What changed in this filing

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Item 1A. Risk Factors

2025-03-12 compared with 2024-03-25 · 168 added, 186 removed, 202 unchanged (64% of the section changed)

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Our business is primarily affected by the economies of Oklahoma, Texas and to a smaller degree the State of Kansas.

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

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

As of December 31, 2023, the substantial majority of the loans in our loan portfolio were made to borrowers who live and/or conduct business in our markets and the substantial majority of our secured

loans were secured by collateral located in our markets.

Accordingly, we are exposed to risks associated with a lack of geographic diversification as any regional or local economic downturn that affects our markets, our existing or prospective

borrowers, or property values in our markets may affect us and our profitability more significantly and more adversely than our competitors whose operations are less geographically focused.

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

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

As of December 31, 2024, the substantial majority of the loans in our loan portfolio were made to borrowers who live and/or conduct business in our markets and the substantial majority of our

secured loans were secured by collateral located in our markets.

Accordingly, we are exposed to risks associated with a lack of geographic diversification as any regional or local economic downturn that affects our markets, our existing or

prospective borrowers, or property values in our markets may affect us and our profitability more significantly and more adversely than our competitors whose operations are less geographically focused.

In addition, market developments may affect consumer confidence levels and may cause adverse changes in payment patterns, causing increases in delinquencies and default rates, which could impact our

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The energy industry is a significant sector in our Oklahoma market, and to a lesser extent, Kansas and the Dallas/Fort Worth metropolitan area.

A downturn or lack of growth in the energy industry and

energy-related business, including sustained low oil or gas prices or the failure of oil or gas prices to rise in the future, could adversely affect our business, financial condition and results of operations.

As of December 31, 2023, our energy

loans, which include loans to exploration and production companies, midstream companies, purchasers of mineral and royalty interests and service providers totaled $190.6 million, or 14.0% of total loans, as compared to $182.8 million, or 14.4% of

total loans as of December 31, 2022.

In addition to our direct exposure to energy loans, we also have indirect exposure to energy prices, as some of our non-energy customers' businesses are directly affected by volatility with the oil and gas

industry and energy prices and otherwise are dependent on energy-related businesses.

A downturn or lack of growth in the energy industry

and energy-related business, including sustained low oil or gas prices or the failure of oil or gas prices to rise in the future, could adversely affect our business, financial condition and results of operations.

As of December 31, 2024, our

energy loans, which include loans to exploration and production companies, midstream companies, purchasers of mineral and royalty interests and service providers totaled $133.3 million, or 9.5% of total loans, as compared to $190.6 million, or

14.0% of total loans as of December 31, 2023.

In addition to our direct exposure to energy loans, we also have indirect exposure to energy prices, as some of our non-energy customers’ businesses are directly affected by volatility with the oil

and gas industry and energy prices and otherwise are dependent on energy-related businesses.

As of December 31, 2024, we had $39 million in unfunded commitments to borrowers in the oil and gas industry.

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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.

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

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general, the CRE Concentration Guidance establishes the following supervisory criteria as preliminary indications of possible CRE concentration risk:

(1) the institution’s total construction, land development and other land loans represent 100% or

more of total capital;

(1) the institution’s total construction, land development and other land loans represent 100%

or more of total capital;

or (2) total CRE loans as defined in this guidance, or Regulatory CRE, represent 300% or more of total capital, and the institution’s Regulatory CRE has increased by 50% or more during the prior 36-month period.

the CRE Concentration Guidance, loans secured by owner occupied CRE are not included for purposes of the CRE concentration calculation.

As of December 31, 2023, our Regulatory CRE represented 290.69% of our total Bank capital and our construction,

land development and other land loans represented 73.97% of our total Bank capital, as compared to 304.72% and 101.20% as of December 31, 2022, respectively.

to the CRE Concentration Guidance, loans secured by owner occupied CRE are not included for purposes of the CRE concentration calculation.

