling

these various operational risks that evolve continuously.

Potential gaps in our risk management policies and internal audit procedures

may leave us exposed unidentified or

unanticipated risk, which could negatively affect our business.

Our enterprise risk management and internal audit program is

designed to mitigate material risks and loss to us.

developed and continue to develop risk management and internal

audit policies and procedures to reflect the ongoing

Our enterprise risk management and internal audit program is designed to

mitigate material risks and loss to us.

developed and continue to develop risk management and internal audit policies

and procedures to reflect the ongoing

review of our risks and expect to continue to do so in the future.

Nonetheless, our policies and procedures may not be

comprehensive and may not identify timely every risk to which we

are exposed, and our internal audit process may fail to

detect such weaknesses or deficiencies in our risk management

Nonetheless, our policies

and procedures may not be

comprehensive and may not identify timely every risk to which we are exposed,

and our internal audit process may fail to

detect such weaknesses or deficiencies in our risk management framework.

Many of our risk management models and

estimates use observed historical market behavior to model

or project potential future exposure.

estimates use observed historical market behavior to model or project

potential future exposure.

Models used by our

business are based on assumptions and projections.

models may not operate properly or our inputs and assumptions

may be inaccurate, or changes in economic conditions, customer

behaviors or regulations.

may not operate properly or our inputs and assumptions

may be inaccurate, or changes in economic conditions, customer behaviors

or regulations.

As a result, these methods may

not fully predict future exposures, which can be significantly

greater than historically.

not fully predict future exposures, which can be significantly greater than

historically.

Other risk management methods

depend upon the evaluation of information regarding markets,

clients, or other matters that are publicly available or

depend upon the evaluation of information regarding markets, clients, or

other matters that are publicly available or

otherwise accessible to us.

This information may not always

be accurate, complete, up-to-date or properly evaluated.

Furthermore, there can be no assurance that we can effectively

review and monitor all risks or that all of our employees will

closely follow our risk management policies and procedures,

nor can there be any assurance that our risk management

policies and procedures will enable us to accurately identify all

risks and limit our exposures based on our assessments.

addition, we may have to implement more extensive and perhaps

different risk management policies and procedu

This information may not always be accurate,

complete, up-to-date or properly evaluated.

Furthermore, there can be no assurance that we can effectively review

and monitor all risks or that all of our employees will

closely follow our risk management policies and procedures, nor can there be any assurance

that our risk management

policies and procedures will enable us to accurately identify all risks and limit our exposures

based on our assessments.

addition, we may have to implement more extensive

and perhaps different risk management policies and procedures

regulation changes.

All of these could adversely affect our financial condition

and results of operations.

For example, the Federal Reserve and the OCC are in the initial stages of proposing

management criteria and potential climate risk stress tests.

The SEC is expected to require more disclosure on climate

All of these could adversely affect our financial condition and results

of operations.

Any failure to protect

the confidentiality of customer information could adversely affect our

reputation and have a material

adverse effect on our business, financial condition and

results of operations

laws enforced by the bank regulators and other agencies protect

the privacy and security of customers’ non-public

the confidentiality of customer information could adversely affect our reputation

and have a material

adverse effect on our business, financial condition and results

of operations

laws enforced by the bank regulators and other agencies protect the privacy and security of

customers’ non-public

personal information.

Many of our employees have access to,

and routinely process personal information of clients through

Many of our employees have access to, and routinely process

personal information of clients through

a variety of media, including information technology systems.

Our internal processes and controls are designed to protect

the confidentiality of client information we hold and that is accessible

to us and our employees.

the confidentiality of client information we hold and that is accessible to us and our employees.

It is possible that an

employee could, intentionally or unintentionally,

disclose or misappropriate confidential client information or

disclose or misappropriate confidential client information or our data

could be the subject of a cybersecurity attack.

Such personal data could also be compromised via intrusions into

systems or those of our service providers or persons we do business

with such as credit bureaus, data processors and

Such personal data could also be compromised via intrusions into our

systems or those of our service providers or persons we do business with such as credit

bureaus, data processors and

merchants who accept credit or debit cards for payment.

fail to maintain adequate internal controls, or if our

employees fail to comply with our policies and procedures,

misappropriation or inappropriate disclosure or misuse of client

If we fail to

maintain adequate internal controls, or if our

employees fail to comply with our policies and procedures, misappropriation

or inappropriate disclosure or misuse of client

information could occur.

internal control inadequacies or non-compliance could materially damage

our reputation,

internal control inadequacies or non-compliance could materially damage our

lead to remediation costs and civil or criminal penalties.

4 unchanged sentences

We rely heavily on communications

and information systems, including those provided

by third-party service providers, to

and information systems, including those provided by third-party service

providers, to

conduct our business.

Any failure, interruption, or security breach of these systems could

result in failures or disruptions

which could affect our customers’ privacy and our

customer relationships, generally.

Any failure, interruption, or security breach of these systems could result in failures

or disruptions

which could affect our customers’ privacy and our customer

relationships, generally.

Our business continuity plans,

including those of our service providers, to provide back-up and

restore service may not be effective in the case of

including those of our service providers, to provide back-up and restore service

may not be effective in the case of

widespread outages due to severe weather,

natural disasters, pandemics, or power,

communications and other failures.

Our systems and networks, as well as those of our third-party service

providers, are subject to security risks and could be

natural disasters, pandemics, or power, communications

and other failures.

Our systems and networks, as well as those of our third-party service providers,

are subject to security risks and could be

susceptible to cyber-attacks, such as denial of service attacks,

1 unchanged sentence

Cybercrime risks

have increased as electronic and mobile banking activities increased

as a result of the COVID-19 pandemic.

financial service institutions and their service providers have reported

material security breaches in their websites or other

systems, some of which have involved sophisticated and targeted

attacks, including use of stolen access credentials,

malware, ransomware, phishing and distributed denial-of

have increased as electronic and mobile banking activities increased as a result

of the COVID-19 pandemic, and may

increase as a result of the Russia invasion of Ukraine.

Other financial service institutions and their service providers have

reported material security breaches in their websites or other systems, some of

which have involved sophisticated and

targeted attacks, including use of stolen access credentials, malware,

ransomware, phishing and distributed denial-of-

service attacks, among other means.

Such cyber-attacks may also

seek to disrupt the operations of public companies or their business

partners, effect unauthorized fund transfers, obtain

unauthorized access to confidential information, destroy data,

disable or degrade service, or sabotage systems.

service attacks have

been launched against a number of financial services institutions,

and we may be subject to these types

of attacks in the future.

Hacking and identity theft risks, in particular,

could cause serious reputational harm.

Despite our cybersecurity policies and procedures and our

Board of Director’s and Management’s

efforts to monitor and

ensure the integrity of the system we use, we may not be able

to anticipate the rapidly evolving security threats, nor may we

Such cyber-attacks may also seek to disrupt the operations of public companies

their business partners, effect unauthorized fund transfers, obtain unauthorized

access to confidential information, destroy

data, disable or degrade service, or sabotage systems.

