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Item 1B. Unresolved Staff Comments

2025-03-11 compared with 2024-03-14 · 173 added, 160 removed, 87 unchanged (79% of the section changed)

1 unchanged sentence

CYBERSECURITY

We rely extensively on

various information systems and other electronic resources to operate our business.

nearly all of our customers, service providers and other business partners on whom

we depend, including the providers of

our online banking, mobile banking and accounting systems, use their own electronic information

systems can be compromised, including by employees, customers and other individuals

who are authorized to use them,

and bad actors using sophisticated and a constantly evolving set of software, tools

and strategies to do so.

The threats are

domestic and international and range from small to large, including state

sponsored, terrorist and criminal organizations

with substantial funds, and technical and other resources

We rely extensively

on various information systems and other electronic resources to operate our business.

nearly all of our customers, service providers and other business partners on

whom we depend, including the providers of

our online banking, mobile banking and accounting systems, use their own

electronic information systems.

systems can be compromised by employees, customers and other

authorized individuals, and bad actors using sophisticated

and constantly evolving sets of software, tools and strategies, which may include

artificial intelligence, to do so.

threats are domestic and international and range from small to large,

including state sponsored, terrorist and criminal

organizations with substantial funds, and technical

and other resources

As a bank, we and our vendors, service providers and customers may be attractive targets,

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cybersecurity threats.

Insurance to fully cover these risks is unavailable in sufficient

amounts at reasonable costs.

Insurance to fully cover these risks is unavailable in sufficient amounts at reasonable

believe the more effective approach is taking active measures to

detect, deter and reduce cybersecurity threats, and be

prepared to address and remediate any breaches and prevent similar breaches in the

prepared to address and remediate any breaches and prevent similar breaches

in the future.

See “Risks Related to

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in Item 1A of this Form 10-K for

additional information.

Accordingly, we have devoted

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operations and governance;

Establishing an IT Steering Committee of the Board that is responsible for security administration,

conducting regular assessments of our information systems, existing controls, vulnerabilities

and potential

improvements;

Implementing layers of controls and not allowing excessive reliance on any single control;

Establishing an IT Steering Committee that includes participation by directors that

is responsible for security

administration, including reviewing assessments of our information

systems, existing controls, vulnerabilities

and potential improvements;

Implementing layers of controls and not allowing excessive reliance on

any single control;

Employing a variety of preventative and detective tools designed to monitor,

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regarding suspicious activity;

Continuously evaluating tools that can detect and help respond to cybersecurity threats

in real-time;

Leveraging people, processes and technology to manage and maintain cybersecurity controls;

Maintaining a vendor management program with periodic review processes, and

a third-party risk

management program designed to identify, assess and manage risks associated

with external service providers;

Monitoring our systems and related software and programming periodically to update

programing, including updating data protection elements,

and requiring that our service providers also engage

in similar programs that are reasonably designed to deter cybersecurity breaches;

Performing initial and ongoing due diligence with respect to our third-party service

providers, including their

cybersecurity practices and safeguards, and service levels based on the risk they pose to the Bank;

Engaging third-party cybersecurity consultants, who conduct periodic

penetration testing, vulnerability

assessments and other procedures to identify potential weaknesses in our systems and

Continuously evaluating tools that can detect and help respond to cybersecurity

threats in real-time;

Leveraging people, processes and technology to manage and maintain cybersecurity

Maintaining a vendor management program with pre-engagement and periodic

review processes thereafter,

and a third-party risk management program designed to identify, assess and manage

risks associated with

external service providers;

Monitoring our systems and related software and programming periodically

to update software and

programing, including updating data protection elements, and requiring

that our service providers also engage

in similar programs that are reasonably designed to deter cybersecurity

Performing initial and ongoing due diligence with respect to our third-party

service providers, including their

cybersecurity practices and safeguards, and service level standards

based on the risk they pose to the Bank;

Engaging third-party cybersecurity consultants, who conduct periodic penetration

testing, vulnerability

assessments and other procedures to identify potential weaknesses in our

systems and processes;

Conducting periodic cybersecurity training for our employees and the Company’s

board of directors.

Our Information Security Program is a key part of our overall risk management system,

which is administered by our IT

Steering Committee and evaluated by our IT Steering Committee and chief risk officer.

Our Information Security Program is a key part of our overall risk management

system, which is administered by our IT

Steering Committee and evaluated by our IT Steering Committee and chief

risk officer.

The program includes

administrative, technical and physical safeguards to help protect the security and confidentiality

and availability of

administrative, technical and physical safeguards to help protect the security

and confidentiality and availability of

customer records and information.

From time-to-time, we have identified cybersecurity threats that require us to

make changes to our processes, equipment

From time-to-time, we have identified cybersecurity threats

that require us to make changes to our processes and equipment

and to implement additional safeguards.

