What changed in this filing

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Item 1A. Risk Factors

2021-03-25 compared with 2020-03-30 · 263 added, 398 removed, 201 unchanged (77% of the section changed)

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Risks Relating to Our Business and Market

The acquisition of banks, bank branches, and other businesses involves risks.

As part of our growth strategy, we may pursue mergers and acquisitions of other banks, branches or other financial services companies within or outside of our principal market

We cannot assure you that we will be able to adequately or profitably manage any such future acquisitions.

The acquisition of banks, bank branches, and other businesses involves risk, including exposure to unknown or contingent

liabilities, the uncertainties of asset quality assessment, the difficulty and expense of integrating the operations and personnel of the acquired companies with ours, the potential negative effects on our other operations of the diversion of

management’s time and attention, and the possible loss of key employees and customers of the banks, businesses, or branches we acquire.

Our failure to execute our internal growth strategy or our acquisition strategy could adversely affect our

business, results of operations, financial condition, and future prospects.

In addition, if we finance acquisitions by issuing convertible debt or equity securities, our existing shareholders may be diluted, which could affect the market price of

our common stock.

Our business is concentrated in, and largely dependent upon, the continued growth and welfare of our markets, and adverse economic conditions in these markets

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Our business is affected by the economy of Oklahoma, the Dallas/Fort Worth metropolitan area and Kansas, our primary markets.

Our success depends to a significant extent upon the

business activity, population, income levels, employment trends, deposits and real estate activity in these markets.

Our success depends to a significant extent upon the business activity,

population, income levels, employment trends, deposits and real estate activity in these markets.

The Oklahoma economy has been generally steady, if not increasing, in the past few years.

The housing market remains strong with

prices having increased through 2019.

The housing market remains strong with prices having increased

through 2020.

Vacancy rates for commercial properties remain low and small business owners are increasingly considering bank borrowings in order to grow.

However, in early March 2020, the economic outlook changed

dramatically due to multiple events, including:

However, in early March 2020, the economic outlook changed dramatically due to multiple events,

the COVID-19 virus, possible supply chain disruption, an increasing risk of recession, and in some cases, fear of the unknown.

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As of December 31, 2020, we had $10.7 million in unfunded commitments to borrowers in the oil and gas industry.

On March 9, 2020, global oil prices

dropped precipitously by approximately 20%.

Since that time, through March 27, 2020, global oil prices have continued to drop including an approximately 26% drop on March 18, 2020.

As of March 27, 2020, West Texas Intermediate Crude was near its

lowest point in 18 years.

We expect prolonged depressed pricing pressure on oil and gas to lead to increased credit stress in our energy portfolio, increased losses associated with our energy portfolio, increased utilization of our contractual

obligations to extend credit and weaker demand for energy lending.

General uncertainty resulting from continued volatility could have other adverse impacts, such as job losses in industries tied to energy, decreased spending habits, lower borrowing

needs, higher transaction deposit balances or a number of other effects that are difficult to isolate or quantify, particularly in markets with significant dependence on the energy industry like Oklahoma, and to a lesser extent Kansas and the

Dallas/Fort Worth metropolitan area, all of which could have an adverse effect on our business, financial condition and results of operations.

We expect prolonged depressed pricing

pressure on oil and gas to lead to increased credit stress in our energy portfolio, increased losses associated with our energy portfolio, increased utilization of our contractual obligations to extend credit and weaker demand for energy lending.

General uncertainty resulting from continued volatility could have other adverse impacts, such as job losses in industries tied to energy, decreased spending habits, lower borrowing needs, higher transaction deposit balances or a number of other

effects that are difficult to isolate or quantify, particularly in markets with significant dependence on the energy industry like Oklahoma, and to a lesser extent Kansas and the Dallas/Fort Worth metropolitan area, all of which could have an adverse

effect on our business, financial condition and results of operations.

We have credit exposure to the hospitality industry.

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At December 31, 2020, this exposure was

approximately $167.0 million, or 23.6%, of the total loan portfolio, along with an additional $39.4 million in unfunded debt, as compared to $123 million, or 20.5%, of the total loan portfolio, along with

an additional $28.3 million in unfunded debt as of December 31, 2018 .

The hospitality industry is subject to changes in the travel patterns of business and leisure travelers, both of which are affected by the strength of the economy, as

well as other factors.

The performance of the hospitality industry has traditionally been closely linked with the performance of the general economy and, specifically, growth in gross domestic product.

Changes in travel patterns of both business

and leisure travelers, particularly during periods of economic contraction or low levels of economic growth, may create difficulties for the industry over the long-term.

Although we have made a large portion of our hospitality loans to long-term,

well-established hotel operators in strategic locations, a general downturn in the supply growth of such markets or hotel occupancy or room rates could negatively impact the borrowers’ ability to repay.

A significant loss in this portfolio could

materially and adversely affect the Company’s financial condition and results of operations.

Our customers in the hospitality industry may be particularly susceptible to a material decline in revenues resulting from decreased travel and leisure

activities following the outbreak of COVID-19.

The outbreak of the recent coronavirus ("COVID-19"), or an outbreak of another highly infectious or contagious disease, could adversely affect our business

activities, financial condition and results of operations.

approximately $194.3 million, or 23.2%, of the total loan portfolio, along with an additional $65 million in unfunded debt, as compared to $167 million, or 23.6%, of the total loan portfolio, along with an additional $39.4 million in unfunded debt as

of December 31, 2019.

The hospitality industry is subject to changes in the travel patterns of business and leisure travelers, both of which are affected by the strength of the economy, as well as other factors.

The performance of the hospitality

industry has traditionally been closely linked with the performance of the general economy and, specifically, growth in gross domestic product.

Changes in travel patterns of both business and leisure travelers, particularly during periods of economic

contraction or low levels of economic growth, may create difficulties for the industry over the long-term.

Although we have made a large portion of our hospitality loans to long-term, well-established hotel operators in strategic locations, a general

downturn in the supply growth of such markets or hotel occupancy or room rates could negatively impact the borrowers’ ability to repay.

A significant loss in this portfolio could materially and adversely affect the Company’s financial condition and

results of operations.

Our customers in the hospitality industry may be particularly susceptible to a material decline in revenues resulting from decreased travel and leisure activities following the outbreak of COVID-19.

The continued economic impacts of the coronavirus ("COVID-19") could adversely affect our business activities, financial condition and results of operations.

Our business is dependent upon the willingness and ability of our customers to conduct banking and other financial transactions.

The spread of a highly infectious or contagious

disease, such as COVID-19, could cause severe disruptions in the U.S.

economy, which could in turn disrupt the business, activities, and operations of our customers, as well as our business and operations.

Moreover, since the beginning of January

2020, the coronavirus outbreak has caused significant disruption in the financial markets both globally and in the United States.

The spread of COVID-19, or an outbreak of another highly infectious or contagious disease, may result in a significant

decrease in business and/or cause our customers to be unable to meet existing payment or other obligations to us, particularly in the event of a spread of COVID-19 or an outbreak of an infectious disease in our market area.

Although we maintain

contingency plans for pandemic outbreaks, a spread of COVID-19, or an outbreak of another contagious disease, could also negatively impact the availability of key personnel necessary to conduct our business activities.

Such a spread or outbreak

could also negatively impact the business and operations of third-party service providers who perform critical services for us.