Denial of service attacks have been launched against a number of

financial services institutions, and we may be subject to these types of attacks in

Hacking and identity theft risks,

in particular, could cause serious reputational harm.

Despite our cybersecurity policies and procedures and our Board

of Director’s and Management’s efforts

to monitor and

ensure the integrity of the system we use, we may not be able to anticipate the rapidly evolving

security threats, nor may we

be able to implement preventive measures effective against

1 unchanged sentence

The techniques used by cyber criminals change

frequently, may not be recognized

until launched and can originate from a wide variety of sources, including

outside groups

such as external service providers, organized crime

affiliates, terrorist organizations or

hostile foreign governments.

risks may increase in the future as the use of mobile banking

and other internet electronic banking continues to grow.

Security breaches or failures may have serious adverse financial and

other consequences, including significant legal and

remediation costs, disruptions to operations, misappropriation of confidential

information, damage to systems operated by

us or our third-party service providers, as well as damages to

our customers and our counterparties.

frequently, may not be recognize

until launched and can originate from a wide variety of sources, including outside groups

such as external service providers, organized crime affiliates,

terrorist organizations or hostile foreign governments.

risks may increase in the future as the use of mobile banking and other internet

electronic banking continues to grow.

Security breaches or failures may have serious adverse financial and other consequences,

including significant legal and

remediation costs, disruptions to operations, misappropriation of confidential information,

damage to systems operated by

us or our third-party service providers, as well as damages to our customers and our

counterparties.

In addition, these events

could damage our reputation, result in a loss of customer business, subject

us to additional regulatory scrutiny,

could damage our reputation, result in a loss of customer business, subject us to additional

regulatory scrutiny, or expose

to civil litigation and possible financial liability,

any of which could have a material adverse effect

on our financial

any of which could have a material adverse effect on

our financial

condition and results of operations.

unable to attract and retain key

people to support our business.

Our success depends, in large part, on our ability to attract

and retain key people.

compete with other financial services

companies for people primarily on the basis of compensation and

benefits, support services and financial position.

We may be unable

to attract and retain key people to support our business.

Our success depends, in large part, on our ability to attract and retain key people.

with other financial services

companies for people primarily on the basis of compensation and benefits,

support services and financial position.

competition exists for key employees with demonstrated ability,

and we may be unable to hire or retain such employees.

Effective succession planning is also important to

our long-term success.

The unexpected loss of services of one or

our key persons and failure to ensure effective transfer

of knowledge and smooth transitions involving such persons

have a material adverse effect on our business due

to loss of their skills, knowledge of our business, their years

experience and the potential difficulty of promptly finding

qualified replacement employees.

Proposed rules implementing the executive compensation provisions

of the Dodd-Frank Act may limit the type and

structure of compensation arrangements and prohibit the payment

of “excessive compensation” to our executives.

restrictions could negatively affect our ability to compete

with other companies in recruiting and retaining key personnel.

Severe weather,

natural disasters, pandemics, epidemics, acts of war or terrorism

or other external events could have

significant effects on our business.

Effective succession planning is also important to our long-term

The unexpected loss of services of one or more of

our key persons and failure to ensure effective transfer of knowledge

and smooth transitions involving such persons could

have a material adverse effect on our business due to loss of their skills,

knowledge of our business, their years of industry

experience and the potential difficulty of promptly finding qualified

replacement employees.

Proposed rules implementing the executive compensation provisions of the

Dodd-Frank Act may limit the type and

structure of compensation arrangements and prohibit the payment of “excessive

compensation” to our executives.

restrictions could negatively affect our ability to compete with other companies

in recruiting and retaining key personnel.

Severe weather and natural disasters, including

as a result of climate change, pandemics, epidemics,

acts of war or

terrorism or other external events could

have significant effects on our business.

Severe weather and natural disasters, including hurricanes, tornados,

drought and floods, epidemics and pandemics, acts of

war or terrorism or other external events could have a significant effect

on our ability to conduct business.

could affect the stability of our deposit base,

impair the ability of borrowers to repay outstanding loans, impair the value

collateral securing loans, cause significant property damage,

result in loss of revenue and/or cause us to incur additional

war or terrorism or other external events could have a significant effect on our

ability to conduct business.

could affect the stability of our deposit base, impair the ability of borrowers

to repay outstanding loans, impair the value of

collateral securing loans, cause significant property damage, result in loss of revenue

and/or cause us to incur additional

Although management has established disaster recovery and business continuity

3 unchanged sentences

adverse effect on our financial condition and results of operations.

The coronavirus or COVID-19 pandemic, trade wars, tariffs,

and similar events and disputes, domestic and international,

have adversely affected, and may continue to adversely affect

economic activity globally,

The COVID-19 pandemic, trade wars, tariffs, and similar events and

disputes, domestic and international, have adversely

affected, and may continue to adversely affect economic

activity globally,

nationally and locally.

interest rates have declined significantly during 2020,

and remain low.

Such events also may adversely affect business

consumer confidence, generally.

customers, and our respective suppliers, vendors and processors

adversely affected.

Any such adverse changes may adversely affect our

profitability, growth asset

quality and financial

Market interest rates have

declined significantly during 2020, and remain low,

but may begin increasing in early 2022 due to inflation.

also may adversely affect business and consumer confidence,

We and our customers,

and our respective

suppliers, vendors and processors may be adversely affected

by rising costs and shortages of needed equipment and

Any such adverse changes may adversely affect our profitability,

growth asset quality and financial condition.

Financial Risks

Our ability to realize our deferred

tax assets may be reduced in the

future if our estimates of future

taxable income from

our operations and tax planning strategies do not support

this amount, and the amount of net operating loss carry-forwards

realizable for income tax purposes may

be reduced under Section 382 of

the Internal Revenue Code by sales of our capital

tax assets may be reduced in the future

if our estimates of future taxable income from

our operations and tax planning strategies do not support this amount, and the amount

of net operating loss carry-forwards

realizable for income tax purposes may be reduced

under Section 382 of the Internal Revenue Code by sales of our capital

allowed to carry-back losses for two years for Federal income tax purposes.

As of December 31, 2022, we had a

net deferred tax liability of $1.5 million with gross deferred tax assets

of $1.9 million.

net deferred tax asset of $0.4 million with gross deferred tax assets of $1.7

These and future deferred tax assets

may be further reduced in the future if our estimates of future

taxable income from our operations and tax planning

may be further reduced in the future if our estimates of future taxable income from our

operations and tax planning

strategies do not support the amount of the deferred tax asset.

The amount of net operating loss carry-forwards realizable

for income tax purposes potentially could be further reduced

under Section 382 of the Internal Revenue Code by a

for income tax purposes potentially could be further reduced under Section 382

of the Internal Revenue Code by a

significant offering and/or other sales of our capital securities.

1 unchanged sentence

benefits of deferred tax assets.

Our cost of funds may increase as a

result of general economic conditions,

interest rates, inflation and competitive

The Federal Reserve shifted to a more accommodating monetary

policy in Summer 2019.

