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Item 1A. Risk Factors

2026-03-17 compared with 2025-03-12 · 201 added, 172 removed, 198 unchanged (65% of the section changed)

We believe the risks described below are the risks that are material to us.

Any of the following risks, as well as risks that we do not know or currently deem immaterial, could

have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Any of the following risks, as well as risks that we do not know or currently deem immaterial,

could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Risks Relating to Our Business and Market

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

could negatively impact our operations and customers.

We have identified a material weakness in our internal control over financial reporting, which could, if not remediated, result in material misstatements of

our financial statements and adversely affect our stock price.

Our management is responsible for establishing and maintaining effective internal control over financial reporting.

As disclosed in Item 9A of this Annual Report on Form 10-K, management concluded that, as of

December 31, 2025, our disclosure controls and procedures were not effective and we did not maintain effective internal control over financial reporting due to the material weaknesses identified in Item 9A of this Annual Report.

weaknesses (more fully described in Item 9A of this Annual Report) relate to the failure to maintain effectively designed internal control over financial reporting in the following areas:

Deposit operations;

Related party transactions;

Reconciliations;

Financial statement disclosures;

Segregation of duties;

Completeness and Accuracy of Information produced by the Company;

Information technology general controls;

Control activities component of internal control.

While we have not identified any material misstatements in our financial statements for the period ended December 31, 2025 as a result of these material weaknesses, these weaknesses create a

reasonable possibility that a future material misstatement would not be prevented or detected.

We are taking specific steps to remediate these material weaknesses, including enhancements to policies, procedures, oversight activities, and information technology controls supporting

financial reporting

There can be no assurance as to when the remediation will be completed or that it will be determined to be effective.

If we are unsuccessful in remediating these material weaknesses, or if we

identify additional material weaknesses, we may be unable to report our financial results accurately and timely, which could result in a negative impact on our financial condition, results of operations or cash flow, restrict our ability to access

the capital markets, require significant resources to correct, result in a loss of investor confidence and/or a decline in our stock price, and subject us to fines, potential litigation or regulatory action.

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

markets could negatively impact our operations and customers.

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

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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

charge-offs and provision for credit losses.

Adverse changes in economic conditions in these markets could reduce our growth in loans and deposits, impair our ability to collect our loans, increase our problem loans and charge-offs and otherwise

negatively affect our performance and financial condition.

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 charge-offs and provision for credit losses.

Adverse changes in economic conditions in these markets could reduce our growth in loans and deposits, impair our ability to collect our loans, increase our problem loans and charge-offs and

otherwise negatively affect our performance and financial condition.

We have credit exposure to the energy industry.

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of total loans as of December 31, 2024.

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.

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, 2025, we had $72.4 million in unfunded commitments to borrowers in the oil and gas industry.

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At December 31, 2025, this exposure was approximately

million, or 18.5%, of the total loan portfolio, along with an additional $2.9 million in unfunded debt, as compared to $298.5 million, or 21.9%, of the total loan portfolio, along with an additional $5.7 million in unfunded debt as of December

$310.6 million, or 19.3%, of the total loan portfolio, along with an additional $17.8 million in unfunded debt, as compared to $259.1 million, or 18.5%, of the total loan portfolio, along with an additional $2.9 million in unfunded debt as of

December 31, 2024.

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.

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.

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

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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.

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.

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

As of December 31, 2025, our Regulatory CRE represented 261.89% of our total Bank capital and our construction,

land development and other land loans represented 85.91% of our total Bank capital, as compared to 254.04% and 74.82% as of December 31, 2024, respectively.

During the prior 36-month period, our Regulatory CRE has decreased 42.83%.

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.

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.

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.

Unlike 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.

Unlike 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 impaired.

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.

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 .

As of December 31, 2024, our 20 largest borrowing relationships ranged from approximately $16.8 million to $45.1 million (including unfunded commitments) and totaled approximately $552.1 million in

total commitments (representing, in the aggregate, 32.8% of our total outstanding commitments as of December 31, 2024).

As of December 31, 2025, our 20 largest borrowing relationships ranged from approximately $21.9 million to $56.9 million (including unfunded commitments) and totaled approximately $659.9 million

in total commitments (representing, in the aggregate, 33.8% of our total outstanding commitments as of December 31, 2025).

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

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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, 2025, our 20 largest deposit relationships accounted for 28.5% of our total deposits.

Withdrawals of deposits by any one of our largest depositors or by one of our 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.

Withdrawals of deposits by any one of our largest depositors or by one of our 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

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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.

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 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

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.

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

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 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.

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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.

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

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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.

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.

Elevated interest rates in prior periods increased interest expense, which in turn adversely affected net interest income throughout 2025.

While the Federal Reserve commenced a series of rate

reductions in the latter half of 2025, the interest rate environment remains high relative to historical averages, which may continue to impact net interest income if funding costs remain elevated.

In this environment, competition for

cost-effective deposits remains intense, making it more costly to fund loan growth.

In addition, the interest rate environment has contributed to a decline in overall mortgage-related lending volumes.

Any rapid and unexpected volatility in interest

rates, or uncertainty regarding the pace of future monetary easing, creates 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 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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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

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

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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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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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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Undiscovered data corruption could render our customer information inaccurate.

may obstruct our ability to provide services and process transactions.

These events 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 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

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

We depend to a significant extent on a number of relationships with third-party service providers.

Specifically, we receive core systems processing, essential web hosting and other 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 an interruption were to continue for a significant period of time, our business, financial condition and results of operations could be materially adversely

Specifically, we receive core systems processing, essential web hosting and other 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 an interruption were to continue for a significant period of time, our business, financial condition and results of operations could be materially

adversely affected.

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.

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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 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.

While inflationary pressures have moderated from recent peaks, they remained “sticky” and slightly above the Federal Reserve’s target throughout 2025.

Bureau of Labor Statistics reported

that the 12-month percent change in the Consumer Price Index for All Urban Consumers (not seasonally adjusted) was 2.7% for the period ended December 31, 2025, compared to 2.9% and 3.4% for the years ended December 31, 2024 and 2023, respectively.

Although inflation has eased, persistent costs in key categories such as shelter and services continued to impact the economic environment in 2025.

Current economic forecasts suggest a gradual descent toward the Federal Reserve’s target in 2026,

though uncertainty remains regarding the pace of future easing and its potential impact on our funding costs and borrower health.

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

Consequently, the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely impact our results of operations and financial condition.

When the rate of

inflation accelerates, there is an erosion of consumer and customer purchasing power.

Accordingly, this could impact our business by reducing our tolerance for extending credit, and our customer’s desire to obtain credit, or causing us to incur

additional provisions for credit losses resulting from a possible increased default rate.

rate of inflation accelerates, there is an erosion of consumer and customer purchasing power.

Accordingly, this could impact our business by reducing our tolerance for extending credit, and our customer’s desire to obtain credit, or causing us to

incur additional provisions for credit losses resulting from a possible increased default rate.

Inflation may lead to lower loan re-financings.

Furthermore, a prolonged period of inflation could cause wages and other costs to further increase which

could adversely affect our results of operations and financial condition.

Furthermore, a prolonged period of inflation could cause wages and other costs to further increase

which could adversely affect our results of operations and financial condition.

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.

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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.

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

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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

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.

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 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

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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.

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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.

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.

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 by these

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;

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.

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.

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

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.

Our 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.

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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, 2024 approximately 55.8% 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, 2025, approximately 55.4% of our outstanding common stock is beneficially owned by our principal shareholders, executive officers

and directors.

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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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

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.

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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.

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

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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