What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-03-11 compared with 2024-03-14 · 1206 added, 1099 removed, 334 unchanged (87% of the section changed)

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

and an investment in our

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

7 unchanged sentences

Our risks include operational risks,

financial risks and legal and regulatory risks, which are related and intertwined

as discussed more fully in the Risk Factors

financial risks and legal and regulatory risks, which are related and

intertwined as discussed more fully in the Risk Factors

that follow this summary.

Operational risks are inherent in our business, and include:

The effects of local, national and regional market and economic conditions and

cyclicality, including inflation,

interest rates and their effects on borrowers and markets, including real estate

The effects of local, national and regional market and economic conditions

and cyclicality, including the

and rates of change in inflation and interest rates, and the effects on depositors,

borrowers and markets, including

the real estate and securities markets;

Our allowance for credit losses is based on estimates and judgments and may prove

to be inadequate to our credit

The risks and costs of nonperforming assets

Our allowance for credit losses is based on estimates and judgments and may prove to be

inadequate to our credit

The soundness of other financial institutions and perceptions regarding our industry,

especially when other banks

The soundness of other financial institutions and perceptions regarding our

industry, especially when other

experience difficulties or fail;

Our concentrations in commercial real estate loans in our market;

in a highly competitive market against a number of larger national and regional

Future acquisitions may disrupt our business, dilute shareholder value and adversely affect

our operating results

and financial condition, among other risks

Technological changes affect

our business, and we may have fewer resources than various of our larger

and unregulated competitors, inside and outside our market area,

which may increase the competition we face

Potential gaps in our risk management, including managing the risks to us of data

security and cybersecurity,

including risks to our service providers could affect our results of operations, financial

condition, customer

relationship and reputation

We operate in

a highly competitive market and compete against a number of larger national and

competitors, as well as smaller institutions, nonbanks and credit unions;

Our ability to attract and retain key people;

Inflation and strong labor markets may affect our non-interest expenses;

Technological changes

affect our business, and we may have fewer resources than our

larger regulated and

unregulated competitors, both in and outside our market area, which may increase

the competition we face;

Potential gaps in our risk management, including managing the risks related

to maintaining our data security and

cybersecurity and those of our third-party service providers;

Continuity risks to us and our service providers due to power,

information technology and telecommunication

disruptions and outages, could affect our customer service,

reputation and our results of operations, financial

condition, customer relationship and reputation;

Risks of severe weather, natural disasters, climate changes,

1 unchanged sentence

wars and acts of terrorism and other events;

Financial risks result in part from our operational risks and the risk of our business, and include:

Increases in costs of funds due to inflation, monetary and fiscal policies, changes in

costumer behaviors and

Future acquisitions may disrupt our business, dilute shareholder value

and adversely affect our operating results

and financial condition, among other risks.

Financial risks result in part from our operational risks and the risk of our business,

Increases in costs of funds due to inflation, monetary and fiscal policies, changes

in costumer behaviors and

competitive pressures;

Our results of operations and financial condition, including the values of our assets and liquidity,

may be affected

by changes in interest rates and interest rate levels, the shape of the yield curve and economic conditions

Liquidity risks, including the costs and availability of funding, and the liquidity of our assets,

including our

Our results of operations and financial condition, including the values of our

assets and liquidity, may be

by changes in interest rates and interest rate levels, the shape of the yield curve and

economic conditions;

Liquidity risks, including the costs and availability of funding, and the

liquidity of our assets, including our

investment securities portfolio, and institutional lending sources;

2 unchanged sentences

Potentially excessive risk taking by our associates;

Our ability to pay dividends depends on our earnings, liquidity and regulatory requirements

related to our capital

Our ability to pay dividends depends on our earnings, liquidity and regulatory

requirements related to our capital

and our risks;

A limited trading market exists for our common stock

Our common stock trades in limited volumes.

Legal and regulatory risks include:

The Company is a legal entity separate and distinct from the Bank, and transactions

between the Bank and the

The Company is a legal entity separate and distinct from the Bank, and

transactions between the Bank and the

Company are limited by law;

The Company is required to be a source of financial and managerial strength to

the Bank, even where further

investment in the Bank may not be warranted in the circumstances

The scope, volume and complexity of regulations and regulatory and legal changes affect

us, increase the time and

costs of compliance and may limit our business and adversely affect our

financial condition and results of

Litigation, investigations and other claims by government agencies and private parties and

regulatory actions,

The Company is required to be a source of financial and managerial strength

to the Bank, even in circumstances

where further investment in the Bank may not be warranted;

Privatization of Fannie Mae and Freddie Mac incident to the ending of their conservatorships

and the resulting

effects on the costs and availability of mortgage loans and the mortgage

markets, generally, and

the Company as a

mortgage originator, and seller and

servicer of residential mortgage loans;

The scope, volume, complexity and clarity of regulations and regulatory

and legal changes affect us, increase the

time and costs of compliance and may limit our business and adversely

affect our financial condition and results of

The pace and volume of regulatory changes and interpretations, especially by

the bank regulators, the CFPB and

the SEC, and well as numerous Executive Orders, and changes in government

leadership, personnel and policies.