Our cost of funds may increase as a result

of general economic conditions, interest rates, inflation

and competitive

The Federal Reserve shifted to a more accommodating monetary policy in

During 2020, the Federal Reserve

reduced its federal funds target to 0-0.25%

is continuing significant monthly purchases of U.S.

mortgage-backed securities to help combat the economic effect

of the COVID-19 pandemic.

Since November 2020,

interest rates have increased, possibly as a result of increased government

borrowings to finance rounds of fiscal stimulus

and increased inflation expectations resulting from such stimulus

and expected increases in economic growth from fiscal

and monetary stimulus and COVID-19 vaccinations.

Our costs of funds may increase as a result of general economic

conditions, increasing interest rates and competitive pressures, and

potential inflation resulting from continued government

deficit spending and monetary policies.

reduced its federal funds target to 0-0.25% and has made significant

monthly purchases of U.S.

Treasury and agency

mortgage-backed securities to help stimulate the economy,

market interest rates have increased, possibly as a result of

increased government borrowings to finance rounds of fiscal stimulus and

increased inflation expectations resulting from

such stimulus and expected increases in economic growth from fiscal and

monetary stimulus and COVID-19 vaccinations.

Our costs of funds may increase as a result of general economic conditions, increasing

interest rates and competitive

pressures, and potential inflation resulting from continued government deficit spending

and monetary policies, and

anticipated changes by the Federal Reserve to a less accommodative monetary policy.

Traditionally,

we have obtained funds principally through local deposits and

borrowings from other institutional lenders, which we believe

are a cheaper and more stable source of funds than

we have obtained

funds principally through local deposits and borrowings from other institutional

lenders, which we believe are a cheaper

and more stable source of funds than borrowings.

Increases in interest rates may cause consumers to shift their funds to

more interest bearing instruments and to

increase the competition for and costs of deposits.

If customers move money out of bank deposits and into other

investment assets or from transaction deposits to higher interest bearing

time deposits, we could lose a relatively low cost

source of funds, increasing our funding costs and reducing our net interest

income and net income.

Additionally,

loss of funds could result in lower loan originations and growth, which could

materially and adversely affect our results of

operations and financial condition.

Our profitability and liquidity may

be affected by changes in interest rates and

interest rate levels, the shape of

more interest bearing instruments and to increase the competition for and costs of

If customers move money out

of bank deposits and into other investment assets or from transaction deposits to higher interest

bearing time deposits, we

could lose a relatively low cost source of funds, increasing our funding costs and reducing our

net interest income and net

Additionally, any

such loss of funds could result in lower loan originations and growth, which could

materially and

adversely affect our results of operations and financial condition.

Our profitability and liquidity may be

affected by changes in interest rates and interest

rate levels, the shape of the yield

curve and economic conditions.

1 unchanged sentence

between interest earned on interest-earning

assets, such as loans and investments, and interest expense on interest

-bearing liabilities, such as deposits and borrowings.

Net interest income will be adversely affected if market

interest rates on the interest we pay on deposits and borrowings

assets, such as loans and investments, and interest expense on interest-bearing liabilities,

such as deposits and borrowings.

Net interest income will be adversely affected if market interest

rates on the interest we pay on deposits and borrowings

increases faster than the interest earned on loans and investments.

Interest rates, and consequently our results of operations,

are affected by

general economic conditions (national, international and local) and

fiscal and monetary policies, as well as

expectations of these rates and policies and the shape of the yield curve.

Our income is primarily driven by the spread

between these rates.

As a result, a steeper yield curve, meaning long

-term interest rates are significantly higher than short-

term interest rates, would provide the Bank with a better opportunity

to increase net interest income.

flattening yield curve could pressure our net interest margin

as our cost of funds increases relative to the spread we can earn

on our assets.

In addition, net interest income could be affected

by asymmetrical changes in the different interest rate

indexes, given that not all of our assets or liabilities are priced

with the same index.

The 2019 and 2020 rate reductions by

the Federal Reserve and the effects of the COVID

-19 pandemic have reduced market rates, which adversely affected

net interest income and our results of operations.

The production of mortgages and other loans and the value of

collateral securing our loans are dependent on demand within

are affected by general economic conditions (national, international and

local) and fiscal and monetary policies, as well as

expectations of interest rate changes, fiscal and monetary policies and the shape of the

Our income is primarily

driven by the spread between these rates.

As a result, a steeper yield curve,

meaning long-term interest rates are

significantly higher than short-term interest rates, would

provide the Bank with a better opportunity to increase net interest

Conversely, a

flattening yield curve could further pressure our net interest margin

as our cost of funds increases

relative to the spread we can earn on our assets.

In addition, net interest income could

be affected by asymmetrical changes

in the different interest rate indexes, given that not all of our assets or liabilities

are priced with the same index.

interest rate reductions by the Federal Reserve and the effects of the

COVID-19 pandemic have reduced market rates,

which adversely affected our net interest income and our results of operations.

The production of mortgages and other loans and the value of collateral

securing our loans are dependent on demand within

the markets we serve, as well as interest rates.

Lower interest rates typically increase mortgage originations, decrease

Lower interest rates typically increase mortgage originations, decrease MSR

values, and facilitate pandemic-related trends to single family houses.

Increases in market interest rates would tend to

decrease mortgage originations, increase MSR values and potentially

increase net interest spread depending upon the yield

decrease mortgage originations, increase MSR values and potentially increase

net interest spread depending upon the yield

curve and the magnitude and duration of interest rate increase.

2 unchanged sentences

Liquidity is essential to our business.

An inability to raise funds through deposits, borrowings,

proceeds from loan

repayments or sales proceeds from maturing loans and securities,

and other sources could have a negative effect on our

Our funding sources include federal funds purchased, securities sold

under repurchase agreements, core and non-

core deposits, and short-

and long-term debt.

We maintain a

portfolio of securities that can be used as a source of liquidity.

also members of the FHLB and the Federal Reserve Bank of Atlanta, where

we can obtain advances collateralized

An inability to raise funds through deposits, borrowings, proceeds from loan

repayments or sales proceeds from maturing loans and securities, and other sources

could have a negative effect on our

Our funding sources include federal funds purchased, securities sold under

repurchase agreements, core and non-

core deposits, and short- and long-term debt.

maintain a portfolio of securities that can be used as a source of liquidity.

also members of the FHLB and the Federal Reserve Bank of Atlanta, where we can obtain advances

collateralized

with eligible assets.

There are other sources of liquidity available to

the Company or the Bank should they be needed,

including our ability to acquire additional non-core deposits.

There are other sources of liquidity available to the Company or the Bank

should they be needed,

including our ability to acquire additional

non-core deposits.

We may be able, depending

upon market conditions, to

otherwise borrow money or issue and sell debt and preferred or

common securities in public or private transactions.

access to funding sources in amounts adequate to finance or

capitalize our activities on terms which are acceptable to

otherwise borrow money or issue and sell debt and preferred or common securities in public

or private transactions.

access to funding sources in amounts adequate to finance or capitalize our activities

on terms which are acceptable to us

could be impaired by factors that affect us specifically,

or the financial services industry or the economy in general.