If COVID-19, or another highly infectious or contagious disease, spreads or the response to contain COVID-19 is

unsuccessful, we could experience a material adverse effect to our business, financial condition, and results of operations.

There continue to be broad concerns related to the potential effects of the coronavirus or COVID-19 outbreak.

If the coronavirus has an adverse effect on (i) customer deposits, (ii)

the ability of our borrowers to satisfy their obligations to us, (iii) the demand for our loans or our other products and services, (iv) other aspects of our business operations, or (v) on financial markets, real estate markets, or economic growth,

this could, depending on the extent of the decline in customer deposits or loan defaults, materially and adversely affect our liquidity and financial condition and the results of operations could be materially and adversely affected.

Beginning in early 2020, COVID-19 spread across the

world, including the U.S.

The spread of COVID-19 caused severe disruptions in the U.S.

economy, regional quarantines, business shutdowns, high unemployment, disruptions to supply chains, and overall economic instability.

The pandemic’s ultimate

impact on our business will depend on highly uncertain and unpredictable future developments, including the magnitude and duration of the pandemic and actions taken by governmental authorities in response to the pandemic, particularly within our

geographic footprint.

The pandemic and resultant governmental action have severely restricted economic activity and resulted in a general deterioration in economic conditions.

Many businesses saw a steep decline in revenue and have endured temporary

closures or are operating at reduced capacities, some of which are our borrowers.

The pandemic’s impact on our customer’s businesses has resulted in the recognition of credit losses in our loan portfolios and increases in our allowance for credit

losses and such effects may continue if the economy continues to worsen or more clients draw on their lines of credit or seek additional loans to help finance their businesses.

Additionally, the COVID-19 pandemic has significantly affected the financial markets and has resulted in a number of Federal Reserve actions.

Market interest rates have declined

significantly.

On March 3, 2020, the 10-year Treasury yield fell below 1.00% for the first time, and the Federal Reserve reduced the target federal funds rate by 50 basis points to 1.00% to 1.25%.

On March 15, 2020, the Federal Reserve further

reduced the target federal funds rate by 100 basis points to 0.00% to 0.25% and announced a $700 billion quantitative easing program in response to the expected economic downturn caused by the COVID-19 pandemic.

The Federal Reserve reduced the

interest that it pays on excess reserves from 1.60% to 1.10% on March 3, 2020, and then to 0.10% on March 15, 2020.

We expect that these reductions in interest rates, especially if prolonged, could adversely affect our net interest income and

margins and our profitability.

Market interest rates declined

significantly in March 2020 and have remained at lower rates throughout 2020 into 2021.

On March 3, 2020, the 10-year Treasury yield fell below 1.00% for the first time, and the Federal Reserve reduced the target federal funds rate by 50 basis points

to 1.00% to 1.25%.

On March 15, 2020, the Federal Reserve further reduced the target federal funds rate by 100 basis points to 0.00% to 0.25% and announced a $700 billion quantitative easing program in response to the expected economic downturn

caused by the COVID-19 pandemic.

The Federal Reserve reduced the interest that it pays on excess reserves from 1.60% to 1.10% on March 3, 2020, and then to 0.10% on March 15, 2020.

These prolonged reductions in interest rates, have adversely affected

our net interest income and margins and our profitability.

These negative economic conditions have negatively impacted our financial results and are expected to have a continued adverse effect on our business, including adversely impacting the demand for our

products and services, our net interest income and our liquidity and regulatory capital requirements.

We have a concentration in commercial real estate lending that could cause our regulators to restrict our ability to grow.

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our construction, land development and other land loans represented 93.5% of our total Bank capital, as compared to 322.6% and 66.3% as of December 31, 2019, respectively.

During the prior 36-month period, our Regulatory CRE has decreased 111.6%.

We are actively working to manage our Regulatory CRE concentration, and we believe that our underwriting policies, management information systems, independent credit administration process, and monitoring of real estate loan concentrations are

currently sufficient to address the CRE Concentration Guidance.

During the prior 36-month period, our Regulatory CRE has increased 87.3%.

are actively working to manage our Regulatory CRE concentration, and we believe that our underwriting policies, management information systems, independent credit administration process, and monitoring of real estate loan concentrations are currently

sufficient to address the CRE Concentration Guidance.

We have implemented enhanced CRE monitoring techniques as expected by banking regulators as our concentrations have approached or exceeded the regulatory guidance.

Nevertheless, the

Federal Reserve could become concerned about our CRE loan concentrations, and it could limit our ability to grow by restricting its approvals for the establishment or acquisition of branches, or approvals of mergers or other acquisition

opportunities, or by requiring us to raise additional capital, reduce our loan concentrations or undertake other remedial actions.

Because a portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could

impair the value of collateral securing our real estate loans and result in loan and other losses.

Nevertheless, the Federal

Reserve could become concerned about our CRE loan concentrations, and it could limit our ability to grow by restricting its approvals for the establishment or acquisition of branches, or approvals of mergers or other acquisition opportunities, or by

requiring us to raise additional capital, reduce our loan concentrations or undertake other remedial actions.

Because a portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair

the value of collateral securing our real estate loans and result in loan and other losses.

Adverse developments affecting real estate values, particularly in Oklahoma City and the Dallas/Fort Worth metropolitan area, could increase the credit risk associated with our real

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Real estate values may experience periods of fluctuation, and the market value of real estate can fluctuate significantly in a short period of time.

Adverse changes affecting real estate values and the liquidity of real

estate in one or more of our markets could increase the credit risk associated with our loan portfolio, and could result in losses that adversely affect credit quality, financial condition and results of operation.

Negative changes in the economy

affecting real estate values and liquidity in our market areas could significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses.

Collateral may have to be sold for less than the outstanding balance of the loan, which could result in losses on such loans.

Adverse changes affecting real estate values and the liquidity of real estate

in one or more of our markets could increase the credit risk associated with our loan portfolio, and could result in losses that adversely affect credit quality, financial condition and results of operation.

Negative changes in the economy affecting

real estate values and liquidity in our market areas could significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses.

Collateral may

have to be sold for less than the outstanding balance of the loan, which could result in losses on such loans.

Such declines and losses could have a material adverse impact on our business, results of operations and growth prospects.

If real estate values decline, it is also more likely that we would be required to increase our allowance, which could adversely affect our business, financial condition and results of operations.

If real estate

values decline, it is also more likely that we would be required to increase our allowance, which could adversely affect our business, financial condition and results of operations.

Many of our loans are to commercial borrowers, which have a higher degree of risk than other types of loans.

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Accordingly, a downturn in the real estate market or the general economy could heighten our risk related to commercial purpose loans, particularly energy and CRE loans.

residential mortgage loans, which generally are made on the basis of the borrowers’ ability to make repayment from their employment and other income and which are secured by real property whose value tends to be more easily ascertainable,

commercial purpose loans typically are made on the basis of the borrowers’ ability to make repayment from the cash flow of the commercial venture.

If the cash flow from business operations is reduced, the borrowers’ ability to repay the loan may be

As a result of the larger average size of each commercial purpose loan as compared with other loans such as residential loans, as well as the collateral which is generally less readily marketable, losses incurred on a small number of

commercial purpose loans could have a material adverse impact on our financial condition and results of operations.

purpose loans typically are made on the basis of the borrowers’ ability to make repayment from the cash flow of the commercial venture.