Even where changes ultimately will benefit the Company,

changes in regulation and policies require time and

attention, and involve costs to implement;

Litigation, investigations and other claims by government agencies

and private parties and regulatory actions,

including those related to assertions of compliance failures;

The amount of and changes in the capital we are required to maintain in respect of our business

and risk, and

The amounts and changes in the capital we are required to maintain in respect

of our business and risks, and

regulatory perceptions of us and our industry;

Liquidity requirements

Liquidity requirements and changes in rules that affect brokered

and reciprocal deposits and other sources and

measures of liquidity.

Additional Executive Orders and Administration and regulatory

decisions, directives and actions, including modifications

or changes to those discussed in this report, may occur at any time with currently

unpredictable effects.

Operational Risks

Market conditions and economic cyclicality may adversely affect our industry.

We believe the following,

among other things, may affect us in 2024:

The COVID-19 pandemic disrupted the economy beginning late in the first quarter of 2020.

Auburn University,

government agencies and businesses were limited to remote work and gatherings

were limited.

Supply chains

continue to be disrupted and labor markets remain tight.

Hotels, motels, restaurants, retail and shopping centers

were especially affected.

COVID-19 continues, but with diminishing direct economic effects

due to population

health, generally.

President Biden has terminated the COVID-19 national emergencies

effective May 11, 2023.

Extraordinary monetary and fiscal stimulus in 2020 and in early 2021

offset certain of the pandemic’s adverse

economic effects, but together with supply chain disruptions,

continued consumer demand, Russia’s invasion

Ukraine and its effects on energy and food prices, and tight labor

markets, have resulted in inflation.

We believe the

following, among other things, may affect us in 2025:

Extraordinary monetary and fiscal stimulus in 2020 and in early 2021 offset

certain of the COVID-19 pandemic’s

adverse economic effects, but together with supply chain disruptions,

continued consumer demand, Russia’s war

in Ukraine and its effects on energy and food prices,

and tight labor markets, resulted in inflation.

Inflation began

running at levels unseen in decades and well above the Federal Reserve’s

long term inflation goal of 2.0%

Beginning in March 2022, the Federal Reserve has been raising target

federal funds interest rates and

reducing its securities holdings in an effort to reduce inflation.

The nature and timing of any future changes in

monetary and fiscal policies and their effect on us cannot be predicted.

At the end of 2023, many believed that the

Federal Reserve would loosen its monetary policy in response to inflation,

which was declining, but remained

above the Fed’s 2% long term target

Strong economic data and inflation reports since then appear to have

reduced expectations as to the number, timing and size of

any reductions in the target federal funds rate in the near

Market developments, including unemployment, price levels, stock and

bond market volatility, and changes,

including those resulting from Russia’s

invasion of Ukraine affect consumer confidence levels, economic

and inflation.

Increases in market interest rates, inflation and consumer and business confidence

changes in customers’ savings and payment behaviors, including potential increases in

loan delinquencies and

default rates.

These 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

predictable as a result of inflation and higher market

interest rates

CECL on January 1, 2023 as required by generally accepted accounting principles

CECL changed the loss model to take into account current expected credit losses in place

incurred loss method used historically under GAAP.

This changes the process we use to estimate losses inherent

in our credit exposures.

Beginning in March 2022, the Federal Reserve raised its target federal

funds interest rates and reduced

its securities holdings in an effort to reduce inflation.

Inflation subsided in 2024.

In February 2025 inflation

remains above the Federal Reserve’s

target rate, the labor market remains strong and the Federal Reserve cut its

target federal funds rate in September through December 2024

100 basis points from 5.25-5.50% to 4.25%-4.50%,

and reduced the rate of decline in reinvestments of maturing securities proceeds.

The new presidential Administration that took office in January

2025 has established DOGE to increase

government efficiency and reduce fiscal expenditures, imposed

and threatened tariffs, and proposed tax cuts and

tax cut extensions, the net effect of which is unknown.

The nature and timing of any future changes in monetary

and fiscal policies, government policies and their administration and personnel,

and their effects on us cannot be

Market developments, including unemployment, inflation

and price levels, stock and bond market volatility,

changes, including those resulting from Russia’s

war in Ukraine and governmental fiscal, operational and

monetary policies affect consumer confidence

levels, economic activity and interest rates.