General conditions that are not specific to us, such as disruptions in

the financial markets or negative views and

expectations about the prospects for the financial services industry

could adversely affect us.

The COVID-19 pandemic generally has increased our deposits and at

banks, generally, while

reducing the interest rate

available on loans and securities.

Such excess liquidity and the resulting balance sheet growth requires

support and may reduce returns on assets and equity.

Changes in accounting and tax rules applicable to

banks could adversely affect our financial conditions and

General conditions that are not specific to us, such as disruptions in the financial

markets or negative views and

expectations about the prospects for the financial services industry could

adversely affect us.

The COVID-19 pandemic generally has increased our deposits and at banks, generally,

while reducing the interest rates

earned on loans and securities.

Such excess liquidity and the resulting balance sheet growth requires capital support

may reduce returns on assets and equity.

Changes in accounting and tax rules applicable to banks could adversely

affect our financial conditions and results of

From time to time, the FASB

and the SEC change the financial accounting and reporting standards

that govern the

and the SEC change the financial accounting and reporting standards that govern the

preparation of our financial statements.

These changes can be difficult to predict and can materially

impact how we record

These changes can be difficult to predict and can materially impact

how we record

and report our financial condition and results of operations.

3 unchanged sentences

guidance under ASU No.

2016-13 includes significant changes to the manner in which

banks’ allowance for loan losses will be effective for

2016-13 includes significant changes to the manner in which banks’ allowance

for loan losses will be effective for us

beginning January 1, 2023.

Instead of using historical losses, the CECL model is forward-looking

with respect to expected

losses over the life of loans and other instruments, and could materially

affect our results of operations and financial

condition, including the variability of our results of operations

and our regulatory capital, notwithstanding a three-year

Instead of using historical losses, the CECL model is forward-looking with respect

losses over the life of loans and other instruments, and could materially affect our

results of operations and financial

condition, including the variability of our results of operations and our regulatory

capital, notwithstanding a three-year

phase-in of CECL for regulatory capital purposes.

to raise additional capital in the future,

but that capital may not be available when it is needed or

to raise additional capital in the future, but that capital

may not be available when it is needed or on

favorable terms.

We anticipate that our

current capital resources will satisfy our capital requirements

for the foreseeable future under

We anticipate that our current

capital resources will satisfy our capital requirements for the foreseeable

currently effective rules.

however, need to raise additional capital

to support our growth or currently

unanticipated losses, or to meet the needs of our communities,

resulting from failures or cutbacks by our competitors.

ability to raise additional capital, if needed, will depend, among

other things, on conditions in the capital markets at that

time, which are limited by events outside our control, and on

our financial performance.

however, need to raise additional capital to

support our growth or currently

unanticipated losses, or to meet the needs of our communities, resulting from failures or

cutbacks by our competitors.

ability to raise additional capital, if needed, will depend, among other things,

on conditions in the capital markets at that

time, which are limited by events outside our control, and on our financial performance.

If we cannot raise additional

capital on acceptable terms when needed, our ability to further

expand our operations through internal growth and

capital on acceptable terms when needed, our ability to further expand our

operations through internal growth and

acquisitions could be limited.

Our associates may take excessive risks which could negatively

affect our financial condition and business.

Our associates may take excessive risks which could negatively affect our financial

condition and business.

Banks are in the business of accepting certain risks.

3 unchanged sentences

exposing us to risk.

endeavor, in the design and implementation

of our compensation programs and practices, to avoid

in the design and implementation of our compensation programs and practices, to avoid

giving our associates incentives to take excessive risks;

associates may nonetheless take such risks.

although we employ controls and procedures designed to prevent

misconduct, to monitor associates’ business decisions and

prevent them from taking excessive risks, these controls and

procedures may not be effective.

although we employ controls and procedures designed to prevent misconduct,

to monitor associates’ business decisions and

prevent them from taking excessive risks, these controls and procedures

may not be effective.

If our associates take

excessive risks, risks to our reputation, financial condition and

business operations could be materially and adversely

excessive risks, risks to our reputation, financial condition and business operations

could be materially and adversely

Our ability to continue to pay dividends to shareholders

3 unchanged sentences

and these limitations may prevent or limit future

Cash available to pay dividends to our shareholders is derived

primarily from dividends paid to the Company by the Bank.

The ability of the Bank to pay dividends, as well as our ability

to pay dividends to our shareholders, will continue to be

subject to and limited by laws limiting dividend payments by

the Bank, the results of operations of our subsidiaries and our

need to maintain appropriate liquidity and capital at all levels

of our business consistent with regulatory requirements and

Cash available to pay dividends to our shareholders is derived primarily from dividends paid

to the Company by the Bank.

The ability of the Bank to pay dividends, as well as our ability to pay dividends to our shareholders,

will continue to be

subject to and limited by laws limiting dividend payments by the Bank, the results of operations

of our subsidiaries and our

need to maintain appropriate liquidity and capital at all levels of our business consistent

with regulatory requirements and

the needs of our businesses.

2 unchanged sentences

which could result in price volatility.

ability to sell or purchase common shares depends

upon the existence of an active trading market for our common

Although our common stock is quoted on the Nasdaq Global Market

under the trading symbol “AUBN,” our historic

ability to sell or purchase common shares depends upon the existence of an active trading

market for our common

Although our common stock is quoted on the Nasdaq Global Market under the trading

symbol “AUBN,” our historic

trading volume has been limited historically.

As a result, you may be unable to sell or purchase shares of our

As a result, you may be unable to sell or purchase shares of our common

stock at the volume, price and time that you desire.

2 unchanged sentences

reflects a reasonable valuation of our common stock also is affected

by an active trading market, and thus the price you

receive for a thinly-traded stock such as our common stock, may not

reflect its true or intrinsic value.

by limited trading market, and thus the price you

receive for a thinly-traded stock such as our common stock, may not reflect its true or intrinsic

The limited trading

market for our common stock may cause fluctuations in the market value

of our common stock to be exaggerated, leading

to price volatility in excess of that which would occur in a more

active trading market.

market for our common stock may cause fluctuations in the market value of our common

stock to be exaggerated, leading

to price volatility in excess of that which would occur in a more active trading

Legal and Regulatory Risks

1 unchanged sentence

The Company is an entity separate and distinct from the Bank.

transactions with the Bank are limited by Sections

23A and 23B of the Federal Reserve Act and Federal Reserve

Regulation W.

Company transactions

with the Bank are limited by Sections

23A and 23B of the Federal Reserve Act and Federal Reserve Regulation

We depend upon the Bank’s

dividends, which are limited by law and regulatory policies and actions,

for cash to pay the Company’s debt

and corporate

dividends, which are limited by law and regulatory policies and actions, for cash to pay the

Company’s debt and corporate

obligations, and to pay dividends to our shareholders.

If the Bank’s ability to pay dividends

to the Company was

terminated or limited, the Company’s

liquidity and financial condition could be materially

and adversely affected.

If the Bank’s ability to pay dividends to the Company

terminated or limited, the Company’s liquidity

and financial condition could be materially and adversely affected.