If the cash flow from business operations is reduced, the borrowers’ ability to repay the loan may be impaired.

a result of the larger average size of each commercial purpose loan as compared with other loans such as residential loans, as well as the collateral which is generally less readily marketable, losses incurred on a small number of commercial purpose

loans could have a material adverse impact on our financial condition and results of operations.

Our largest loan relationships make up a material percentage of our total loan portfolio .

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Each of the loans associated with these relationships has been underwritten in accordance with our underwriting policies and limits.

Along with other risks inherent

in these loans, such as the deterioration of the underlying businesses or property securing these loans, this concentration of borrowers presents a risk that, if one or more of these relationships were to become delinquent or suffer default, we

could be exposed to material losses.

Along with other risks inherent in

these loans, such as the deterioration of the underlying businesses or property securing these loans, this concentration of borrowers presents a risk that, if one or more of these relationships were to become delinquent or suffer default, we could be

exposed to material losses.

The allowance for loan losses may not be adequate to cover losses associated with any of these relationships, and any loss or increase in the allowance would negatively affect our earnings and capital.

these loans are adequately collateralized, an increase in classified assets could harm our reputation with our regulators and inhibit our ability to execute our business plan.

Even if these loans

are adequately collateralized, an increase in classified assets could harm our reputation with our regulators and inhibit our ability to execute our business plan.

Our largest deposit relationships currently make up a material percentage of our deposits and the withdrawal of deposits by our largest depositors could force us

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related customer groups could force us to rely more heavily on borrowings and other sources of funding for our business and withdrawal demands, adversely affecting our net interest margin and results of operations.

We may also be forced, as a

result of withdrawals of deposits, to rely more heavily on other, potentially more expensive and less stable funding sources.

Additionally, such circumstances could require us to raise deposit rates in an attempt to attract new deposits, which

would adversely affect our results of operations.

We may also be forced, as a result

of withdrawals of deposits, to rely more heavily on other, potentially more expensive and less stable funding sources.

Additionally, such circumstances could require us to raise deposit rates in an attempt to attract new deposits, which would

adversely affect our results of operations.

Under applicable regulations, if the Bank were no longer “well capitalized,” the Bank would not be able to accept brokered deposits without the approval of the FDIC.

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or renewed on the same terms or at all.

As of December 31, 2019, approximately 41.7% of our gross loans were maturing within one year, compared to approximately 45.3% of our gross loans that were maturing within one year

as of December 31, 2018.

As of December 31, 2020, approximately 43.2% of our gross loans were maturing within one year, compared to approximately 41.7% of our gross loans that were maturing within one year as

of December 31, 2019.

As a result, we will either need to renew or replace these loans during the course of the year.

There is no guarantee that these loans will be originated or renewed by borrowers on the same terms or at all, as demand for

such loans may decrease.

Furthermore, there is no guarantee that borrowers will qualify for new loans or that existing loans will be renewed by us on the same terms or at all, as collateral values may be insufficient or the borrowers’ cash flow may

be materially less than when the loan was initially originated.

There is no guarantee that these loans will be originated or renewed by borrowers on the same terms or at all, as demand for such

loans may decrease.

materially less than when the loan was initially originated.

This could result in a significant decline in the size of our loan portfolio.

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We maintain an allowance for loan losses in an amount that we believe is appropriate to provide for losses inherent in the portfolio.

While we strive to carefully monitor

credit quality and to identify loans that may become nonperforming, at any time there are loans included in the portfolio that will result in losses but that have not been identified as nonperforming or potential problem loans.

We cannot be sure

that we will be able to identify deteriorating loans before they become nonperforming assets or that we will be able to limit losses on those loans that are identified.

While we strive to carefully monitor credit

quality and to identify loans that may become nonperforming, at any time there are loans included in the portfolio that will result in losses but that have not been identified as nonperforming or potential problem loans.

We cannot be sure that we

will be able to identify deteriorating loans before they become nonperforming assets or that we will be able to limit losses on those loans that are identified.

As a result, future additions to the allowance may be necessary.

Additionally, future additions may be required based on changes in the loans comprising the portfolio and changes in the financial condition of borrowers, such as may result from changes in economic conditions or as a result of incorrect

assumptions by management in determining the allowance.

Additionally, future

additions may be required based on changes in the loans comprising the portfolio and changes in the financial condition of borrowers, such as may result from changes in economic conditions or as a result of incorrect assumptions by management in

determining the allowance.

Federal banking regulators, as an integral part of their supervisory function, periodically review our allowance for loan losses.

These regulatory agencies may require us to increase our

provision for loan losses or to recognize further loan charge-offs based upon their judgments, which may be different from ours.

Any increase in the allowance for loan losses could have a negative effect on our financial condition and results of

Commercial and commercial real estate loans comprise a significant portion of our total loan portfolio.

These regulatory agencies may require us to increase our provision for loan losses or to

recognize further loan charge-offs based upon their judgments, which may be different from ours.

Any increase in the allowance for loan losses could have a negative effect on our financial condition and results of operations.

Commercial and

commercial real estate loans comprise a significant portion of our total loan portfolio.

These types of loans typically are larger than residential real estate loans and other consumer loans.

Because our loan

portfolio contains a significant number of commercial and commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans may cause a significant increase in nonperforming assets.

An increase in

nonperforming loans could result in a loss of earnings from these loans, an increase in the allowance for loan losses, or an increase in loan charge-offs, which could have an adverse impact on our results of operations and financial condition.

We rely on our senior management team and may have difficulty identifying, attracting and retaining necessary personnel, which may divert resources and limit our

ability to execute our business strategy and successfully expand our operations.

Our business plan includes, and is dependent upon, our hiring and retaining highly qualified and motivated personnel at every level.

Our senior management team has significant industry experience, and

their knowledge and relationships would be difficult to replace.

The loss of senior management without qualified successors who can execute our strategy could have an adverse impact on our business, financial condition and results of operations.

For example, since joining the Bank in August 2015, one senior loan officer in the Dallas/Fort Worth metropolitan area, has originated 25.3% of our total loan portfolio as of December 31, 2019.

The senior loan officer is subject to a

noncompetition agreement but the loss of his expertise and ability, could have an adverse impact on our business, financial condition and results of operations.

Competition for senior executives and skilled personnel in the financial services and banking industry is intense, which means the cost of hiring, incenting and retaining skilled

personnel may continue to increase.

We need to continue to identify, attract and retain key personnel and to recruit qualified individuals to succeed existing key personnel to ensure the continued growth and successful operation of our business.

addition, as a provider of relationship-based commercial banking services, we must identify, attract and retain qualified banking personnel to continue to grow our business.

Our ability to effectively compete for senior executives and other

qualified personnel by offering competitive compensation and benefit arrangements may be restricted by applicable banking laws and regulations.

If we are unable to hire and retain qualified personnel we may be unable to successfully execute our

business strategy and manage our growth.

In addition, to attract and retain personnel with appropriate skills and knowledge to support our business, we may offer a variety of benefits, which could reduce our earnings or have a material adverse

effect on our business, financial condition or results of operations.

Because our loan portfolio contains a significant

number of commercial and commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans may cause a significant increase in nonperforming assets.

An increase in nonperforming loans could result in a

loss of earnings from these loans, an increase in the allowance for loan losses, or an increase in loan charge-offs, which could have an adverse impact on our results of operations and financial condition.