As of December 31, 2024, our Regulatory CRE represented 254.04% of our total Bank capital and our

construction, land development and other land loans represented 74.82% of our total Bank capital, as compared to 290.69% and 73.97% as of December 31, 2023, respectively.

During the prior 36-month period, our Regulatory CRE has decreased 48.43%.

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.

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.

We utilize 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.

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

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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.

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.

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.

As of December 31, 2023, we had approximately $1.35 billion of commercial purpose loans, which include general commercial, energy, agricultural, and CRE loans, representing approximately 98.9% of our

gross loan portfolio.

As of December 31, 2024, we had approximately $1.38 billion of commercial purpose loans, which include general commercial, energy, agricultural, and CRE loans, representing approximately 99.0% of

our gross loan portfolio.

Commercial purpose loans are often larger and involve greater risks than other types of lending.

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

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

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.

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become delinquent or suffer default, we could be exposed to material losses.

The allowance for credit 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.

The allowance for credit 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.

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

to fund our business through more expensive and less stable sources.

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 to fund our business through more expensive and less stable sources.

At December 31, 2024, our 20 largest deposit relationships accounted for 29.3% of our total deposits.

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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.

A substantial portion of our loan portfolio consists of loans maturing within one year, and there is no guarantee that these loans will be replaced upon maturity

or renewed on the same terms or at all.

A substantial portion of our loan portfolio consists of loans maturing within one year, and there is no guarantee that these loans will be replaced upon

maturity or renewed on the same terms or at all.

As of December 31, 2024, approximately 40.3% of our gross loans were maturing within one year, compared to approximately 40.0% of our gross loans that were maturing within one year as of December

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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

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.

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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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.

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

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 credit losses.

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

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

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

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

Any increase in the allowance for credit 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.

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 credit losses, or an increase in loan charge-offs, which could have an adverse impact on our results of operations and financial condition.

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 credit losses, or an increase in loan charge-offs, which could have an adverse impact on our results of operations and financial condition.

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

Our profitability depends in substantial part on our net interest income.

Net interest income is the difference between the amounts received by us on our interest-earning assets and the interest paid

by us on our interest-bearing liabilities.

Net interest income is the difference between the amounts received by us on our interest-earning assets and the interest

paid by us on our interest-bearing liabilities.

Our net interest income depends on many factors that are partly or completely outside of our control, including competition, federal economic, monetary and fiscal policies and economic conditions

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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.

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.

Thus, an increase

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

Rising interest rates in prior periods have increased interest expense, which in turn has adversely affected net interest income, and may do so in the future if the Federal Reserve raises rates

as anticipated.

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

Rising interest rates in prior periods have increased interest expense, which in turn has adversely affected net interest income, and may do so in the future if the Federal Reserve raises

rates as anticipated.

In a rising interest rate environment, competition for cost-effective deposits increases, making it more costly to fund loan growth.

In addition, a rising rate environment could cause mortgage and mortgage warehouse lending

volumes to substantially decline.

In addition, a rising rate environment could cause mortgage and mortgage warehouse

lending volumes to substantially decline.

Any rapid and unexpected volatility in interest rates creates uncertainty and potential for unexpected material adverse effects.

The Company actively monitors and manages the balances of maturing and repricing

assets and liabilities to reduce the adverse impact of changes in interest rates, but there can be no assurances that the Company can avoid all material adverse effects that such interest rate changes may have on the Company's net interest margin

and overall financial condition.

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 Company actively monitors and manages the balances of maturing and

repricing assets and liabilities to reduce the adverse impact of changes in interest rates, but there can be no assurances that the Company can avoid all material adverse effects that such interest rate changes may have on the Company’s net

interest margin and overall financial condition.

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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million of the remaining balance of deposits consists of certificates of deposit, of which approximately $231.7 million, or 96.9% of remaining 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.

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.

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 affected.

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

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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.

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

Correspondent banks can withdraw unsecured lines of credit or require collateralization for the purchase of fed funds.

Correspondent banks can withdraw unsecured lines of credit or require collateralization for the purchase of fed

Liquidity also may be affected by the Bank’s routine commitments to extend credit.

Market conditions or other events could also negatively affect the level or cost of funding, affecting our ongoing ability to accommodate 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.

Market conditions or other events could also negatively affect the level or cost of funding, affecting our ongoing ability to accommodate 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

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Third-party or internal systems and networks may fail to operate properly or become disabled due to deliberate attacks or unintentional events.

Our operations are vulnerable to disruptions from human

error, natural disasters, power loss, computer viruses, spam attacks, denial of service attacks, unauthorized access and other unforeseen events.

Our operations are vulnerable to disruptions from

human error, natural disasters, power loss, computer viruses, spam attacks, denial of service attacks, unauthorized access and other unforeseen events.

Undiscovered data corruption could render our customer information inaccurate.

These events may

obstruct our ability to provide services and process transactions.

may obstruct our ability to provide services and process transactions.

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

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.

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

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Inflationary pressures and rising prices may affect our results of operations and financial condition.

Inflation reached a near 40-year high in late 2021, and high levels of inflation persisted during 2022 and 2023, and may continue in 2024.

Bureau of Labor Statistics reported that the

12-month percent change in the Consumer Price Index for All Urban Consumers (not seasonally adjusted) for all items was 3.4% for December 2022 to December 2023, 6.5% for December 2021 to December 2022, 7.0% for December 2020 to December 2021, 1.4%

for December 2019 to December 2020, and 2.3% for December 2018 to December 2019.

Inflationary pressures are currently expected to remain elevated throughout 2024.

Inflation reached a near 40-year high in late 2021 and persisted at elevated levels during 2022 and 2023.

While inflationary pressures have begun to moderate, their effects continued into 2024.

Bureau of Labor Statistics reported that the 12-month percent change in the Consumer Price Index for All Urban Consumers (not seasonally adjusted) for all items was 2.9% for December 2023 to December 2024, 3.4% for December 2022 to December

2023, 6.5% for December 2021 to December 2022, 7.0% for December 2020 to December 2021, 1.4% for December 2019 to December 2020, and 2.3% for December 2018 to December 2019.

Inflationary pressures have begun to moderate during 2024, and current

economic forecasts suggest a further easing in 2025.

Small to medium -sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.

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Sustained higher interest rates by the Federal Reserve may be needed to tame persistent inflationary price pressures, which could push down asset prices and weaken economic activity.

A deterioration

in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in

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

deterioration in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all

of which, in turn, would adversely affect our business, financial condition and results of operations.

A natural disaster affecting our market areas could adversely affect the Company’s financial condition and results of operations.

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Almost all of our credit exposure is in that area.

This geographic region has been subject to tornadoes

and severe hail storms with occasional flooding.

Natural disasters could harm our operations directly through interference with communications, which would prevent us from gathering deposits, originating loans, and processing and controlling our

flow of business, as well as through the destruction of facilities and our operational, financial and management information systems.

A natural disaster or recurring power outages may also impair the value of our loan portfolio, as uninsured or

underinsured losses, including losses from business disruption, may reduce our borrowers’ ability to repay their loans.

Disasters may also reduce the value of the real estate securing our loans, impairing our ability to recover on defaulted loans

through foreclosure and making it more likely that we would suffer losses on defaulted loans.

The occurrence of natural disasters in our market areas could have a material adverse effect on our business, prospects, financial condition, and results

of operations.

This geographic region has been subject to

tornadoes and severe hail storms with occasional flooding.

Natural disasters could harm our operations directly through interference with communications, which would prevent us from gathering deposits, originating loans, and processing and

controlling our flow of business, as well as through the destruction of facilities and our operational, financial and management information systems.

A natural disaster or recurring power outages may also impair the value of our loan portfolio,

as uninsured or underinsured losses, including losses from business disruption, may reduce our borrowers’ ability to repay their loans.

Disasters may also reduce the value of the real estate securing our loans, impairing our ability to recover

on defaulted loans through foreclosure and making it more likely that we would suffer losses on defaulted loans.

The occurrence of natural disasters in our market areas could have a material adverse effect on our business, prospects, financial

condition, and results of operations.

Risks Relating to Our Regulatory Environment

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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

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.

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 credit 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 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

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 credit 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.

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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

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

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

example, our business is subject to the Gramm-Leach-Bliley Act which, among other things:

For example, our business is subject to the Gramm-Leach-Bliley Act which, among other things:

(i) imposes certain limitations on our ability to share non-public personal information about our customers with non-affiliated third parties;

(ii) requires

that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with non-affiliated third parties (with certain

exceptions) and (iii) requires we develop, implement and maintain a written comprehensive information security program containing safeguards appropriate based on our size and complexity, the nature and scope of our activities and the 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.

Bank are required to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” This could 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.

requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with non-affiliated third parties (with

certain exceptions) and (iii) requires we develop, implement and maintain a written comprehensive information security program containing safeguards appropriate based on our size and complexity, the nature and scope of our activities and the

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.

Bank are required to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification

incident.” This could 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.

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

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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.

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 to which we are

subject could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could have a material adverse effect on our business, financial conditions or results of operations.

failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have

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

have a material adverse effect on our business, financial condition or results of operations.

Risks Related to Our Common Stock

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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, 2023 approximately 56.7% 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.

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, 2024 approximately 55.8% 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.

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

As of December 31, 2023, the Haines Family Trusts control approximately 50.5% of our common stock.

So long as the Haines Family Trusts continue to control more than 50% of our outstanding shares of

common stock, they will have the ability, if they vote in the same manner, to determine the outcome of all matters requiring shareholder approval, including the election of directors, the approval of mergers, material acquisitions and dispositions

and other extraordinary transactions, and amendments to our certificate of incorporation, bylaws and other corporate governance documents.

In addition, this concentration of ownership may delay or prevent a change in control of our Company and make

some transactions more difficult or impossible without the support of the Haines Family Trusts.

The Haines Family Trusts also have certain rights, such as registration rights, that our other shareholders do not have.

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.

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.

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

that a majority of our board of directors consists of “independent directors,” as defined under NASDAQ rules;

that director nominations are selected, or recommended for the board of directors’ selection, by either (i) the independent directors constituting a majority of the board of directors’ independent directors

in a vote in which only independent directors participate, or (ii) a nominating and corporate governance committee that is composed entirely of independent directors;

that we have a compensation committee that is composed entirely of independent directors.

Even though we are a “controlled company,” we currently intend to comply with each of these requirements.

However, we may avail ourselves of certain of these other exemptions for as long as we remain

a “controlled company.” Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of NASDAQ’s corporate governance requirements, which could make our stock less attractive to

investors or otherwise harm our stock price.

We are controlled by insiders, whose interests may not coincide with our other shareholders.

As of December 31, 2024, the Haines Family Trusts, management, and the board of directors control approximately 55.8% of our common stock.

So long as insiders continue to control more than 50% of

our outstanding shares of common stock, they will have the ability, if they vote in the same manner, to determine the outcome of all matters requiring shareholder approval, including the election of directors, the approval of mergers, material

acquisitions and dispositions and other extraordinary transactions, and amendments to our certificate of incorporation, bylaws and other corporate governance documents.

In addition, this concentration of ownership may delay or prevent a change in

control of our Company and make some transactions more difficult or impossible without the support of the Haines Family Trusts.

The Haines Family Trusts also have certain rights, such as registration rights, that our other shareholders do not

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.

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

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What changed 10-K

Item 1A. Risk Factors