Increases in market

interest rates and inflation, and adverse changes in consumer and business confidence

may change customers’

savings and payment behaviors, including potential increases in loan delinquencies

and default rates.

affect our credit quality,

and our results of operations and financial condition.

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 predictable

as a result of inflation and fluctuating

market interest rates and changes in monetary and fiscal policies.

CECL on January 1, 2023 as

required by generally accepted accounting principles (“GAAP”).

CECL changed the loss model to take into

account current expected credit losses in place of the incurred loss method used historically

to estimate losses inherent in our credit exposures.

The process for estimating expected losses requires difficult,

subjective, and complex

judgments, including forecasts of economic conditions and how those economic predictions

might affect the

ability of our borrowers to repay their loans or the value of assets.

Changes in economic conditions and factors

used in our CECL models may increase the variability of our provisions for loan losses and

our earnings.

subjective, and complex judgments, including forecasts of economic

conditions, unemployment levels in Alabama,

and how those economic predictions might affect the ability of our

borrowers to repay their loans or the value of

Changes in economic conditions and factors used in our CECL models may

increase the variability of our

provisions for loan losses and our earnings.

Changes in market interest rates and the shape of the yield curve affect

the value of our investment securities and

our other accumulated other comprehensive income or “AOCI.”

Our allowance for loan losses may prove inadequate

or we may be negatively affected by credit risk exposures.

We periodically

review the 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 fiscal and monetary policy changes, inflation,

market conditions or events adversely affecting specific customers,

industries or markets, including disruptions of supply

chains, the war in Ukraine, changes in taxes and regulations and changes in borrower

Certain borrowers and their

businesses and real estate and commercial projects and businesses may be adversely

affected by inflation and higher interest

rates, and economic slowdowns arising from tighter monetary policies, and

may request or need loan modifications and

businesses will be unable to fully pass on increased costs due to inflation, supply

chain disruptions and

changes and other factors, and their profits may shrink.

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 expected future loan losses, became effective

for the Company beginning January 1,

2023, and its effects upon the Company over a full business cycle

The CECL model incorporates various

economic condition factors, where changes in fiscal and monetary policy,

as well as market interest rates and unemployment

rates in our markets, among other factors, could result in more volatility in

our provisions for loan losses under CECL, which

could adversely affect our net income.

See Note 1 to our Financial Statements –

“Allowance for Credit Losses – Loans.”

Nonperforming and similar assets take significant time to resolve

6 unchanged sentences

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

We do 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

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,

In addition, the resolution of nonperforming assets requires commitments of time from

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

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, generally.

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,

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 and

fiscal and monetary response to COVID-19 and the shift beginning in March 2022

from an extraordinarily expansionary

monetary policies to a tightening monetary policy to fight inflation,

market conditions or events adversely affecting specific

customers, industries or markets, including disruptions of supply chains and the

war in Ukraine, and changes in borrower

Certain borrowers and their businesses and real estate and commercial projects

and businesses may be adversely

affected by inflation and higher interest rates, and economic slowdowns

arising from tighter monetary policies, and may

request or need loan modifications and deferrals.

businesses will be unable to fully pass on increased costs due to

inflation, and their profits may shrink.

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

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.

CECL, a new accounting

standard for estimating expected future loan losses, is effective for

the Company beginning January 1, 2023, and its effects

upon the Company in the current environment have not yet been determined

fully due to its short existence.

model incorporates various economic condition elements, where changes

in fiscal and monetary policy, as

well as market

interest rates, could result in more volatility in our provisions for loan losses

under CECL, which could adversely affect our

Loan deferrals and modifications made to help

resolve borrower issues and avoid foreclosures may not be successful.

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, generally.

Changes in the real estate markets, including the

secondary market for residential mortgage loans, may continue

secondary market for residential mortgage loans,

may continue to

adversely affect us.

Beginning in March 2022, inflation and the Federal monetary policies to increase interest rates

to fight inflation have

caused mortgage rates to increase significantly.

Higher interest rates and the increased level of housing costs as a result

the COVID-19 pandemic, have caused housing starts and sales to slow.

Inventories of existing homes for sale have

remained generally low, and

many believe that higher mortgage rates are adversely affecting potential

sellers from selling

their existing houses and incurring higher mortgage interest rates on their replacement

These conditions have

adversely affected housing affordability and increased

Beginning in March 2022, inflation and the Federal Reserve increases in interest rates to

fight inflation have caused

mortgage rates to increase significantly.

Higher interest rates and the increased level of housing costs since 2020 have

slowed housing sales.

Although short term interest rates decreased in last half of 2024, longer term rates, including

mortgage rates, have remained elevated.

Inventories of existing homes for sale have remained generally low,

believe that higher mortgage rates discourage potential sellers from selling

their existing houses and incurring higher

mortgage costs on replacement homes.