Legislative and regulatory changes

The Biden Administration may propose changes to bank regulation and

corporate tax changes that could have an adverse

effect on our results of operations and financial conditions.

subject to extensive regulation

that could limit or restrict our activities and adversely

affect our earnings.

subsidiaries are regulated by several regulators, including the Federal

Reserve, the Alabama Superintendent,

The Biden Administration is appointing new members to FDIC and Federal

Reserve Board, and has appointed an acting

Comptroller of the Currency and a new full time CFPB director.

This Administration and its appointees propose changes to

bank regulation and corporate tax changes that could have an adverse effect

on our results of operations and financial

subject to extensive regulation that could limit or restrict

our activities and adversely affect our earnings.

We and our subsidiaries are

regulated by several regulators, including the Federal Reserve, the

Alabama Superintendent,

the SEC and the FDIC.

Our success is affected by state and federal regulations affecting

Our success is affected by state and federal laws and regulations affecting

banks and bank holding

companies, and the securities markets, and our costs of compliance

could adversely

affect our earnings.

regulations are primarily intended to protect depositors, and

the FDIC Deposit Insurance Fund (“DIF”), not shareholders.

The financial services industry also is subject to frequent legislative

and regulatory changes and proposed changes.

addition, the interpretations of regulations by regulators may

change and statutes may be enacted with retroactive impact.

From time to time, regulators raise issues during examinations of us

which, if not determined satisfactorily,

companies, and the securities markets, and our costs of compliance could adversely affect

our earnings.

regulations are primarily intended to protect depositors, and the FDIC Deposit Insurance

Fund (“DIF”), not shareholders.

The financial services industry also is subject to frequent legislative and regulatory

changes and proposed changes.

addition, the interpretations of regulations by regulators may change and statutes

may be enacted with retroactive impact.

From time to time, regulators raise issues during examinations of us which,

if not determined satisfactorily,

material adverse effect on us.

2 unchanged sentences

affect our profitability.

The position of the President and his administration that took

office in January 2021 with respect to

regulation of banks and bank holding companies by our new President is

not yet known, their views and actions could have

a material adverse effect on financial services regulation,

Litigation and regulatory actions could

harm our reputation and adversely affect our

results of operations and financial

A substantial legal liability or a significant regulatory action against us,

as well as regulatory inquiries or investigations,

could harm our reputation, result in material fines or penalties,

result in significant legal costs, divert management resources

away from our business, and otherwise have a material adverse effect

on our ability to expand on our existing business,

financial condition and results of operations.

position of the President and his administration that took office

in January 2021 with respect to

regulation of banks and bank holding companies is not yet fully known, but

their views and actions could have a material

adverse effect on financial services regulation, generally.

Litigation and regulatory actions could harm

our reputation and adversely affect our results

of operations and financial

A substantial legal liability or a significant regulatory action against us, as well as regulatory

inquiries or investigations,

could harm our reputation, result in material fines or penalties, result in significant

legal and other costs, divert management

resources away from our business, and otherwise have a material adverse

effect on our ability to expand on our existing

business, financial condition and results of operations.

Even if we ultimately

prevail in litigation, regulatory investigation or action,

our ability to attract new customers, retain our current customers

and recruit and retain employees could be materially and

adversely affected.

Regulatory inquiries and litigation may

also adversely affect the prices or volatility of our

specifically, or the securities of

our industry, generally.

prevail in litigation, regulatory investigation or

action, our ability to attract new customers, retain our current customers and recruit and

retain employees could be

materially and adversely affected.

Regulatory inquiries and litigation

may also adversely affect the prices or volatility of

our securities specifically, or the

securities of our industry,

required to maintain

1 unchanged sentence

and if we fail to maintain sufficient capital, our

financial condition, liquidity and results

of operations would be adversely affected.

We and the Bank must

meet regulatory capital requirements and maintain sufficient

financial condition, liquidity and results of operations

would be adversely affected.

We and the Bank

must meet regulatory capital requirements and maintain sufficient

liquidity, including liquidity

Company, as well as

Company, as well as the Bank.

If we fail to meet these capital and other regulatory requirements, including

more rigorous

requirements arising from our regulators’ implementation of Basel

III, our financial condition, liquidity and results of

requirements arising from our regulators’ implementation of Basel III,

our financial condition, liquidity and results of

operations would be materially and adversely affected.

2 unchanged sentences

for bank regulatory purposes, could affect customer

confidence, our ability to grow,

our costs of funds and FDIC insurance, our ability to raise

brokered deposits and our ability

to pay dividends on our common stock and our ability to make acquisitions,

and we may no longer meet the requirements

for becoming a financial holding company.

These could also affect our ability to use discretionary

bonuses to attract and

retain quality personnel.

The Basel III Capital Rules include a minimum ratio of

common equity tier 1 capital, or CET1, to

risk-weighted assets of 4.5% and a capital conservation buffer

of 2.5% of risk-weighted assets.

confidence, our ability to grow, our

costs of funds and FDIC insurance, our ability to raise brokered deposits,

our ability to

pay dividends on our common stock and our ability to make acquisitions, and

we may no longer meet the requirements for

becoming a financial holding company.

These could also affect our ability to use discretionary bonuses

to attract and retain

quality personnel.

The Basel III Capital Rules include a minimum ratio of common equity

tier 1 capital, or CET1, to risk-

weighted assets of 4.5% and a capital conservation buffer of 2.5% of risk-weighted

“Supervision and

Regulation—Basel III Capital Rules.”

Although we currently have capital ratios that exceed all these minimum

a strategic plan to maintain these levels, we or the Bank may be

unable to continue to satisfy the capital adequacy

Although we currently have capital ratios that exceed all these minimum levels and

a strategic plan to maintain these levels, we or the Bank may be unable to continue

to satisfy the capital adequacy

requirements for various reasons, which may include:

losses and/or increases in the Bank’s

credit risk assets and expected losses resulting from the deterioration

creditworthiness of borrowers and the issuers of equity and

debt securities;

difficulty in refinancing or issuing instruments upon redemption

or at maturity of such instruments to raise capital

losses and/or increases in the Bank’s credit

risk assets and expected losses resulting from the deterioration in the

creditworthiness of borrowers and the issuers of equity and debt securities;

difficulty in refinancing or issuing instruments upon redemption or

at maturity of such instruments to raise capital

under acceptable terms and conditions;

declines in the value of our securities portfolios;

revisions to the regulations or their application by our regulators

that increase our capital requirements;

reduced total earnings on our assets will reduce our internal generation

of capital available to support our balance

revisions to the regulations or their application by our regulators that increase our capital requirements;

reduced total earnings on our assets will reduce our internal generation of capital

available to support our balance

sheet growth;

2 unchanged sentences

unexpected growth and an inability to increase capital timely.