One of our senior loan officers is responsible for a material portion of our loan originations and the loss of such officer could adversely affect our business,

financial condition and results of operation.

Since joining the Bank in August 2015, one senior loan officer in the Dallas/Fort Worth metropolitan area, has originated 24.1% of our total loan portfolio as of December 31, 2020.

This senior loan officer is subject to a noncompetition agreement but the loss of his expertise and ability, could have an adverse impact on our business, financial condition and results of operations.

Our profitability depends on interest rates generally, and we may be adversely affected by changes in market interest rates.

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Loan origination volume usually declines during periods of rising or high interest rates and increases during periods of declining or low interest rates.

Changes in interest rates also have a significant impact on the carrying value of

certain of our assets, including loans and other assets, on our balance sheet.

Changes in interest rates also have a significant impact on the carrying value of certain

of our assets, including loans and other assets, on our balance sheet.

Interest rate increases often result in larger payment requirements for our borrowers, which increase the potential for default.

At the same time, the marketability of any

underlying property that serves as collateral for such loans may be adversely affected by any reduced demand resulting from higher interest rates.

An increase in interest rates that adversely affects the ability of borrowers to pay the principal or

interest on loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse effect on our results of operations and cash flows.

Further, when we place a loan on nonaccrual status, we

reverse any accrued but unpaid interest receivable, which decreases interest income.

Subsequently, we continue to have a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding

Thus, an increase in the amount of nonaccrual loans would have an adverse impact on net interest income.

At the same time, the marketability of any underlying

property that serves as collateral for such loans may be adversely affected by any reduced demand resulting from higher interest rates.

An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on

loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse effect on our results of operations and cash flows.

Further, when we place a loan on nonaccrual status, we reverse any

accrued but unpaid interest receivable, which decreases interest income.

Subsequently, we continue to have a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense.

increase in the amount of nonaccrual loans would have an adverse impact on net interest income.

As short-term interest rates have remained at low levels, and as longer term interest rates have fallen, we expect to experience net interest margin compression as our

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This could have a material adverse effect on our net interest income and our results of operations.

The ratio of variable- to fixed-rate loans in our loan portfolio, the ratio of short-term (maturing at a given time within 12 months) to long-term loans, and the ratio of our

demand, money market and savings deposits to certificates of deposit (and their time periods), are the primary factors affecting the sensitivity of our net interest income to changes in market interest rates.

The composition of our rate-sensitive

assets or liabilities is subject to change and could result in a more unbalanced position that would cause market rate changes to have a greater impact on our earnings.

Fluctuations in market rates and other market disruptions are neither

predictable nor controllable and may adversely affect our financial condition and earnings.

The ratio of variable- to fixed-rate loans in our loan portfolio, the ratio of short-term (maturing at a given time within 12 months) to long-term loans, and the ratio of our demand,

money market and savings deposits to certificates of deposit (and their time periods), are the primary factors affecting the sensitivity of our net interest income to changes in market interest rates.

The composition of our rate-sensitive assets or

liabilities is subject to change and could result in a more unbalanced position that would cause market rate changes to have a greater impact on our earnings.

Fluctuations in market rates and other market disruptions are neither predictable nor

controllable and may adversely affect our financial condition and earnings.

We rely on short-term funding, which can be adversely affected by local and general economic conditions.

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Approximately $212.2 million of the remaining balance of deposits consists of certificates of deposit, of which approximately $164.8 million, or 18.2% of our total deposits, was due to mature within one year.

Based on our experience, we believe

that our savings, money market and non-interest-bearing accounts are relatively stable sources of funds.

Based on our experience, we believe that

our savings, money market and non-interest-bearing accounts are relatively stable sources of funds.

Historically, a majority of non-brokered certificates of deposit are renewed upon maturity as long as we pay competitive interest rates.

of these customers are, however, interest-rate conscious and may be willing to move funds into higher-yielding investment alternatives.

Our ability to attract and maintain deposits, as well as our cost of funds, has been, and will continue to be

significantly affected by general economic conditions.

Many of these

customers are, however, interest-rate conscious and may be willing to move funds into higher-yielding investment alternatives.

Our ability to attract and maintain deposits, as well as our cost of funds, has been, and will continue to be significantly

affected by general economic conditions.

In addition, as market interest rates rise, we will have competitive pressure to increase the rates we pay on deposits.

If we increase interest rates paid to retain deposits, our earnings may

be adversely affected.

If we increase interest rates paid to retain deposits, our earnings may be adversely

Liquidity risk could impair our ability to fund operations and meet our obligations as they become due and could jeopardize our financial condition.

Liquidity is essential to our business.

Liquidity risk is the potential that we will be unable to meet our obligations as they come due because of an inability to liquidate assets

or obtain adequate funding.

Liquidity risk is the potential that we will be unable to meet our obligations as they come due because of an inability to liquidate assets or

obtain adequate funding.

The Bank’s primary funding source is customer deposits.

In addition, the Bank has historically had access to advances from the Federal Home Loan Bank of Topeka, or the FHLB, the Federal Reserve Bank of Kansas City, or

the FRB, discount window and other wholesale sources, such as internet-sourced deposits to fund operations.

We participate in the Certificate of Deposit Account Registry Service, or CDARS, where customer funds are placed into multiple certificates

of deposit, each in an amount under the standard FDIC insurance maximum of $250,000, and placed at a network of banks across the United States.

Although the Bank has historically been able to replace maturing deposits and advances as necessary, it

might not be able to replace such funds in the future.

In addition, the Bank has historically had access to advances from the Federal Home Loan Bank of Topeka, or the FHLB, the Federal Reserve Bank of Kansas City, or the

FRB, discount window and other wholesale sources, such as internet-sourced deposits to fund operations.

We participate in the Certificate of Deposit Account Registry Service, or CDARS, where customer funds are placed into multiple certificates of

deposit, each in an amount under the standard FDIC insurance maximum of $250,000, and placed at a network of banks across the United States.

Although the Bank has historically been able to replace maturing deposits and advances as necessary, it might

not be able to replace such funds in the future.

An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on liquidity.

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concentrated or adverse regulatory actions against us.

The Bank’s ability to borrow or attract and retain deposits in the future could be adversely affected by the Bank’s financial condition or regulatory restrictions, or impaired by factors that

are not specific to it, such as FDIC insurance changes, disruption in the financial markets or negative views and expectations about the prospects for the banking industry.

Borrowing capacity from the FHLB or FRB may fluctuate based upon the

condition of the Bank or the acceptability and risk rating of loan collateral and counterparties could adjust discount rates applied to such collateral at the lender’s discretion.

The Bank’s ability to borrow or attract and retain deposits in the future could be adversely affected by the Bank’s financial condition or regulatory restrictions, or impaired by factors that are

not specific to it, such as FDIC insurance changes, disruption in the financial markets or negative views and expectations about the prospects for the banking industry.

Borrowing capacity from the FHLB or FRB may fluctuate based upon the condition of

the Bank or the acceptability and risk rating of loan collateral and counterparties could adjust discount rates applied to such collateral at the lender’s discretion.

The FRB or FHLB could restrict or limit the Bank’s access to secured borrowings.

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liability maturities and deposit withdrawals, meet contractual obligations and fund asset growth and new business transactions at a reasonable cost, in a timely manner and without adverse consequences.