These conditions have adversely affected housing affordability

and increased

monthly mortgage payments.

House prices have begun to decline in

certain markets from their earlier highs.

This adversely affects our mortgage loan productions and the value of residential

mortgage collateral.

Commercial real estate projects’ economic assumptions may be adversely affected,

projects with short term and/or unhedged variable rate debt may be especially affected

by increased interest rates and a

slower economy.

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

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

Recently adopted changes to the CFPB’s

qualified mortgage

rules are reportedly being reconsidered.

The Tax Cuts and Jobs

Act’s (the “2017 Tax

These conditions adversely affect our mortgage loan production

and may affect the value of

residential mortgage collateral.

Commercial real estate projects’ economic assumptions may be adversely

higher interest rates, and certain projects with short term and/or unhedged

variable rate debt may be especially affected by

increased interest rates and/or a slower economy.

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

The Tax Cuts and

Jobs Act’s (the “2017 Tax

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

and local property and other taxes often called “SALT,”

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

single and multi-family loans.

Acquisition, construction and development loans for residential development

similarly adversely affected.

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.

timing and effects of resolution of these government sponsored enterprises

cannot be predicted.

We may be contractually

obligated to repurchase

construction and development loans for residential development may be similarly

adversely affected.

The new Trump

administration has indicated it is considering increasing the amount of

SALT permitted

to be deducted for federal income

Unless extended, many provisions of the 2017 Tax

Act, including the cap on SALT

deductions expire at the end of

2025, and the marginal individual tax brackets will increase.

Fannie Mae and Freddie Mac have been in conservatorship since September

The newly appointed Secretary of

Housing and Urban Development has stated that coordinating the effort

to privatize these GSEs would be his priority.

Since these GSEs dominate the residential mortgage markets, any changes

in their operations and requirements, as well as

their respective restructurings and capital and the costs of their borrowings

as private institutions, 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.

Resolution of these extremely large GSEs will be complex,

and the timing and

effects of such resolution and the effects on

mortgage originators and the mortgage markets and their participants, including

the Company, cannot be

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,

generally to Fannie Mae, a GSE.

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 loans.

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

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

and financial condition.

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

that it subsequently sells in the secondary market,

generally to Fannie Mae.

In connection with such loan sales, the Company makes customary representations and

warranties, the breach of which may result in the Company being required

to repurchase the loan or loans.

Furthermore, the

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

Although mortgage loan

repurchase requests made to us have been limited historically,

if these increased, we may have to establish reserves for

possible repurchases and adversely affect our results of

operation and financial condition.

Mortgage servicing rights requirements

1 unchanged sentence

us to incur additional costs and risks.

The CFPB’s residential mortgage servicing

standards may adversely affect our costs to service residential

The CFPB’s residential mortgage

servicing standards may adversely affect our costs to service residential

mortgage loans.

The effects of reduced housing starts and mortgage activity due to

higher market interest rates, have decreased our

generation of new mortgage loans and related MSRs.

This may be offset partially by decreases in mortgage prepayments

and refinancings, and corresponding increases in the duration of our existing MSRs

and their values.

This net effect could

reduce our aggregate 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 Basel III Rules relating to MSRs may also increase the

potential capital required as a result of MSRs, when considered with other capital rule adjustments

Reduced mortgage activity due to higher market interest rates has decreased our

generation of new mortgage loans and

related MSRs.

This may be offset partially by decreases in mortgage

prepayments and refinancings, and corresponding

increases in the duration of our existing MSRs and their values.

This net effect could reduce our aggregate 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 Basel III Capital Rules relating to MSRs may also increase the potential

required as a result of MSRs, when considered with other capital rule adjustments

and deductions.

The soundness of other financial institutions could adversely affect us.

We routinely execute

transactions with counterparties in the financial services industry,

execute transactions with counterparties in the financial services industry,

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-Atlanta, could be adversely

affected by the actions, financial

condition, and profitability of such other financial institutions, including the FHLB-Atlanta

and our correspondent banks.

Financial services institutions are interrelated as a result of shared credits,

trading, clearing, counterparty and other

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

investments in holdings of obligations

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

by the actions, financial condition,

profitability and regulation of such other financial institutions, including

the FHLB-Atlanta and our correspondent banks.

Financial services institutions are interrelated as a result of shared

credits, trading, clearing, counterparty and other

relationships.

Most LIBOR reference interest rates used by many financial institutions to

price extensions of credit stopped

being quoted June 30, 2023 and their use has been strongly discouraged by regulatory agencies.

Most banks did not adopt

CECL until January 1, 2023.

The failures of Silicon Valley

Bank, Signature Bank and First Republic Bank in 2023 due to concentrations of deposits and

depositors holding large amounts of deposits in excess of FDIC insurance limits,

as well as flawed business models and

management, adversely affected the financial system and public confidence.