A failure to remain “well capitalized,” for bank regulatory purposes,

including meeting the Basel III Capital Rule’s

conservation buffer, could adversely

affect customer confidence, and our:

A failure to remain “well capitalized,” for bank regulatory purposes, including

meeting the Basel III Capital Rule’s

conservation buffer, could adversely affect

customer confidence, and our:

ability to grow;

2 unchanged sentences

ability to raise or replace brokered deposits;

ability to pay dividends on our capital stock.

ability to pay or increase dividends on our capital stock.

ability to make discretionary bonuses to attract and retain quality personnel;

1 unchanged sentence

flexibility if we become subject to prompt corrective action restrictions;

ability to make payments of principal and interest on our capital

ability to make payments of principal and interest on our capital instruments;

The Federal Reserve may require

2 unchanged sentences

As a matter of policy, the Federal

Reserve expects a bank holding company to act as a source of financial

and managerial

strength to a subsidiary bank and to commit resources to support

such subsidiary bank.

The Federal Reserve may require a

bank holding company to make capital injections into a troubled

subsidiary bank.

Reserve expects a bank holding company to act as a source of financial and

strength to a subsidiary bank and to commit resources to support such subsidiary bank.

Federal Reserve may require a

bank holding company to make capital injections into a troubled subsidiary bank.

In addition, the Dodd-Frank Act amended

the FDI Act to require that all companies that control a FDIC-insured

depository institution serve as a source of financial

the FDI Act to require that all companies that control a FDIC-insured depository institution

serve as a source of financial

strength to their depository institution subsidiaries.

requirements, we could be required to provide financial

assistance to the Bank should it experience financial distress,

even if further investment was not otherwise warranted.

Under these requirements,

we could be required to provide financial

assistance to the Bank should it experience financial distress, even if further investment

was not otherwise warranted.

“Supervision and Regulation.”

Our operations are subject to risk of loss from

unfavorable fiscal, monetary and political developments

Our businesses and earnings are affected by the fiscal, monetary

and other policies and actions

of various U.S.

unfavorable fiscal, monetary and political developments in the

Our businesses and earnings are affected by the fiscal, monetary and other

policies and actions of various U.S.

governmental and regulatory authorities.

Changes in these are

beyond our control and are difficult to predict and,

Changes in these are beyond our control

and are difficult to predict and,

consequently, changes in these

policies could have negative effects on our activities and results

of operations.

the executive and legislative branches to agree on spending plans and

budgets previously have led to Federal government

policies could have negative effects on our activities and results of operations.

the executive and legislative branches to agree on spending plans and budgets previously

have led to Federal government

shutdowns, which may adversely affect the U.S.

4 unchanged sentences

government workers who are not paid during such events, and

where the absence of government services and data could adversely affect

consumer and business sentiment, our local

where the absence of government services and data could adversely affect consumer

and business sentiment, our local

economy and our customers and therefore our business.

Litigation and regulatory investigations

are increasingly

common in our businesses and

may result in significant financial

Litigation and regulatory investigations are

increasingly common in our businesses and may result

in significant financial

losses and/or harm to our reputation.

We face risks of litigation

and regulatory investigations and actions in the ordinary course

of operating our businesses,

and regulatory investigations and actions in the ordinary course of operating

our businesses,

including the risk of class action lawsuits.

in class action and other lawsuits against us may seek very large

Plaintiffs in class

action and other lawsuits against us may seek very large and/or

indeterminate amounts, including punitive and treble damages.

the vagaries of litigation, the ultimate outcome of

litigation and the amount or range of potential loss at particular

points in time may be difficult to ascertain.

Due to the vagaries of litigation,

the ultimate outcome of

litigation and the amount or range of potential loss at particular points in time may be difficult

to ascertain.

any material pending litigation or regulatory matters affecting

Failures to comply with the fair lending

laws, CFPB regulations or the Community

Reinvestment Act, or CRA, could

Failures to comply with the fair lending laws, CFPB regulati

ons or the Community Reinvestment Act, or CRA, could

adversely affect us.

The Bank is subject to, among other things, the provisions of

the Equal Credit Opportunity Act, or ECOA, and the Fair

Housing Act, both of which prohibit discrimination based on

race or color, religion, national origin, sex

and familial status

in any aspect of a consumer, commercial credit

or residential real estate transaction.

The DOJ and the federal

regulatory agencies have issued an Interagency Policy Statement

on Discrimination in Lending have provided guidance

financial institutions to evaluate whether discrimination exists

and how the agencies will respond to lending discrimination,

and what steps lenders might take to prevent discriminatory lending

The Bank is subject to, among other things, the provisions of the Equal Credit Opportunity

Act, or ECOA, and the Fair

Housing Act, both of which prohibit discrimination based on race or

color, religion, national origin, sex and familial status

in any aspect of a consumer, commercial credit or

residential real estate transaction.

The DOJ and the federal bank

regulatory agencies have issued an Interagency Policy Statement on Discrimination

in Lending have provided guidance to

financial institutions to evaluate whether discrimination exists and how the

agencies will respond to lending discrimination,

and what steps lenders might take to prevent discriminatory lending practices.

Failures to comply with ECOA, the Fair

Housing Act and other fair lending laws and regulations, including

CFPB regulations, could subject us to enforcement

Housing Act and other fair lending laws and regulations, including CFPB

regulations, could subject us to enforcement

actions or litigation, and could have a material adverse effect

1 unchanged sentence

Our Bank is also subject to the CRA and periodic CRA examinations.

The CRA requires us to serve our entire

communities, including low- and moderate-income neighborhoods.

Our CRA ratings could be adversely affected by actual

or alleged violations of the fair lending or consumer financial

protection laws.

The CRA requires

us to serve our entire

communities, including low-

and moderate-income neighborhoods.

Our CRA ratings could

be adversely affected by actual

or alleged violations of the fair lending or consumer financial protection

Even though we have maintained an

“satisfactory” CRA rating since 2000, we cannot predict

our future CRA ratings.

Violations of fair

lending laws or if our

“satisfactory” CRA rating since 2000, we cannot predict our future CRA ratings.

Violations of fair lending laws or if our

CRA rating falls to less than “satisfactory” could adversely affect

2 unchanged sentences

COVID-19 Risks

The COVID-19 pandemic is expected to continue

to adversely affect our

business, financial condition and results of

The ultimate effects of the pandemic on us will depend

on the severity, scope and

duration of the pandemic, its

cumulative economic effects, governmental actions

in response to the pandemic, and the

restoration of a more

The COVID-19 pandemic may continue to adversely affect our business, financial

condition and results of operations.

ultimate effects of the pandemic on us will depend on the severity,

scope and duration of the pandemic, its cumulative

economic effects, governmental actions in response

to the pandemic, and the restoration of a more

normal economy.

The COVID-19 national health emergency has significantly disrupted

4 unchanged sentences

financial condition and results of operations in future periods.

spread of COVID-19 has caused illness, quarantines,

cancellation of events and travel, business and school shutdowns, reductions

in business activity and financial transactions,

The spread of COVID-19

has caused illness, quarantines,

cancellation of events and travel, business and school shutdowns, reductions in business

activity and financial transactions,

supply chain interruptions and overall economic and financial market instability.

The State of Alabama and many other

states have taken preventative and protective actions, such as

imposing a statewide mask mandate, restrictions on travel,

business operations, public gatherings, social distancing, advising

or requiring individuals to limit or forego their time

outside of their homes, and ordering temporary closures of non-essential

Though certain of these measures have

been relaxed or eliminated, the pandemic has moved in disruptive

and unpredictable waves.