Any substantial, unexpected or prolonged change in the level or cost of liquidity could have a material adverse effect on our financial condition and results of operations, and

could impair our ability to fund operations and meet our obligations as they become due and could jeopardize our financial condition.

We face strong competition from banks, credit unions and other financial services providers that offer banking services, which may limit our ability to attract

and retain banking customers.

Competition in the banking industry generally, and in our primary markets specifically, is intense.

Competitors include banks as well as other financial services providers, such as

savings and loan institutions, consumer finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries.

In particular, our competitors include several larger national and regional financial

institutions whose greater resources may afford them a marketplace advantage by enabling them to maintain numerous banking locations and ATMs, achieve larger economies of scale, offer a wider array of banking services, make larger investments in

technologies needed to attract and retain customers and conduct extensive promotional and advertising campaigns.

If we are unable to offer competitive products and services as quickly as our larger competitors, our business may be negatively

Additionally, as a smaller institution, we are disproportionately affected by the continually increasing costs of compliance with new banking and other regulations.

Banks and other financial institutions with larger capitalization and

financial intermediaries not subject to bank regulatory restrictions have larger lending limits and are thereby able to serve the credit needs of a broader customer base than us.

Larger competitors may also be able to offer better lending and

deposit rates to customers, and could increase their competition as we become a public company and our growth becomes more visible.

If our competitors extend credit on terms we find to pose excessive risks, or at interest rates which we believe do

not warrant the credit exposure, we may not be able to maintain our business volume and could experience deteriorating financial performance.

Moreover, larger competitors may not be as vulnerable as us to downturns in the local economy and real

estate markets since they often have a broader geographic area and their loan portfolio is often more diversified.

Additionally, we face growing competition from so-called “online businesses” with few or no physical locations, including financial technology companies, online banks, lenders and

consumer and commercial lending platforms, as well as automated retirement and investment service providers.

New technology and other changes are allowing parties to effectuate financial transactions that previously required the involvement of

For example, consumers can maintain funds in brokerage accounts or mutual funds that would have historically been held as bank deposits.

Consumers can also complete transactions such as paying bills and transferring funds directly without

the assistance of banks.

The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits.

loss of these revenue streams and access to lower cost deposits as a source of funds could have a material adverse effect on our business, results of operations and financial condition.

We also compete against community banks, credit unions and non-bank financial services companies that have strong local ties.

These smaller institutions are likely to cater to the

same small- to medium-sized businesses that we target.

If we are unable to attract and retain banking customers, we may be unable to continue to grow our loan and deposit portfolios and our results of operations and financial condition may be

adversely affected.

Ultimately, we may be unable to compete successfully against current and future competitors.

Our risk management framework may not be effective in mitigating risks or losses to us.

Our risk management framework is comprised of various processes, systems and strategies, and is designed to manage the types of risk to which we are subject, including credit,

market, liquidity, interest rate, operational, reputation, business and compliance.

Our framework also includes financial or other modeling methodologies that involve management assumptions and judgment.

Our risk management framework may not be

effective under all circumstances and may not adequately mitigate risk or loss to us.

If our risk management framework is not effective, we could suffer unexpected losses and our business, financial condition, results of operations or growth

prospects could be materially and adversely affected.

We may also be subject to potentially adverse regulatory consequences.

Failure to keep pace with technological change could adversely affect our business.

Advances and changes in technology could significantly affect our business, financial condition, results of operations and future prospects.

We face many challenges, including the

increased demand for providing customers access to their accounts and the systems to perform banking transactions electronically.

Our ability to compete depends on our ability to continue to adapt technology on a timely and cost-effective basis to

meet these demands.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services.

competitors have substantially greater resources to invest in technological improvements.

We may not be able to effectively or timely implement new technology-driven products and services or be successful in marketing these products and services to

our customers and clients.

Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business, financial condition, results of operations or cash flows.

Any substantial, unexpected or prolonged change in the level or cost of liquidity could have a material adverse effect on our financial condition and results of operations, and could

impair our ability to fund operations and meet our obligations as they become due and could jeopardize our financial condition.

We are exposed to cybersecurity risks associated with our internet-based systems and online commerce security, including “hacking” and “identify theft.”

We conduct a portion of our business over the internet.

We rely heavily upon data processing, including loan servicing and deposit processing, software, communications and

information systems from a number of third parties to conduct our business.

We rely heavily upon data processing, including loan servicing and deposit processing, software, communications and information

systems from a number of third parties to conduct our business.

As a bank, we are more likely to be targeted by cyber-attacks in an effort to unlawfully access customer funds or customer personally identifiable information.

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While we believe we are in compliance with all applicable privacy and data security laws, an incident could put our customer confidential information at risk.

Although we have not experienced a cyber-incident which has been successful in compromising our data or systems, we can never be certain that all of our systems are entirely free

from vulnerability to breaches of security or other technological difficulties or failures.

Although we have not experienced a cyber-incident which has been successful in compromising our data or systems, we can never be certain that all of our systems are entirely free from

vulnerability to breaches of security or other technological difficulties or failures.

We monitor and modify, as necessary, our protective measures in response to the perpetual evolution of known cyber-threats.

A breach in the security of any of our information systems, or other cyber-incident, could have an adverse impact on, among other things, our revenue, ability to attract and

maintain customers and our reputation.

A breach in the security of any of our information systems, or other cyber-incident, could have an adverse impact on, among other things, our revenue, ability to attract and maintain

customers and our reputation.

In addition, as a result of any breach, we could incur higher costs to conduct our business, to increase protection, or related to remediation.

Furthermore, our customers could incorrectly blame us and

terminate their account with us for a cyber-incident which occurred on their own system or with that of an unrelated third party.

In addition, a security breach could also subject us to additional regulatory scrutiny and expose us to civil

litigation and possible financial liability.

Furthermore, our customers could incorrectly blame us and terminate their

account with us for a cyber-incident which occurred on their own system or with that of an unrelated third party.

In addition, a security breach could also subject us to additional regulatory scrutiny and expose us to civil litigation and possible

financial liability.

Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking

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internet systems, loan and deposit processing and other processing services from third-party service providers.

If these third-party service providers experience financial, operational or technological difficulties or terminate their services and

we are unable to replace them with other service providers, our operations could be interrupted.

If these third-party service providers experience financial, operational or technological difficulties or terminate their services and we

are unable to replace them with other service providers, our operations could be interrupted.

If an interruption were to continue for a significant period of time, our business, financial condition and results of operations could be materially

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Even if we are able to replace our service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations.

We may need to raise additional capital in the future, and if we fail to maintain sufficient capital, whether due to losses, an inability to raise additional

capital or otherwise, our financial condition, liquidity and results of operations, as well as our ability to maintain regulatory compliance, would be adversely affected.

Our business strategy calls for continued growth.

We may need to raise additional capital in the future to support our continued growth and to maintain our required regulatory

capital levels.

Our ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and

governmental activities, and on our financial condition and performance.

Any occurrence that may limit our access to the capital markets may adversely affect our capital costs and our ability to raise capital.

Moreover, if we need to raise capital

in the future, we may have to do so when many other financial institutions are also seeking to raise capital, and we would have to compete with those institutions for investors.

Accordingly, there are no assurances that we will be able to raise

additional capital if needed or on terms acceptable to us.

Our growth may be constrained if we are unable to raise additional capital as needed.

Furthermore, if we fail to maintain capital to meet regulatory requirements, our financial condition,

liquidity and results of operations would be materially and adversely affected.

We may be exposed to risk of environmental liabilities with respect to properties to which we take title.

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claims by third parties based on damages and costs resulting from environmental contamination emanating from the property.

If we ever become subject to significant environmental liabilities, our business, financial condition, liquidity and results

of operations could be materially and adversely affected.

If we ever become subject to significant environmental liabilities, our business, financial condition, liquidity and results of

operations could be materially and adversely affected.

Risks Relating to Our Regulatory Environment

We are subject to extensive regulation, which increases the cost and expense of compliance and could limit or restrict our activities, which in turn may

adversely impact our earnings and ability to grow.

We operate in a highly regulated environment and are subject to regulation, supervision and examination by a number of governmental regulatory agencies, including the Federal

Reserve, the OBD, and the FDIC.

Regulations adopted by these agencies, which are generally intended to provide protection for depositors, customers and the DIF, rather than for the benefit of shareholders, govern a comprehensive range of matters

relating to ownership and control of our shares, our acquisition of other companies and businesses, permissible activities for us to engage in, maintenance of adequate capital levels, dividend payments and other aspects of our operations.

bank regulators possess broad authority to prevent or remedy unsafe or unsound practices or violations of law.

Following examinations, we may be required, among other things, to change our asset valuations or the amounts of required loan loss

allowances or to restrict our operations, as well as increase our capital levels, which could adversely affect our results of operations.

The laws and regulations applicable to the banking industry could change at any time and we cannot predict the

effects of these changes on our business, profitability or growth strategy.

We are subject to extensive regulation, which increases the cost and expense of compliance and could limit or restrict our activities, which in turn may adversely

impact our earnings and ability to grow.

We operate in a highly regulated environment and are subject to regulation, supervision and examination by a number of governmental regulatory agencies, including the Federal Reserve,

the OBD, and the FDIC.

ownership and control of our shares, our acquisition of other companies and businesses, permissible activities for us to engage in, maintenance of adequate capital levels, dividend payments and other aspects of our operations.

These bank regulators

possess broad authority to prevent or remedy unsafe or unsound practices or violations of law.

Following examinations, we may be required, among other things, to change our asset valuations or the amounts of required loan loss allowances or to

restrict our operations, as well as increase our capital levels, which could adversely affect our results of operations.

The laws and regulations applicable to the banking industry could change at any time and we cannot predict the effects of these

changes on our business, profitability or growth strategy.

Increased regulation could increase our cost of compliance and adversely affect profitability.

Moreover, certain of these regulations contain significant punitive sanctions

for violations, including monetary penalties and limitations on a bank’s ability to implement components of its business plan, such as expansion through mergers and acquisitions or the opening of new branch offices.

In addition, changes in

regulatory requirements may add costs associated with compliance efforts.

Moreover, certain of these regulations contain significant punitive sanctions for violations,

including monetary penalties and limitations on a bank’s ability to implement components of its business plan, such as expansion through mergers and acquisitions or the opening of new branch offices.

In addition, changes in regulatory requirements

may add costs associated with compliance efforts.

Furthermore, government policy and regulation, particularly as implemented through the Federal Reserve, significantly affect credit conditions.

Negative developments in the

financial industry and the impact of new legislation and regulation in response to those developments could negatively impact our business operations and adversely impact our financial performance.

Negative developments in the financial industry and the

impact of new legislation and regulation in response to those developments could negatively impact our business operations and adversely impact our financial performance.

Monetary policy and other economic factors could affect our profitability adversely.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve.

An important function of the Federal

Reserve is to regulate the money supply and credit conditions.

An important function of the Federal Reserve

is to regulate the money supply and credit conditions.

Among the instruments used by the Federal Reserve to implement these objectives are open market purchases and sales of U.S.

government securities, adjustments of the discount rate and

changes in banks’ reserve requirements against bank deposits.

government securities, adjustments of the discount rate and changes in

banks’ reserve requirements against bank deposits.

These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits.

Their use also affects

interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to

do so in the future.

Their use also affects interest rates

charged on loans or paid on deposits.

The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do

so in the future.

The effects of such policies upon our business, financial condition and results of operations cannot be predicted.

Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information

and adversely affect our business opportunities.

Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and

adversely affect our business opportunities.

We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted

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sensitivity of customer information we process, as well as plans for responding to data security breaches.

Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels

of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach.

Moreover, legislators and regulators in the United States are increasingly adopting or revising privacy, information

security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer

or employee information, and some of our current or planned business activities.

Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of

individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach.

Moreover, legislators and regulators in the United States are increasingly adopting or revising privacy, information security

and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee

information, and some of our current or planned business activities.

This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives.

This includes increased

privacy-related enforcement activity at the federal level by the Federal Trade Commission, as well as at the state level.

This includes increased privacy-related

enforcement activity at the federal level by the Federal Trade Commission, as well as at the state level.

We rely on third parties, and in some cases subcontractors, to provide information technology and data services.

Although we provide for appropriate protections through our

contracts and perform information security risk assessments of its third-party service providers and business associates, we still have limited control over their actions and practices.

In addition, despite the security measures that we have in

place to ensure compliance with applicable laws and rules, our facilities and systems, and those of our third-party providers may be vulnerable to security breaches, acts of vandalism or theft, computer viruses, misplaced or lost data, programming

and/or human errors or other similar events.

In such cases, notification to affected individuals, state and federal regulators, state attorneys general and media may be required, depending upon the number of affected individuals and whether

personal information including financial data was subject to unauthorized access.

Although we provide for appropriate protections through our contracts

and perform information security risk assessments of its third-party service providers and business associates, we still have limited control over their actions and practices.

In addition, despite the security measures that we have in place to ensure

compliance with applicable laws and rules, our facilities and systems, and those of our third-party providers may be vulnerable to security breaches, acts of vandalism or theft, computer viruses, misplaced or lost data, programming and/or human

errors or other similar events.

In such cases, notification to affected individuals, state and federal regulators, state attorneys general and media may be required, depending upon the number of affected individuals and whether personal information

including financial data was subject to unauthorized access.

Compliance with current or future privacy, data protection and information security laws (including those regarding security breach notification) affecting customer or employee data

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Risks Related to Our Common Stock

There are no assurances that an active public trading market will develop or persist for our common stock;

and, even if it does, our share price may be subject

to substantial volatility.

We cannot predict the extent to which investor interest in our Company will lead to the development and persistence of an active trading market on the NASDAQ Global Select Market or

otherwise, or how liquid that market may be, especially if few stock analysts follow our stock or issue research reports concerning our business.

If an active trading market does not develop or persist, it may be difficult to sell our shares.

market maker in our common stock is obligated to make a market in our shares, and any such market making may be discontinued at any time in the sole discretion of each market maker.

The price of our common stock could be volatile.

The market price of our common stock may be volatile and could be subject to wide fluctuations in price in response to various factors, some of which are beyond our control.

factors include, among other things:

actual or anticipated variations in our quarterly or annual results of operations;

recommendations by securities analysts;

operating and stock price performance of other companies that investors deem comparable to us;

news reports relating to trends, concerns and other issues in the financial services industry generally;

conditions in the banking industry such as credit quality and monetary policies;

perceptions in the marketplace regarding us or our competitors;

fluctuations in the stock price and operating results of our competitors;

domestic and international economic factors unrelated to our performance;

general market conditions and, in particular, developments related to market conditions for the industry;

new technology used, or services offered, by competitors;

changes in government regulations.

In addition, if the market for stocks in our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline

for reasons unrelated to our business, financial condition or results of operations.

If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and be a

distraction to management.

Shares of certain shareholders may be sold into the public market.

This could cause the market price of our common stock to drop significantly.

Our principal shareholders (collectively, the “Haines Family Trusts”) have the benefit of certain registration rights covering all of their shares of our common stock pursuant to

the registration rights agreement that we entered into with the Haines Family Trusts in connection with our initial public offering.

Sales of a substantial number of these shares in the public market, or the perception that these sales could occur,

could cause the market price of our common stock to decline or to be lower than it might otherwise be.

In addition, as of December 31, 2019 approximately 63.7% of our outstanding common stock is beneficially owned by our principal shareholders,

executive officers and directors.

The substantial amount of common stock that is owned by and issuable to our principal shareholders, executive officers and directors may adversely affect our share price, our share price volatility and the

development and persistence of an active and liquid trading market.

Our principal shareholders (collectively, the “Haines Family Trusts”) have the benefit of certain registration rights covering all of their shares of our common stock pursuant to the

registration rights agreement that we entered into with the Haines Family Trusts in connection with our initial public offering.

Sales of a substantial number of these shares in the public market, or the perception that these sales could occur, could

cause the market price of our common stock to decline or to be lower than it might otherwise be.

In addition, as of December 31, 2020 approximately 70.3% of our outstanding common stock is beneficially owned by our principal shareholders, executive

officers and directors.

persistence of an active and liquid trading market.

The sale of these shares could impair our ability to raise capital through the sale of additional equity securities.

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there are substantial regulatory limitations on changes of control of bank holding companies.

Oklahoma corporate law and provisions of our amended and restated certificate of incorporation, or certificate of incorporation, and our amended and restated bylaws, or bylaws,

could make it more difficult for a third party to acquire us, even if doing so would be perceived to be beneficial by our shareholders.

Furthermore, with certain limited exceptions, federal regulations prohibit a person or company or a group of

persons deemed to be “acting in concert” from, directly or indirectly, acquiring more than 10% (5% if the acquirer is a bank holding company) of any class of our voting stock or obtaining the ability to control in any manner the election of a

majority of our directors or otherwise direct the management or policies of our Company without prior notice or application to and the approval of the Federal Reserve.

Accordingly, prospective investors need to be aware of and comply with these

requirements, if applicable, in connection with any purchase of shares of our common stock.

Collectively, provisions of our certificate of incorporation and bylaws and other statutory and regulatory provisions may delay, prevent or deter a merger,

acquisition, tender offer, proxy contest or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their common stock.

Moreover, the combination of these provisions effectively inhibits

certain business combinations, which, in turn, could adversely affect the market price of our common stock.

Oklahoma corporate law and provisions of our amended and restated certificate of incorporation, or certificate of incorporation, and our amended and restated bylaws, or bylaws, could

make it more difficult for a third party to acquire us, even if doing so would be perceived to be beneficial by our shareholders.

Furthermore, with certain limited exceptions, federal regulations prohibit a person or company or a group of persons

deemed to be “acting in concert” from, directly or indirectly, acquiring more than 10% (5% if the acquirer is a bank holding company) of any class of our voting stock or obtaining the ability to control in any manner the election of a majority of our

directors or otherwise direct the management or policies of our Company without prior notice or application to and the approval of the Federal Reserve.

Accordingly, prospective investors need to be aware of and comply with these requirements, if

applicable, in connection with any purchase of shares of our common stock.

Collectively, provisions of our certificate of incorporation and bylaws and other statutory and regulatory provisions may delay, prevent or deter a merger, acquisition, tender

offer, proxy contest or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their common stock.

Moreover, the combination of these provisions effectively inhibits certain business

combinations, which, in turn, could adversely affect the market price of our common stock.

We are controlled by trusts established for the benefit of members of the Haines family, whose interests may not coincide with our other shareholders.

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In any of these matters, the interests of the Haines Family Trusts may differ from or conflict with our interests as a company or the interests of other shareholders.

Accordingly, the Haines Family Trusts could influence us to enter into

transactions or agreements that other shareholders would not approve or make decisions with which other shareholders may disagree.

Accordingly, the Haines Family Trusts could influence us to enter into transactions

or agreements that other shareholders would not approve or make decisions with which other shareholders may disagree.

We are a “controlled company” within the meaning of the rules of NASDAQ, and qualify for exemptions from certain corporate governance requirements.

our shareholders do not have the same protections afforded to shareholders of companies that are subject to such requirements.

We are a “controlled company” under NASDAQ’s corporate governance listing standards, meaning that more than 50% of the voting power for the election of our board of directors will

be held by a single person, entity or group.

We are a “controlled company” under NASDAQ’s corporate governance listing standards, meaning that more than 50% of the voting power for the election of our board of directors will be

held by a single person, entity or group.

As a controlled company, we are exempt from the obligation to comply with certain corporate governance requirements, including the requirements:

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attractive to investors or otherwise harm our stock price.

Our bylaws have an exclusive forum provision, which could limit a shareholder's ability to obtain a favorable judicial forum for disputes with us or our

directors, officers or other employees.

Our bylaws have an exclusive forum provision providing that, unless we consent in writing to an alternative forum, the state or federal courts for the Western District of Oklahoma

are the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Company to the

Company or the Company’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Oklahoma General Corporation Act, or OGCA, the certificate of incorporation or the bylaws or (iv) any action asserting a claim

governed by the internal affairs doctrine, in each case subject to said courts having personal jurisdiction over the indispensable parties named as defendants therein.

Any person purchasing or otherwise acquiring any interest in any shares of our

capital stock will be deemed to have notice of and to have consented to this provision of our certificate of incorporation.

The exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable

for disputes with us or our directors, officers or other employees, which may discourage such lawsuits.

Alternatively, if a court were to find the exclusive forum provision to be inapplicable or unenforceable in an action, we may incur additional

costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.

Holders of our common stock are entitled to receive only such cash dividends as our board of directors may declare out of funds legally available for such payments.

Any declaration

and payment of dividends on our common stock will depend upon our earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, our ability to service any equity or debt obligations senior to our

common stock and other factors deemed relevant by our board of directors.

Furthermore, consistent with our strategic plans, growth initiatives, capital availability, projected liquidity needs and other factors, we have made, and will continue to

make, capital management decisions and policies that could adversely affect the amount of dividends, if any, paid to our common shareholders.

The Federal Reserve has indicated that bank holding companies should carefully review their dividend policy in relation to the organization’s overall asset quality, current and

prospective earnings and level, composition and quality of capital.

The guidance provides that we inform and consult with the Federal Reserve prior to declaring and paying a dividend that exceeds earnings for the period for which the dividend is

being paid or that could result in an adverse change to our capital structure, including interest on any debt obligations.

If required payments on our debt obligations are not made, or dividends on any preferred stock we may issue are not paid, we

will be prohibited from paying dividends on our common stock.

Our bylaws have an exclusive forum provision, which could limit a shareholder's ability to obtain a favorable judicial forum for disputes with us or our directors,

officers or other employees.

Our bylaws have an exclusive forum provision providing that, unless we consent in writing to an alternative forum, the state or federal courts for the Western District of Oklahoma are

the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Company to the Company

or the Company’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Oklahoma General Corporation Act, or OGCA, the certificate of incorporation or the bylaws or (iv) any action asserting a claim governed by the

internal affairs doctrine, in each case subject to said courts having personal jurisdiction over the indispensable parties named as defendants therein.

Any person purchasing or otherwise acquiring any interest in any shares of our capital stock will

be deemed to have notice of and to have consented to this provision of our certificate of incorporation.

The exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us

or our directors, officers or other employees, which may discourage such lawsuits.

Alternatively, if a court were to find the exclusive forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with

resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

We are a bank holding company and our only source of cash, other than further issuances of securities, is distributions from the Bank.

We are a bank holding company with no material activities other than activities incidental to holding the common stock of the Bank.

Our principal source of funds to pay

distributions on our common stock and service any of our obligations, other than further issuances of securities, would be dividends received from the Bank.

Furthermore, the Bank is not obligated to pay dividends to us, and any dividends paid to us

would depend on the earnings or financial condition of the Bank and various business considerations.

As is the case with all financial institutions, the profitability of the Bank is subject to the fluctuating cost and availability of money, changes

in interest rates and in economic conditions in general.

Our principal source of funds to pay distributions

on our common stock and service any of our obligations, other than further issuances of securities, would be dividends received from the Bank.

Furthermore, the Bank is not obligated to pay dividends to us, and any dividends paid to us would depend on

the earnings or financial condition of the Bank and various business considerations.

As is the case with all financial institutions, the profitability of the Bank is subject to the fluctuating cost and availability of money, changes in interest rates

and in economic conditions in general.

In addition, various federal and state statutes limit the amount of dividends that the Bank may pay to the Company without regulatory approval.

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federal income tax.

If the unaudited, open tax years in which we were an S Corporation are audited by the IRS, and we are determined not to have qualified for,

or to have violated, our S Corporation status, we likely would be obligated to pay corporate level tax, plus interest and possible penalties.

This could result in tax with respect to all of the income we reported for periods when we believed we

properly were treated as an S Corporation not subject to entity level taxation.

Under the terms of a tax sharing agreement entered into by the Company and the Haines Family Trusts, the Haines Family Trusts will indemnify us with respect to our

unpaid tax liabilities (including interest and penalties) to the extent that such unpaid tax liabilities are attributable to a decrease in the shareholders’ taxable income for any tax period and a corresponding increase in the Company’s taxable

income for any period.

If the unaudited, open tax years in which we were an S Corporation are audited by the IRS, and we are determined not to have qualified for, or

to have violated, our S Corporation status, we likely would be obligated to pay corporate level tax, plus interest and possible penalties.

This could result in tax with respect to all of the income we reported for periods when we believed we properly

were treated as an S Corporation not subject to entity level taxation.

Under the terms of a tax sharing agreement entered into by the Company and the Haines Family Trusts, the Haines Family Trusts will indemnify us with respect to our unpaid tax

liabilities (including interest and penalties) to the extent that such unpaid tax liabilities are attributable to a decrease in the shareholders’ taxable income for any tax period and a corresponding increase in the Company’s taxable income for any

This indemnity includes any additional taxes resulting from the Company not being a valid S Corporation.

Any such claims, however, could result in additional costs to us and could have a material adverse effect on our results

of operations and financial condition.

Any such claims, however, could result in additional costs to us and could have a material adverse effect on our results of operations

and financial condition.

We have entered into a tax sharing agreement with the Haines Family Trusts, and we could become obligated to make payments to the Haines Family Trusts for any

2 unchanged sentences

federal income tax purposes.

As a result, the Haines Family Trusts, as our shareholders, were

taxed on our income.

As a result, the Haines Family Trusts, as our shareholders, were taxed

on our income.

Therefore, the Haines Family Trusts have received certain distributions from us that were generally intended to equal the amount of tax such trusts were required to pay with respect to our income.

In connection with our initial

public offering, our S Corporation status terminated.

In connection with our initial public

offering, our S Corporation status terminated.

As a result of such termination, we are subject to federal and state income taxes.

In the event an adjustment to our taxable income for any taxable period (or portion thereof) beginning after

the date of the termination of our S Corporation status results in any increase in taxable income of the Haines Family Trusts for any taxable period (or portion thereof) ending prior to termination of our S Corporation status, it is possible that

the Haines Family Trusts would be liable for additional income taxes for such prior periods.

In the event an adjustment to our taxable income for any taxable period (or portion thereof) beginning after the date

of the termination of our S Corporation status results in any increase in taxable income of the Haines Family Trusts for any taxable period (or portion thereof) ending prior to termination of our S Corporation status, it is possible that the Haines

Family Trusts would be liable for additional income taxes for such prior periods.

Therefore, we have entered into an agreement with the Haines Family Trusts.

Pursuant to this agreement, in the event of any restatement of our taxable

income for any taxable period (or portion thereof) beginning after the date of termination of our S Corporation status pursuant to a determination by, or a settlement with, a taxing authority, then, depending on the nature of the adjustment, we may

be required to make a payment to the Haines Family Trusts in an amount equal to their incremental tax liability, which amount may be material.

In addition, we will indemnify the Haines Family Trusts with respect to unpaid income tax liabilities to

the extent that such unpaid income tax liabilities are attributable to our taxable income for any period after our S Corporation status terminates.

In both cases, the amount of the payment will be based on the assumption that the Haines Family

Trusts are taxed at the highest rate applicable to individuals for the relevant periods.

Pursuant to this agreement, in the event of any restatement of our taxable income for any

taxable period (or portion thereof) beginning after the date of termination of our S Corporation status pursuant to a determination by, or a settlement with, a taxing authority, then, depending on the nature of the adjustment, we may be required to

make a payment to the Haines Family Trusts in an amount equal to their incremental tax liability, which amount may be material.

In addition, we will indemnify the Haines Family Trusts with respect to unpaid income tax liabilities to the extent that

such unpaid income tax liabilities are attributable to our taxable income for any period after our S Corporation status terminates.

In both cases, the amount of the payment will be based on the assumption that the Haines Family Trusts are taxed at

the highest rate applicable to individuals for the relevant periods.

We will also indemnify the Haines Family Trusts for any interest, penalties, losses, costs or expenses arising out of any claim under the agreement.

the Haines Family Trusts will indemnify us with respect to our unpaid tax liabilities (including interest and penalties) to the extent that such unpaid tax liabilities are attributable to a decrease in the shareholders’ taxable income for any for

tax period and a corresponding increase in the Company’s taxable income for any period.

The Haines Family Trusts will also indemnify the Company with respect to any additional taxes attributable to our final S Corporation tax year that ends with

the termination of our S Corporation status.

However, the Haines Family

Trusts will indemnify us with respect to our unpaid tax liabilities (including interest and penalties) to the extent that such unpaid tax liabilities are attributable to a decrease in the shareholders’ taxable income for any for tax period and a

corresponding increase in the Company’s taxable income for any period.

The Haines Family Trusts will also indemnify the Company with respect to any additional taxes attributable to our final S Corporation tax year that ends with the termination of

our S Corporation status.

Unresolved Staff Comments

1 unchanged sentence

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