These have resulted in increased regulatory

scrutiny of bank liquidity, funding and

capital, depressed bank stock values generally,

and higher FDIC deposit insurance

premiums on the largest banks, as well as regulatory proposals to increase large

banks’ capital and expand enhanced

prudential standards starting at $100 billion of assets instead of $250 billion.

The federal bank regulators have been advocating more use of the Federal Reserve discount

window to improve bank

At the same time, these bank failures, together with the failure of the very small

Heartland State bank in Kansas

due to apparent embezzlement by its president due to losses from his personal crypto trading,

have also led to calls to

reduce Federal Home Loan Bank lending to banks.

Bank, Signature Bank and First Republic Bank in March and May 2023 due

to concentrations

of deposits and depositors holding large amounts of deposits in

excess of FDIC insurance limits, as well as flawed business

models and management, adversely affected the financial

system and public confidence.

These resulted in increased

regulatory scrutiny of bank liquidity,

funding and capital, depressed bank stock values generally,

and higher FDIC deposit

insurance premiums on the largest banks.

The federal bank regulators have been advocating more use of the Federal

Reserve discount window to improve bank

At the same time, the 2023 bank failures have also led to calls to reduce Federal Home Loan Bank lending

Traditionally,

the Federal Home Loan Banks have been stable sources

of liquidity and funding for banks.

The Federal Housing Finance Agency (“FHFA)

regulates the Federal Home Loan

the Federal Home Loan Banks have been stable sources of liquidity and funding for banks.

Federal Housing Finance Agency (“FHFA)

regulates the Federal Home Loan Banks.

FHLBank System at

Focusing on the Future

2023) suggest less traditional Federal

Loan Bank lending to banks, especially banks experiencing financial stress.

These changes, together with any exposures other institutions may have

to crypto or digital assets, or cybersecurity and data

breaches, could cause disruption and unexpected changes in the industry.

Any losses, 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, and our business,

including our liquidity,

financial condition

2023) indicates less traditional

Federal Home Loan Bank lending to banks, especially

banks experiencing financial stress.

Sandra Thompson, the FHFA

Director retired on January 19, 2025 and Bill Pulte has

been nominated to succeed her, subject to

Senate confirmation.

views on Federal Home Loan Bank lending to

banks are unknown.

These changes, together with any exposures that other institutions may

have to crypto or digital assets, or cybersecurity and

data breaches, could cause disruption and unexpected changes in the industry.

The Trump Administration has issued

Executive Order “Strengthening American Leadership in Digital Financial

and Congressional hearings on

“debanking” may increase the use of digital assets and the volume of digital

asset transactions with, and the risks to, banks.

Any losses, 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, and our business, including our

liquidity, financial condition

and earnings.

Failures of several banks earlier in 2023

and in early 2024 have resulted in increased

market volatility for financial service

disclosable under law.

The failures of

Silicon Valley

Bank, Signature Bank,

First Republic

and Heartland

Tri-State Bank

customers, generally,

greater bank regulatory scrutiny

of banking organizations,

especially those experiencing

Community Bank following

two acquisitions raised

market concerns and led to

replacement of management and

a dilutive equity capital raise.

resolution planning

several banks

market volatility

for financial

service companies’

securities and

changes in regulatory views and emphases that

may adversely affect us and may not be disclosable under law.

organizations,

regional banks

concerns about

credit quality

dilutive equity capital raise.

These failures

volatility in

financial services

Regulators have

focused supervisory

have resulted

in bank regulators

focusing supervisory

activities, generally,

organizations

on capital adequacy

and liquidity

concentrations

regulatory examination

processes, as

nonpublic supervisory

understanding,

supervisory actions.

holding examination

processes, as

any nonpublic

supervisory actions,

“confidential supervisory information”

for regulatory purposes,

whose existence and terms,

may not be disclosed

banking organizations.

relationships;

liquidity plans

director resolutions,

understanding, and

other regulatory

criticism, and

formal, public

enforcement actions.

“confidential

organizations.

capital, liquidity,

resolution planning of banking organizations with over

$100 billion in assets.

Our concentration of commercial real

2 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 the 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

family residential construction loans), multi-family property,

and non-farm non-residential property,

where the primary or a

significant source of repayment is derived from rental income associated

with the property (that is, loans for which 50% or

more of the source of repayment comes from third party,

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

refinancing, or permanent financing of the property.

Loans to REITs

and unsecured loans to developers that closely

correlate to the inherent risks in CRE markets are also CRE loans.

Loans on owner occupied commercial real estate are

generally excluded from CRE for purposes of this guidance.