The travel, hospitality and food and beverage industries, restaurants,

retailers and auto manufacturers, and their suppliers

states have taken preventative and protective actions, such as imposing a statewide

mask mandate, restrictions on travel,

business operations, public gatherings, social distancing, advising or requiring

individuals to limit or forego their time

outside of their homes, and ordering temporary closures of non-essential businesses.

Though various of these measures

have been relaxed or eliminated, the pandemic has moved in disruptive and unpredictable

The travel, hospitality and food and beverage industries, restaurants, retailers and auto

manufacturers, and their suppliers

have been severely affected.

1 unchanged sentence

furloughs of employees, as well as remote work have

occurred in these and other industries, including government offices,

schools and universities.

occurred in these and other industries, including government offices, schools and

universities.

Auburn University held

virtual classes only from March 16, 2020 through the summer

Auburn University’s

guidelines for the spring

semester of 2020 and the 2021 involve both remote and in person

instructions as well as social distancing measures and

modified class schedules.

The economic effects of these

measures is not presently known.

Montgomery and

Point, Georgia plants were closed for a portion of the first

quarter of 2020, but began a phased reopen in the

second quarter of 2020 in response to COVID-19.

The ultimate effects of the COVID-19 pandemic on the

economy, generally,

our markets, and on us cannot be predicted.

The timing and effects of the COVID-19 pandemic on

our business, results of operations and financial condition may

virtual classes only from March 16, 2020 through the summer session.

The auto industry’s production

and sales continue to

be adversely affected

by supply chain disruptions.

Hyundai and Kia are major direct and indirect employers in our area.

The ultimate effects of the COVID-19 pandemic on the economy,

generally, our markets, and on us cannot

be predicted.

The timing and effects of the COVID-19 pandemic on our business, results

of operations and financial condition may

include, among various other consequences, the following.

effects depend on the severity,

scope and duration of the

These effects

depend on the severity, scope

and duration of the

pandemic, its cumulative economic effects, and the effectiveness

2 unchanged sentences

including vaccinations.

Employees’ health could be adversely affected, necessitating

their recovery away from work;

Employees’ health could be adversely affected, necessitating their recovery

away from work;

Unavailability of key personnel necessary to conduct our business activities;

Our operating effectiveness may be reduced

as our employees work from home or suffer from the COVID

Shelter in place, remote work or other restrictions and interruptions of

our business and contact with our

Sustained closures

of our branch lobbies or the offices of our

Declines in demand for loans and other banking services and products,

and reduced usage and interchange fees

Our operating effectiveness may be reduced as our employees

work from home or suffer from the COVID-19

Shelter in place, remote work or other restrictions and interruptions of our business and contact

Sustained closures of our branch lobbies or the offices of our customers;

Declines in demand for loans and other banking services and products, and reduced usage

and interchange fees

on our payment cards;

1 unchanged sentence

may stabilize the economy, but

economic and market risks, including valuation “bubbles,” volati

lity in various assets and inflation;

Inflation and increases in interest rates may result from fiscal

stimulus and monetary stimulus, and the Federal

Reserve has indicated it is willing to permit inflation to run moderately

above its 2% target for some time;

Increased savings and debt reduction by consumers could reduce

demand for credit and our earning assets;

Significant volatility in United States financial markets and our

investment securities portfolio, including credit

economic and market risks, including valuation “bubbles,” volatility in various assets and

Inflation and increases in interest rates may result from fiscal stimulus and

monetary stimulus, and the Federal

Reserve has indicated it is willing to permit inflation to run moderately above its 2% target

for some time, but is

considering raising interest rates and reducing its securities holdings as a result of inflation

that is substantially

higher than the Federal

Reserve’s target range;

Increased savings and debt reduction by consumers could reduce demand for credit

and our earning assets;

Significant volatility in United States financial markets and our investment securities

portfolio, including credit

concerns in municipal securities;

Declines in the credit quality of our loan portfolio, owing to

the effects of the COVID-19 pandemic in the

markets we serve, leading to increased provisions for loan losses and

increases in our allowance for possible

Declines in the credit quality of our loan portfolio, owing to the effects

of the COVID-19 pandemic in the

markets we serve, leading to increased provisions for loan losses and increases in our allowance

credit losses;

Declines in the value of collateral for loans, including real estate

collateral, especially in industries such as

travel, hospitality, restaura

nts and retailers;

Declines in the net worth and liquidity of borrowers, impairing their

ability to pay timely their loan obligations

Generally low market interest rates that reduce our net interest

income and our profitability;

Declines in the value of collateral for loans, including real estate collateral, especially in industries

travel, hospitality, restaurants

and retailers;

Declines in the net worth and liquidity of borrowers, impairing their ability to pay timely their

loan obligations

Generally low market interest rates that reduce our net interest income and our profitability;

Loan deferrals and loan modifications, and mortgage foreclosure

moratoria, including those mandated by law,

which are encouraged by our regulators, may increase our expense

and risks of collectability,

which are encouraged by our regulators, may increase our expense and risks of collectability,

reduce our cash

flows and liquidity and adversely affect our results of operations

and financial condition;

The end of temporary regulatory accounting and capital relief for

banks regarding the effects of the COVID-19

pandemic, including loan deferrals and modifications, could

increase our TDRs and require additions to our

allowance for loan losses, which may adversely affect

our income, financial condition and capital;

Our waiver of various fees and service charges to support

our customers and communities will adversely affect

flows and liquidity and adversely affect our results of operations and

financial condition;

The end of temporary regulatory accounting and capital relief for banks regarding the effects

of the COVID-19

pandemic, including loan deferrals and modifications, could increase our TDRs and require

additions to our

allowance for loan losses, which may adversely affect our income,

financial condition and capital;

Our waiver of various fees and service charges to support our customers

and communities will adversely affect

our results of operation and our liquidity and financial position;

The COVID-19 pandemic may change customer financial behaviors

and payment practices.

The COVID-19 pandemic may change customer financial behaviors and

payment practices.

Electronic banking

could become more popular with less customers doing business

at our offices;

Certain of our assets, including loans and securities, may become

impaired, which would adversely affect our

could become more popular with less customers doing business at our offices;

Certain of our assets, including loans and securities, may become impaired,

which would adversely affect our

results of operation and financial condition and mortgage loan foreclosure

1 unchanged sentence

timely act to protect our interests in the loan collateral;

Reductions in income or losses will adversely affect

our capital and growth of capital, including our capital for

Reductions in income or losses will adversely affect our capital and growth

of capital, including our capital for

bank regulatory purposes;

Losses or reductions in net income may adversely affect the

growth or amount of dividends we can pay on our

Losses or reductions in net income may adversely affect the growth or

amount of dividends we can pay on our

common stock;

The effects of government fiscal and monetary policies,

including changes in such policies, or the effects

COVID-19 relief programs are discontinued, on the economy and

financial stability, generally,

business, results of operations and financial condition cannot

be predicted;

Cybercriminals may increase their attempts to compromise business

and consumer emails, including an increase

in phishing attempts, and fraudulent vendors or other parties

may view the pandemic as an opportunity to prey

The effects of government fiscal and monetary policies, including

changes in such policies, or the effects of

COVID-19 relief programs are discontinued, on the economy and financial stability,

generally, and on our

business, results of operations and financial condition cannot be predicted;

Cybercriminals may increase their attempts to compromise business and consumer

emails, including an increase

in phishing attempts, and fraudulent vendors or other parties may view the pandemic

as an opportunity to prey

upon consumers and businesses during this time.