While none of these identified threats or incidents

have materially affected us, it is

possible that threats and incidents we identify in the future could have a material adverse effect

on our business strategy,

While none of these identified

threats or incidents have materially affected us, it is

possible that threats and incidents we identify in the future could have a material

adverse effect on our business strategy,

customer service, data privacy and security,

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The Company’s Chief Technology

Officer is responsible for the day-to-day management of

cybersecurity risks we face and

oversees the IT Steering Committee, which is chaired by a director of the Company’s

Officer is responsible for the day-to-day management of cybersecurity

risks we face and

oversees the IT Steering Committee, which is chaired by a director of

the Company’s board.

The IT Steering Committee

oversees the information security assessment, development of policies, standards

and procedures, testing, training and

oversees the information security assessment, development of policies,

standards and procedures, testing, training and

security report processes.

The IT Steering Committee is comprised of directors and officers

with the appropriate expertise

and authority to oversee the Information Security Program.

Our Chief Technology Officer,

along with the information technology department, is accountable for managing our

The IT Steering Committee is comprised of officers with the appropriate

expertise and authority

to oversee the Information Security Program, and includes the participation

of certain directors.

Our Chief Technology

Officer, along with the information

technology department, is accountable for managing our

enterprise information security and delivering our information security program.

department, as a whole, consists of

information security professionals with varying degrees of education and experience.

The Chief Technology Officer

The department, as a whole, consists of

information security professionals with varying degrees of education

and experience.

The Chief Technology

subject to professional education and certification requirements.

In particular,

our Chief Technology

Officer, who is also

our Chief Technology Officer,

designated as our Information Security Officer,

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risk management.

In addition, the Company’s Board,

both as a whole and through its IT Steering Committee is responsible for the oversight

of risk management, including cybersecurity risks.

In that role, the Company’s

Board and the IT Steering Committee, with

support from the Company’s management and third

party cybersecurity advisors, are responsible for ensuring that the risk

management processes designed and implemented by management are adequate

and functioning as designed.

reviews and approves an information security program, vendor management policy (incl

uding third-party service

providers), acceptable use policy,

incident response policy and business continuity planning policy on an annual basis.

the aforementioned policies are developed and implemented by Company management.

To carry out their duties,

receives updates at least quarterly from the Chief Technology

In addition, the Company’s

Board, both as a whole and through directors participating in the IT Steering

Committee, is

responsible for the oversight of risk management, including cybersecurity

In that role, the Company’s Board

IT Steering Committee, with support from the Company’s

management and third-party cybersecurity advisors, are

responsible for implementing and maintaining risk management processes

designed and implemented by management that

are adequate and functioning as designed.

The Board reviews and approves an information security program, vendor

management policy (including third-party service providers), acceptable

use policy, incident response procedures

business continuity planning policy on at least an annual basis.

All the aforementioned

policies are developed and

implemented by Company management.

carry out their duties, the Board receives updates at least quarterly from the

Chief Technology

Officer regarding cybersecurity risks and the Company’s

efforts to prevent, detect, mitigate and remediate any cybersecurity incidents.

efforts to prevent, detect, mitigate and

remediate any cybersecurity incidents.

DESCRIPTION OF PROPERTY

The Bank conducts its business from its main office and seven full-service

The Bank also operates a loan

production office in Phenix City,

The Bank owns its main campus in downtown Auburn, Alabama, which comprises

over 4 acres and includes the newly

constructed AuburnBank Center,

which was completed in May 2022 and had its grand opening in June 2022.

The Bank conducts its business from its main office,

seven full-service branches,

and a loan production office.

The Bank owns its main campus in downtown Auburn, Alabama, which

comprises over 4 acres and includes the newly

constructed AuburnBank Center, which

was completed in May 2022 and had its grand opening in June 2022.

AuburnBank Center has approximately 90,000 square feet of space.

The AuburnBank Center includes the Bank’s

office, Auburn loan production office, and all of its back-office

office, Auburn loan production office, and

all of its back-office operations.

The main office branch offers the full line of

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teller window.

The Bank has approximately 46,000 square feet of office space

and approximately 5,000 square feet of

retail space in the new AuburnBank Center building available for lease to

third party tenants.

In February 2022, the Company entered into an agreement to sell a parcel of approximately 0.85

acres to a hotel developer.

As part of the agreement, the Bank negotiated a long-term lease with the hotel developer

for 100 to 150 parking spaces in

the Bank’s parking deck.

In October 2022, the Company closed the sale at the agreed upon price

of $4.3 million, and

recognized a $3.2 million gain.

The Bank has approximately 46,000 square feet of Class A office space

and approximately 5,000 square

feet of retail space in the new AuburnBank Center building available for

lease to third party tenants, of which

approximately 21,000 square feet is currently leased and occupied.

The Opelika branch is located in Opelika, Alabama.

This branch, built in 1991,

is owned by the Bank and has

This branch, built

in 1991, is owned by the Bank and has

approximately 4,000 square feet of space.

This branch offers the full line of the

Bank’s services and has drive-through

This branch offers

the full line of the Bank’s services and

has drive-through

windows and an ATM.

This branch offers parking for approximately 36 vehicles.

The Bank’s Notasulga branch was opened

in August 2001.

This branch is located in Notasulga, Alabama, about 15

west of Auburn, Alabama.

The Notasulga branch was opened in August 2001.

This branch is located

in Notasulga, Alabama, about 15 miles west of

Auburn, Alabama.

This branch is owned by the Bank and has approximately 1,344

square feet of space.

leased the land for this branch from a third party.

In May 2022, the Bank’s land lease renewed

The Bank leased

the land for this branch from a third party.

In May 2024, the Bank’s land lease renewe

for another one-year term.

This branch offers the full line of the Bank’s

services including safe deposit boxes and a drive-through window and parking

for approximately 11 vehicles, including a handicapped

branch offers the full line of the Bank’s

services including safe deposit boxes and a drive-through window

and parking for

approximately 11 vehicles, including

a handicapped ramp.

In November 2002, the Bank opened a loan production office

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south of Auburn, Alabama.

In November 2022, the Bank renewed its lease for another

In February 2009, the Bank opened a branch located on Bent Creek Road in Auburn,

In November 2023, the Bank renewed

its lease for another 2 years.

In February 2009, the Bank opened a branch located on Bent Creek Road in

Auburn, Alabama.

This branch is owned by the

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This branch offers parking for approximately 29 vehicles.

In December 2011, the Bank opened a branch located

on Fob James Drive in Valley,

In December 2011, the Bank opened a branch

located on Fob James Drive in Valley,

Alabama, about 30 miles northeast of

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This branch offers

the full line of the Bank’s services and has drive-through

windows and a drive-up ATM.

the full line of the Bank’s services and

has drive-through windows and a drive-up ATM.

This branch offers parking for

approximately 35 vehicles.

Prior to December 2011, the Bank had operated

a loan production office in Valley,

Prior to December 2011, the Bank had operated a

loan production office in Valley,

originally opened in September 2004.

In February 2015, the Bank relocated its Auburn Kroger branch to a new location

within the Corner Village Shopping

Center, in Auburn, Alabama.

In February 2015,

the Bank entered into a new lease agreement for five years with options for

two 5-year extensions.

In February 2020, the Bank exercised its option to renew the lease

for another five years.

leases approximately 1,500 square feet of space for the Corner Village

Prior to relocation, the Bank’s

Kroger branch was located in the Kroger supermarket in the same shopping center

since August 1988.

The current Corner

Village branch offers the

full line of the Bank’s deposit and other services including

but does not maintain safe

deposit boxes.

In February 2015, the Bank relocated its branch in the Auburn Kroger store

to a new leased location within the Corner

Village Shopping Center in

After careful consideration of the Bank’s customers,

branch usage, parking issues, the

lack of a drive through window and the close proximity to our other locations

in Auburn, the Bank closed the Corner

Village branch on December

31, 2024, and its lease expired January 31, 2025.

In September 2015, the Bank relocated its Auburn Wal

-Mart Supercenter branch in south Auburn, which had been opened

in 2004 to a new building, which the Bank built in 2015 at the intersection of S.

Avenue and E.

-Mart Supercenter branch in south Auburn, which had been

in 2004 to a new building, which the Bank built in 2015 at the intersection

Donahue Avenue

University Drive

in Auburn, Alabama.

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for approximately 28 vehicles.

In May 2017, the Bank relocated its Opelika Kroger branch to a new location the Bank purchased

in August 2016 near the

In May 2017, the Bank relocated its Opelika Kroger branch to a new location the

Bank purchased in August 2016 near the

Retail Shopping Center and the intersection of U.S.

Highway 280 and Frederick

Road in Opelika, Alabama.

Highway 280 and Frederick Road

in Opelika, Alabama.

The Tiger Town

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Prior to relocation, the Bank’s

Opelika Kroger branch was located inside the Kroger supermarket in the Tiger

Town retail center in Opelika,

Opelika Kroger branch was

originally opened in July 2007.

Opelika Kroger branch was located inside the Kroger supermarket in

the Tiger Town

retail center in Opelika, Alabama.

Opelika Kroger branch was originally opened in July 2007.

Town branch offers

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This branch offers parking for approximately 36 vehicles.

In addition to the eight ATMs

at various branch locations, mentioned above, the Bank also has four

various locations within our primary service area.

In September 2018, the Bank opened a loan production office on East Samford

Avenue in Auburn,

has approximately 2,500 square feet of space and is leased through 2028.

This loan production office was relocated to the

newly developed AuburnBank Center in June 2022.

The Company entered into a three year sublease agreement, during

2022, with a tenant, which has an option to renew that lease for three additional years.

In addition to the seven ATMs

at various branch locations, the Bank also has three ATMs

located at various locations

within our primary service area.

The Bank had a 2,500 square feet loan production office on

East Samford Avenue

in Auburn, Alabama.

When this loan

production office was relocated to the AuburnBank Center in June

2022, the Company entered into a three-year sublease

agreement during 2022.

The sublessee has an option exercisable by September 2025 to renew the sublease for

remaining term of the

Bank’s lease ending in 2028.

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 1B. Unresolved Staff Comments