Excluding owner occupied commercial real estate, we had 39.6% of our loan por

tfolio in CRE loans at year-end 2023

compared to 40.4% and 42.6% at year-end 2022 and 2021, respectively.

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.

Increases in interest rates beginning in March 2022 may adversely

affect the assumptions and performance of CRE, and the ability of borrowers

to refinance on terms that CRE borrowers and

their projects can support.

Lower demand for CRE and fewer CRE purchase and sale transactions, and reduced availability

of, and higher interest rates and costs for, CRE loans could adversely

affect CRE values and liquidity,

our CRE loans and

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

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

to concentration levels and the risks of the

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

of land and residential construction.

federal bank regulatory agencies’ issued guidance on “Concentrations

in Commercial Real Estate Lending” in 2006 (the

“CRE Guidance”).

The CRE Guidance defines CRE loans as exposures secured by raw land, land development

construction loans (including 1-4 family residential construction

loans), multi-family property,

and non-farm non-

residential property,

where the primary or a significant source of repayment is derived from rental income associated

the property (that is, loans for which 50% or more of the source of repayment comes from third

party, non-affiliated,

income) or the proceeds of the sale, refinancing, or permanent financing of the

Loans to REITs and unsecured

loans to developers that closely correlate to the inherent risks in CRE markets are also CRE loans.

Loans on owner

occupied commercial real estate are generally excluded from CRE for purposes of

this guidance.

Excluding owner occupied commercial real estate, we had 42% of our loan portfolio

in CRE loans at year-end 2024

compared to 40% at year-end 2023.

The bank regulators continue to scrutinize CRE lending and require banks with

elevated CRE under the CRE Guidance, 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.

Increases in interest rates beginning in March 2022 and reduced market

transactions may

adversely affect the assumptions and performance of CRE, especially

for projects financed with short term or unhedged

variable rate debt, and the ability of CRE borrowers to refinance on terms that their

projects can support.

for CRE and fewer CRE purchase and sale transactions, and reduced availability

of, and higher interest rates and costs for,

CRE loans could adversely affect CRE values and liquidity,

our CRE loans and sales of OREO, and therefore our earnings

and financial condition, including our capital and liquidity.

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

The East Alabama banking markets where we operate are highly competitive

and our future growth and success will

depend on our ability to compete effectively in these markets.

Nineteen banks, including JP Morgan Chase, Wells

Truist, PNC, Regions, Valley

National and SouthState, have offices in Lee County.

Eleven of these banks are

This MSA is served by 19 banks, 10 of which are

headquartered outside of Alabama.

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.

Other banks have 35 offices in our MSA.

National and regional competitors that have

offices in our market include J.P.

Morgan Chase, Wells

Fargo, Truist, PNC, Regions,

National, SouthState and

We compete for

loans, deposits and other financial services and products with local, regional and national

commercial banks, thrifts, credit unions, mortgage lenders, and

securities and insurance brokerage firms.

competitors offer services through the mail, by telephone

and over the Internet.

The national and regional financial banks

and financial services companies we compete with have substantially greater

resources, and numerous offices and affiliates

operating over wide geographic areas.

Lenders operating nationwide over the internet are growing rapidly.

Many of our competitors 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 price loans and deposits

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

geographic bases to draw upon.

state banks may branch into our markets.

Fintech and other non-bank competitors also compete for our customers,

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

The failures of other banks with offices in our markets

could also lead to the entrance of new, stronger

competitors in our markets.

competitors offer products and services different

from ours, and have substantially greater resources, name recognition

advertising than we do, which helps them attract business.

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 draw

Out of state banks may branch into our markets.

Fintech and other non-bank competitors also compete for our

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

The failures or sales 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 East Alabama,

including Lee County,

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

Adverse changes in the

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

local markets, including the

effects of higher market interest rates and inflation, supply chain disruptions,

changes in customer behaviors and in the

workforce and demand for space since the COVID-19 pandemic, and the timing and

magnitude of future inflation and

interest rates, 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

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

of our local markets, including the

effects of higher market interest rates and inflation, supply

chain disruptions, changes in customer behaviors and in the

workforce and demand for space since the COVID-19 pandemic, and the timing

and magnitude of future inflation and

interest rates, as well as federal healthcare and education funding, 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.

Auto sales and housing

sales are cyclical and generally are affected adversely by higher interest rates.

Auto sales and housing sales are cyclical and generally are affected adversely

by higher sticker

prices and interest rates, and may be adversely affected by tariffs,

especially the 25% tariffs on imported steel and

aluminum and autos, as well as threatened (i) tariffs on automaker

suppliers in Canada and Mexico and (ii) reciprocal tariffs

on countries that impose tariffs on U.S.

Major employers in our market include education and healthcare, which

may be adversely affected by changes in Federal government

policies and funding.

Attractive acquisition opportunities may not be available to us in the

While we seek continued organic growth, including loan growth,

we also may consider the acquisition of other businesses.

We expect that other banking

and financial companies, many of which have significantly greater resources,

While we seek continued organic growth, including loan

growth, we also may consider the acquisition of other businesses.

We expect that

other banking and financial companies, many of which have significantly greater

resources, will compete

with us to acquire financial services businesses.

5 unchanged sentences

we believe is in our best interests, and

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

Among other things,

our regulators consider our capital, liquidity,

profitability, regulatory

compliance and levels of goodwill and intangibles

when considering acquisition and expansion proposals.

Any acquisition could be dilutive to our earnings and shareholders’

equity per share of our common stock.

The regulatory agencies are carefully scrutinizing financial institution

the merger application process has lengthened.

Future acquisitions and expansion activities may disrupt

our business, dilute shareholder value

and adversely affect our

regulatory approvals could contain conditions or commitments that reduce

the anticipated benefits of any transaction.

Among other things, our regulators consider our capital, liquidity,

profitability, regulatory compliance

and levels of

goodwill and intangibles when considering acquisition and expansion

Any acquisition could be dilutive to our

earnings and shareholders’ equity per share of our common stock.

The regulatory agencies carefully review and analyze

financial institution mergers, and the merger

application process has lengthened.

Future acquisitions and expansion activities may

disrupt our business, dilute shareholder

value and adversely affect our

operating results and financial condition.

We regularly evaluate

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

evaluate 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

2 unchanged sentences

risks of unknown or contingent liabilities, and potential asset quality issues;

unanticipated costs and delays;

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

expectations;

unanticipated costs and delays, including the regulatory application process;

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

and profitability expectations;

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

2 unchanged sentences

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, including the

desirability of closing duplicative or overlapping facilities;

potential disruptions to our business;

1 unchanged sentence

potential short-term decreases in profitability;

diversion of our management’s time and

attention from our existing operations and business.

diversion of our management’s time

and attention from our existing operations and business.

Technological

2 unchanged sentences

technological improvements.

The financial services industry is undergoing rapid technological changes

with frequent introductions of new technology

The financial services industry is undergoing rapid technological

changes with frequent introductions of new technology-

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

institutions to reduce costs, risks associated with fraud and compliance

with anti-money laundering and other laws, and

various operational risks.

Largely unregulated “fintech” businesses have increased their

participation in the lending and

payments businesses, and have increased competition in these businesses.

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, data breaches and anti-money laundering and other

potential violations of law.

COVID-19 pandemic and increased remote work has accelerated electronic

activity and the need for increased operational efficiencies and data security.

may need to make significant additional

capital investments in technology,

including cyber and data security,

and we may not be able to effectively implement new

technology-driven products and services, or such technology

may prove less effective than anticipated.

competitors have substantially greater resources to invest in technological improvements

and, increasingly,

firms are using technology to compete with traditional lenders for loans, payments,

and other banking services.

our competition from service providers not located in our markets has increased.

The effective use of

technology may help us better analyze our customers and their needs better,

and the effective use of technology may

increase efficiency and reduce our operating costs.

At the same time the initial costs of acquiring and implementing

technology may be material, and such technology may entail fraud, compliance

with the AML/CFT anti-money laundering

laws and rules, among others, and various operational and other risks.

Largely unregulated “fintech” businesses have

increased their participation in the lending and payments businesses, and have

increased competition in these businesses.

Our future success will depend, in part, upon our ability to use technology

effectively to provide products and services that

meet our customers’ preferences and create additional efficiencies

in operations, while avoiding cyber-attacks and

disruptions, data breaches, violations of AML/CFT laws, and other potential

violations of law.

Remote work has

accelerated electronic banking activity and the need for increased operational

efficiencies and data security in our electronic

and mobile banking services.

to make significant additional capital investments in technology,

artificial intelligence, cyber

and data security, and we may not be

able to effectively implement new technology-driven

products and services, or such technology may prove less effective and/or

more costly than anticipated.

competitors have substantially greater resources to invest in technological

improvements and, increasingly,

firms are using technology to compete for loans, payments, and

other banking services.

As a result, our competition from

service providers not located in our markets has increased.

Operational risks are inherent

1 unchanged sentence

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

weaknesses in our risk management or

gaps or 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;

equipment failures,

including those caused by natural disasters, or by electrical, telecommunications

failures in our estimates or

the models that we rely on;

failures, including those caused by natural disasters, or by electrical, telecommunications

or other essential utility outages;

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

business 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

counterparties.

upgrades, failures to timely and properly

upgrade and patch existing systems or inadequate access to data or poor response

capabilities in light of business continuity

plans in the event of data security system failures;

or the inadequacy or failure

of systems and controls, including those of

our vendors or counterparties.

The COVID-19 pandemic presented operational challenges to maintaining

continuity of operations of

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

similar situations may occur in the future.

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 developing efficient procedures,

identifying and rectifying 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.

continuity of

operations of customer services while protecting our employees’ and

customers’ safety, and similar situations

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 developing efficient

procedures, identifying and rectifying weaknesses in

existing procedures and training staff, 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

1 unchanged sentence

unanticipated risk, which could negatively affect our business.

Our enterprise risk management and internal audit program is designed to

mitigate material risks and losses 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 are designed

to mitigate material risks and losses to us.

have 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 timely in our risk management framework.

of our risk management models

and estimates use observed historical market behavior to model or project

potential future exposure.

The models used by

our business, including the new CECL models, are based on assumptions and projections.

These models may not operate

properly, or our inputs and assumptions

may be inaccurate, or changes in economic and market conditions, customer

behaviors or regulations may adversely affect the accuracy

or usefulness of the models.

As a result, these methods may not

fully or timely predict future exposures, which can be significantly greater and/or faster

than historically.

management methods depend upon the evaluation of information regarding

markets, clients, or other matters that are

publicly available or otherwise accessible to us.

Nonetheless, our

policies and procedures may not be

comprehensive and may not anticipate and identify timely every risk

to which we are exposed, and our internal audit

process may fail to detect such weaknesses or deficiencies timely 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.

The models used by our business, including our CECL models, are based on

assumptions and projections.

may not operate properly,

or our inputs and assumptions may be inaccurate, or changes in economic

and market conditions,

customer behaviors or regulations may adversely affect

the accuracy or usefulness of the models.

As a result, these

methods may not fully or timely predict future exposures, which can be

significantly greater and/or faster than historically.

Other risk management methods depend upon the evaluation of information

regarding markets, clients, or other matters that

are publicly available or otherwise accessible to us.

This information

1 unchanged sentence

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,

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

risk management policies and procedures will enable us to accurately

identify all risks and limit our exposures based on our

In addition, we may have to implement more extensive and perhaps different

risk management policies and procedures as

our regulation changes.

For example, the Federal Reserve and the federal bank regulators issued

Principles for Climate-

Related Risk for Large Financial Institutions

(October 14, 2023).

The bank regulators’ guidance applies to banks with over

$100 billion in assets.

The SEC adopted a climate risk

rule on March 6, to require more disclosure on climate risks, also.

All of these could adversely affect our costs, and our financial condition and results of

our regulation and technology uses changes.

All of these could adversely affect our costs, and our financial condition

results of operations.

Any failure to protect

3 unchanged sentences

of operations

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

customers’ non-public

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, policies and controls are designed to

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

It is possible that an

employee could, intentionally or unintentionally,

disclose or misappropriate confidential client information or our data

could be the subject of a cybersecurity attack.

protect the confidentiality of customer 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 our

data could be the subject of a cybersecurity attack.

Such personal data could also be compromised via intrusions into our

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

bureaus, data processors and

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

as credit bureaus, data processors and

merchants who accept credit or debit cards for payment.

If we fail to maintain adequate

internal controls, or if our

If we fail to maintain adequate internal controls, or if our

employees fail to comply with our policies and procedures, misappropriation

1 unchanged sentence

information could occur.

internal control inadequacies or non-compliance could materially damage our reputation,

Such internal control inadequacies or non-compliance could materially damage

our reputation,

lead to remediation costs and civil or criminal penalties.

3 unchanged sentences

management and strategies.

Our information systems may experience interruptions and security brea

We rely heavily on communications

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

which could affect our customers’ privacy and our customer relationships,

Our information systems may experience interruptions and

security breaches.

We rely heavily

on communications and information systems, including those of 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 business, our customers’ privacy and our customer

relationships, generally.

Our business continuity plans,

including those of our service providers, for back-up and service restoration, may

not be effective in the case of widespread

including those of our service providers, for back-up and service restoration,

may not be effective in the case of widespread

outages due to severe weather, natural disasters, pandemics,

or power, communications and other failures.

this report for more information about cybersecurity and our management and strategies.

this report for more information about cybersecurity and our management

and strategies.

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

are subject to security risks and could be

susceptible to disruption through cyber-attacks, such as denial of service attacks, hacking,

terrorist activities, or identity

Cybercrime risks 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 and tensions

with mainland China and other

susceptible to disruption through cyber-attacks,

such as denial of service attacks, hacking, terrorist activities, or identity

Cybercrime risks have increased as electronic and mobile banking activities have

increased, and may increase further

as a result of the Russia’s war in Ukraine,

tensions with mainland China and other countries, and foreign government

What changed 10-K

Item 1A. Risk Factors