The restoration of financial stability and economic growth may

depend on the health care system developing and

deploying COVID-19 testing and contact tracing, and delivery of COVID

-19 vaccines, which promote consumer

The restoration of financial stability and economic growth may depend

on the health care system developing and

deploying COVID-19 testing and contact tracing, and delivery of COVID-19 vaccines,

which promote consumer

and employee health and confidence in the economy.

These factors, together or in combination with other events or

occurrences that are unknown or anticipated, may materially

and adversely affect our business, financial condition and

results of operations.

These factors, together or in combination with other events or occurrences that are unknown

or anticipated, may materially

and adversely affect our business, financial condition and results of operations.

Our stock price may reflect securities market conditions

The ongoing COVID-19

pandemic has resulted in substantial securities

market volatility, especially for

bank stocks and

has, and may continue to, adversely affect the market of

our common stock.

The spread, intensification and duration

pandemic has resulted in substantial securities market volatility,

especially for bank stocks and

has, and may continue to, adversely affect the market of our common

The spread, intensification and duration of

COVID-19 pandemic, as well as the effectiveness of governmental,

fiscal and monetary policies, and regulatory responses

to the pandemic, further affect the financial markets and

the market prices for securities generally,

and the market prices for

to the pandemic, further affect the financial markets and the market prices

for securities generally, and the

market prices for

bank stocks, including our common stock.

The COVID-19 global pandemic could result

in deterioration of asset quality and an increase

in credit losses.

Many businesses have had, and may continue to have lower revenues

and cash flows and many consumers will have lower

These could result in an inability to repay loans timely in full,

reduce our asset quality and reduce our deposits.

The stock market’s gains due to a concentration

of high growth companies has

been adversely affected by inflation and expectation of higher interest rates and

the Russia invasion of Ukraine in February

The COVID-19 global pandemic could result in

deterioration of asset quality and an increase in credit

Many businesses have had, and may continue to have lower revenues and cash

flows and many consumers will have lower

income as a result of COVID-19.

These could result in an inability to repay loans timely in

full, reduce our asset quality and

reduce our deposits.

Loan modifications and payment deferrals may also increase

our credit risks, especially when temporary regulatory relief

for these actions expires.

Our business, results of operations,

liquidity and financial condition could be adversely

our credit risks, especially when

temporary regulatory relief for these actions expires.

Our business, results of operations, liquidity

and financial condition

could be adversely affected.

As a participating lender in the PPP,

the Bank is subject to additional risks of litigation from

the Bank is subject to additional risks of litigation from the

customers or other

parties regarding

processing of loans for the PPP and

risks that the SBA may not fund some or all PPP loan

The CARES Act, Paycheck Protection Program and Healthcare

Enhancement Act and Economic Aid Act appropriated

more than $1 trillion in funding for PPP loans administered

through by the SBA and the U.S.

processing of loans for the PPP and risks that the SBA may

not fund some or all PPP loan

The CARES Act, Paycheck Protection Program and Healthcare Enhancement

Act and Economic Aid Act appropriated

more than $1 trillion in funding for PPP loans administered through by the SBA and

Department of the Treasury.

Under the PPP,

eligible small businesses and other entities and individuals can apply for

loans from existing SBA lenders

and other approved PPP lenders, subject to numerous limitations

and eligibility criteria.

eligible small businesses and other entities and individuals can apply for loans from existing

and other approved PPP lenders, subject to numerous limitations and eligibility

The Bank is participating as a

lender in the PPP and made $36.5 million of PPP loans in 2020.

The PPP loans charge 1% interest annually.

of these loans has been slow, and

PPP loans earn less than market rates.

Since the opening of the PPP,

various banks have

been subject to litigation regarding the process and procedures

used in processing applications for the PPP,

governmental attention is directed at preventing fraud.

lender in the PPP and made a total of $56.7 million of PPP loans in 2020 and 2021.

The PPP loans charge 1% interest

Forgiveness of these loans has been slow,

and PPP loans earn less than market rates.

Since the opening of the

various banks have been subject to litigation regarding the process and procedures used in processing applications

and greater governmental attention is directed at preventing fraud.

We may be exposed

to similar litigation risks, from both customers

and non-customers that approached the Bank regarding PPP

to similar litigation risks,

from both customers and non-customers that approached the Bank regarding PPP

loans we extended.

If any such litigation is filed against the

Bank and is not resolved favorably to the Bank, it may result

in financial liability or adversely affect our reputation.

If any such litigation

is filed against the Bank and is not resolved favorably to the Bank, it may result in financial

liability or adversely affect our

Litigation can be costly, regardless

Any financial liability,

litigation costs or reputational damage caused by

PPP related litigation could have a material adverse effect

on our business, financial condition and results of operations.

The Bank also has credit risk on PPP loans, if the SBA determines

deficiencies in the manner in which PPP loans were

originated, funded or serviced by the Bank, such as an issue with the

eligibility of a borrower to receive a PPP loan, or

litigation costs or reputational damage

caused by PPP related litigation could have a material adverse effect on our

business, financial condition and results of

The Bank also has credit risk on PPP loans, if the SBA determines deficiencies

in the manner in which PPP loans were

originated, funded or serviced by the Bank, such as an issue with the eligibility of a borrower to

receive a PPP loan, or

obtain forgiveness of a PPP properly,

including those related to the ambiguities in the laws,

rules and guidance regarding

including those related to the ambiguities in the laws, rules and guidance

the PPP’s operation.

the event of a loss resulting from a default on a PPP loan and a

determination by the SBA that there

were one or more deficiencies in the manner in which the PPP

loan was originated, funded, or serviced by the Company,

In the event of a loss resulting

from a default on a PPP loan and a determination by the SBA that there

were one or more deficiencies in the manner in which the PPP loan was originated,

funded, or serviced by the Company,

the SBA may deny its liability under the PPP loan guaranty,

reduce the amount of the guaranty,

or, if it has already paid

under the guaranty, seek recovery of

any loss related to the deficiency from the Company.

reduce the amount of the guaranty, or,

if it has already paid

under the guaranty, seek recovery of any

loss related to the deficiency from the Company.

Similar issues may also result in

the denial of forgiveness of PPP loans, which could expose

us to potential borrower bankruptcies and potential losses and

the denial of forgiveness of PPP loans, which could expose us to potential borrower

bankruptcies and potential losses and

additional costs.

At December 31, 2021 we had $8.1 million PPP loans outstanding and had not realized

any losses on such loans.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors