What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2026-03-16 compared with 2025-03-17 · 112 added, 80 removed, 220 unchanged (47% of the section changed)

2 unchanged sentences

The Bank is headquartered in Rockville, Maryland, received its charter in 1999 and began operations the same year.

We serve businesses, not-for-profit associations, entrepreneurs and others throughout the Washington, D.C.

Baltimore, other Maryland metropolitan areas, Florida, and Illinois through six commercial bank branches, one mortgage banking office, two loan production offices, three government loan servicing offices, and one credit card operations office.

On October 1, 2024, the Company completed its previously announced merger (the “Merger”) with Integrated Financial Holdings, Inc., a North Carolina corporation (“IFH”) pursuant to an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), dated as of March 27, 2024.

At the effective time of the merger, IFH merged with and into the Company, with the Company continuing as the surviving corporation in the merger.

IFH was the holding company of West Town Bank & Trust, an Illinois state-chartered bank which provides banking services through its full-service office located in the greater Chicago area and is a nationwide originator of U.S.

Department of Agriculture (“USDA”) and SBA government guaranteed loans.

IFH was also the parent company of Windsor Advantage, LLC (“Windsor Advantage”), a loan service provider that offers community banks and credit unions with a comprehensive outsourced SBA 7(a) and USDA lending platform.

Immediately following the Merger, West Town Bank & Trust, merged with and into Capital Bank, with Capital Bank as the surviving bank.

Windsor Advantage now operates as a wholly owned subsidiary of Capital Bancorp, Inc.

The Company currently operates four divisions:

Commercial Banking, Capital Bank Home Loans, OpenSky ™ , and Windsor Advantage.

The Company reports its activities in five business segments:

commercial banking;

mortgage banking;

credit cards;

government loan servicing;

and corporate activities.

We serve businesses, not-for-profit associations, entrepreneurs and others throughout the Washington, D.C., Baltimore, other Maryland markets, Delaware, Florida, Illinois, and North Carolina through seven commercial bank branches, one mortgage banking office, three loan production offices, three government loan servicing offices, and one credit card operations office.

On October 1, 2024, the Company completed its acquisition of IFH.

At the effective time of the merger, IFH merged with and into the Company, with the Company continuing as the surviving corporation in the acquisition.

Immediately following the acquisition, West Town Bank & Trust, merged with and into Capital Bank, with Capital Bank as the surviving bank.

Windsor Advantage ™ , a wholly owned subsidiary of the Company, was acquired in connection with the IFH acquisition.

The Company currently operates four divisions and reporting segments:

Commercial Banking, OpenSky ™ , Windsor Advantage ™ , and Capital Bank Home Loans (“CBHL”).

In determining the appropriateness of segment definition, the Company considers components of the business about which financial information is available and regularly evaluated relative to resource allocation and performance assessment.

The accompanying consolidated financial statements have been prepared in accordance with GAAP, and conform to general practices within the banking industry.

Our Commercial Banking division operates primarily in the Washington, D.C.

and Baltimore metropolitan areas and focuses on providing personalized service to commercial clients throughout our area of operations supplemented by lending outside of our primary market, and nationwide deposit verticals.

Additionally, the commercial bank engages in government-guaranteed lending on a national basis.

Capital Bank Home Loans and OpenSky ™ both leverage Capital Bank’s national banking charter to operate national consumer business lines;

Capital Bank Home Loans acts as our residential mortgage origination platform and OpenSky ™ provides nationwide, digitally-originated and served, secured, partially-secured, and unsecured credit cards to under-banked populations and those looking to rebuild their credit scores.

Windsor Advantage generates fee income for the Company through its servicing, processing and packaging of SBA and USDA loans for its financial institution clients.

In addition to the four divisions of Capital Bank, Church Street Capital also operates as a wholly owned subsidiary of Capital Bancorp, Inc.

CSC originates and services a portfolio of primarily mezzanine loans with certain characteristics that do not meet Capital Bank’s general underwriting standards, but command a higher rate of return.

In addition to its subsidiaries discussed above, Capital Bank, N.A.

and Church Street Capital, Capital Bancorp, Inc.

Our Commercial Banking division primarily operates within a corridor extending from Raleigh, North Carolina to Delaware, with significant activity in the Washington, D.C.

and Baltimore metropolitan statistical areas.

The Commercial Bank also maintains offices in Chicago, Illinois and Fort Lauderdale, Florida.

In addition to providing relationship-driven banking services within its primary geographic markets, the Commercial Bank conducts certain lending and deposit activities on a nationwide basis through specialized verticals.

These lending verticals include lender finance, government guaranteed lending and other forms of commercial and industrial (“C&I”) lending.

The Commercial Bank also operates national deposit verticals serving homeowners associations (“HOAs”), title companies, political action committees (“PACs”), not-for-profit organizations, and other commercial clients.

OpenSky ™ and CBHL both leverage Capital Bank’s national banking charter to operate national consumer business lines.

OpenSky ™ provides nationwide, digitally-originated and served, secured, partially-secured, and unsecured credit cards to under-banked populations and those looking to rebuild their credit scores.

CBHL acts as our residential mortgage origination platform.

Windsor Advantage ™ generates fee revenue for the Company through its servicing, processing and packaging of SBA and USDA loans for its financial institution clients.

In addition to its subsidiaries discussed above, Capital Bancorp, Inc.

owns all of the stock of Capital Bancorp (MD) Statutory Trust I (the “Trust”).

1 unchanged sentence

Commercial Banking Division

The Commercial Banking division operates out of six full service banking locations, three of which are in the Washington, D.C.

The Commercial Banking division operates out of seven full service banking locations, three of which are in the Washington, D.C.

Metropolitan Statistical Area (“MSA”), and its full service banking locations in Columbia, Maryland in the Baltimore, Maryland MSA, in Ft.

Lauderdale, Florida in the Miami Metro Area MSA, and in Chicago, Illinois in the Chicago MSA.

Additionally, we have two loan production offices, one located in the Washington, D.C.

area and one in Columbia, Maryland.

Our Commercial Banking division’s commercial loan officers and commercial real estate loan officers provide commercial and industrial, or C&I, commercial real estate, including lender finance loans, and construction lending solutions to business clients in Capital Bank’s operating markets.

Lauderdale, Florida in the Miami Metro Area MSA, in Chicago, Illinois in the Chicago MSA, and in Raleigh, North Carolina in the Raleigh MSA.

Additionally, we have three loan production offices, one located in the Washington, D.C.

area, one in Columbia, Maryland, and one in Towson, Maryland.

Our Commercial Banking division’s commercial loan officers and commercial real estate loan officers provide C&I, commercial real estate, including lender finance loans, and construction lending solutions to business clients in Capital Bank’s operating markets.

Government guaranteed lending serves customers throughout the country in need of, and qualifying for, USDA and SBA loans.

15 unchanged sentences

A portion of the retained residential portfolio is represented by mortgage loans on primary residences within Capital Bank’s operating markets to individuals who own businesses where Capital Bank may also pursue a commercial lending relationship and has a vested interest in maintaining the fullest possible banking relationship.

In 2024, as the mortgage refinance market continued to contract in response to elevated market interest rates, CBHL continued to focus on purchase originations.

Purchase origination volume was 93.5% for the year ended December 31, 2024, compared to 91.7% for the year ended December 31, 2023.

Approximately 62.8% of CBHL loan originations by volume occur within Maryland, Virginia and Washington, D.C.

The remainder of originations are national in scope and originate primarily through a consumer direct-to-consumer model that utilizes consumer marketing, and social media applications.

Approximately 78.5% of CBHL loan originations by volume occur within Maryland, Virginia, Delaware and Washington, D.C.

The remainder of originations are national in scope and originate primarily through a direct-to-consumer model that utilizes consumer marketing and social media applications.

OpenSky ™ Secured Credit Card Division

10 unchanged sentences

As each customer’s secured account ages, we obtain credit scores to baseline the customer’s improvement as an input into any decision to extend unsecured credit.

The unsecured credit card was added, for qualifying customers, in the fourth quarter of 2021 to expand the OpenSky ™ product offering.

The addition of the unsecured card allows for an uninterrupted experience for OpenSky ™ customers who can now more easily transition from a secured to unsecured credit card.

The unsecured credit card was added, for qualifying existing customers, in the fourth quarter of 2021 to expand the OpenSky ™ product offering.

The addition of the unsecured card allows for an uninterrupted experience for OpenSky ™ customers who can now more easily transition from a secured to unsecured credit card and continue their relationship with the Bank.

At December 31, 2025, 31% of our credit card customers had a FICO score in excess of 660 and were considered prime and 33% of outstanding credit card balances were unsecured.

OpenSky ™ cards operate on a digital and mobile enabled platform with almost all marketing and application procedures being conducted through website and mobile applications.

2 unchanged sentences

Credit card eligibility for all product offerings is based on identity and income verification.

Our prior experience has shown that approximately 30% of our secured credit cards will experience a charge-off within the first year of issuance primarily due to the relative inexperience of this under-banked population in effectively managing credit card debt.

Capital Bank evaluates OpenSky ™ customers using analytics that track consumer behaviors and score each customer on risk and behavior metrics.

These real-time monitoring capabilities give management insight into the credit trends of the portfolio on a consumer-by-consumer basis, enabling us to identify many potential fraud situations and mitigate associated losses, as well as to obtain insights into how to optimize the profitability and life cycle of each account.

The model utilizes data proprietary to Capital Bank.

Capital Bank uses data analytics, including AI and proprietary models, throughout the OpenSky ™ customer lifecycle to support fraud prevention and credit decisioning.

During onboarding, these tools are used to help validate identity, verify eligibility and income, and inform which customers may receive offers for additional credit.

After account opening, credit card transactions are evaluated in real-time to help assess transaction legitimacy and detect potentially fraudulent activity.

The Bank also uses portfolio monitoring and behavioral models to provide management with insight into credit trends, identify emerging risk, mitigate potential losses, and inform actions intended to optimize account profitability over the life of the relationship.

Windsor Advantage™ Division

Windsor Advantage™ is a loan service provider that offers community banks and credit unions a comprehensive outsourced SBA and USDA lending platform.

Windsor Advantage generates fee income for the Company in through its servicing, processing and packaging of such loans for its financial institution clients, including Capital Bank.

Gross government loan servicing revenue totaled $4.6 million,

including $0.6 million of Capital Bank related servicing fees, during the fourth quarter 2024.

Windsor Advantage's total servicing portfolio was $2.5 billion, including $1.1 billion attributable to Capital Bank at December 31, 2024.

Windsor Advantage™ generates fee income for the Company through its servicing, processing and packaging of such loans for its financial institution clients, including Capital Bank.

Gross government loan servicing revenue totaled $19.6 million, including $4.1 million of Capital Bank related servicing fees, for the year ended December 31, 2025.

Advantage's™ total servicing portfolio was $3.1 billion, including $1.3 billion attributable to Capital Bank at December 31, 2025.

Our Business Strategy

25 unchanged sentences

We understand our obligation to both our shareholders and the communities we serve -- to be an institution that achieves superior financial performance, while contributing to the communities we serve by delivering products and services to our customers that enhance and strengthen access, equity and opportunity.

We focus our environmental, social, and governance (“ESG”) efforts on issues that are important to our business and to our key stakeholders.

We focus our sustainability efforts on issues that are important to our business and to our key stakeholders.

Our mission is to support businesses, help people and strengthen communities, as well as to grow our operations and revenue.

Essential to this mission is our commitment to provide long-term, sustainable financial and social value to our stakeholders, including the communities we serve, our shareholders and our employees.

Essential to this mission is our commitment to provide long-term, financial and social value to our stakeholders, including the communities we serve, our shareholders and our employees.

Employees and Human Capital Resources

1 unchanged sentence

None of our employees are represented by any collective bargaining unit or are a party to a collective bargaining agreement.

We believe the relationship with our employees to be excellent and we have been named a Best Bank to Work For by American Banker for five of the past six years.

Our ability to attract and retain employees is a key to our success.

We believe the relationship with our employees to be excellent and we have been named a Best Bank to Work For by American Banker for six of the past seven years.

Our ability to attract and retain employees is a key pillar of our success.

We believe we offer a competitive total compensation and benefits program and a congenial work environment to our employees.

32 unchanged sentences

The Dodd-Frank Act also modified the standard by which state consumer financial laws may be applied to national banking associations, such as the Bank.

The application of that standard by state regulators and the courts may cause the Bank’s compliance burden and costs to increase.

The application of that standard by state regulators and the courts may

cause the Bank’s compliance burden and costs to increase.

Moreover, bank regulatory agencies appear to be increasingly aggressive in responding to concerns and trends identified in examinations, which could result in higher frequency initiation of enforcement actions against financial institutions to address credit quality, liquidity, risk management and capital adequacy, as well as other safety and soundness concerns.

10 unchanged sentences

Because our Bank’s deposits are insured by the FDIC to the maximum extent provided by law, it is also subject to certain FDIC regulations, and the FDIC has backup examination authority and some enforcement powers over our Bank.

that the Bank or our management is violating or has violated any law or regulation, various remedies are available to the regulators.

If, as a result of an examination of our Bank, the regulators should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of the Bank’s operations are unsatisfactory or that the Bank or our management is violating or has violated any law or regulation, various remedies are available to the regulators.

Such remedies include the power to enjoin unsafe or unsound practices, require affirmative action to correct any conditions resulting from any violation or practice, issue an administrative order that can be judicially enforced, direct an increase in capital, restrict growth, assess civil monetary penalties and remove officers and directors.

3 unchanged sentences

See “Part II, Item 8.

Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 14, Capital Standards” for additional regulatory capital information, including the Bank’s and Company’s Leverage Ratio as of December 31, 2024.

Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 14, Regulatory Capital Matters” for additional regulatory capital information, including the Bank’s and Company’s leverage ratio as of December 31, 2025.

Community Reinvestment Act

The CRA requires the federal banking regulatory agencies to assess all financial institutions that they regulate to determine whether these institutions are meeting the credit needs of the communities they serve, including their assessment area(s) (as established for these purposes in accordance with applicable regulations based principally on the location of branch offices).

applicable regulations based principally on the location of branch offices).

In addition to substantial penalties and corrective measures that may be required for a violation of certain fair lending laws, the federal banking agencies may take compliance with such laws and CRA into account when regulating and supervising other activities.

1 unchanged sentence

An institution’s record in meeting the requirements of the CRA is based on a performance-based evaluation system, and is made publicly available and is taken into consideration in evaluating any applications it files with federal regulators to engage in certain activities, including approval of a branch or other deposit facility, mergers and acquisitions, office relocations, and expansions into non-banking activities.

Our Bank received an “outstanding” rating in its most recent CRA evaluation which was in 2024.

Our Bank received an “outstanding” rating in its most recent CRA evaluation dated April 30, 2024, which was performed under the intermediate small bank requirements.

Due to its asset size, our Bank will be evaluated under the “large bank” requirements in future CRA evaluations.

In October 2023, the OCC, together with the Federal Reserve and FDIC, issued a joint final rule to modernize the CRA regulatory framework.

On March 29, 2024, a federal district court in Texas granted a preliminary injunction barring implementation of the final rule in response to a lawsuit filed by several trade groups.

We will continue to monitor the litigation until resolved.

We have also begun efforts to evaluate the impact of the new rule and to develop a strategy to ensure compliance.

However, in July 2025, due to litigation, such agencies issued a joint notice of proposed rulemaking to rescind the 2023 final rule and replace it with the CRA framework that existed prior to the 2023 final rule.

Anti-Terrorism, Money Laundering Legislation and OFAC

4 unchanged sentences

For many of these tasks, a bank must keep records to be made available to its primary federal regulator.

Anti-money laundering rules and policies are

developed by a bureau within the Financial Crimes Enforcement Network, but compliance by individual institutions is overseen by its primary federal regulator.

Anti-money laundering rules and policies are developed by a bureau within the Financial Crimes Enforcement Network, but compliance by individual institutions is overseen by its primary federal regulator.

The Bank has established anti-money laundering and customer identification programs and it maintains records of cash purchases of negotiable instruments, files reports of certain cash transactions exceeding $10,000 (daily aggregate amount), and reports suspicious activity that might signify money laundering, tax evasion or other criminal activities pursuant to the Bank Secrecy Act.

2 unchanged sentences

Financial institutions are responsible for, among other things, blocking accounts of and transactions with sanctioned persons and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked and rejected transactions after their occurrence.

If the Company or the Bank finds a name or other information on any transaction, account or wire transfer that is on an OFAC list or that otherwise indicates that the transaction involves a target of an OFAC-administered sanctions program, the Company or the Bank generally must freeze or block such account or transaction, file a suspicious activity report, and notify the appropriate authorities.

Banking regulators examine banks for compliance with the economic sanctions regulations administered by OFAC.

13 unchanged sentences

Under such circumstances, we may not pay a dividend should the Federal Reserve object until such time as we receive approval from the Federal Reserve or no longer need to provide notice under applicable regulations.

In addition, prior

approval of the Federal Reserve may be required in certain circumstances prior to our repurchasing shares of our common stock.

In addition, prior approval of the Federal Reserve may be required in certain circumstances prior to our repurchasing shares of our common stock.

In connection with the decision regarding dividends and share repurchase programs, our Board will take into account general business conditions, our financial results, projected cash flows, capital requirements, contractual, legal and regulatory restrictions on the payment of dividends by the Bank to the Company and such other factors as may be deemed relevant.

4 unchanged sentences

Generally, the Company is not required to obtain prior approval from the Federal Reserve System to acquire a non-bank that engages in activities that are financial in nature or incidental to activities that are financial in nature, as long as the Company meets the capital, managerial, and CRA requirements to qualify as a financial holding company.

Pursuant to Section 18(c) of the Federal Deposit Insurance Act, more commonly known as the Bank Merger Act, and for national banks relying on certain other sources of merger authority, prior written approval from a bank's primary federal regulator is required before any insured depository institution may consummate a merger transaction, which includes a merger, consolidation, assumption of deposit liabilities, and certain asset transfers between or among two or more institutions.

Pursuant to Section 18(c) of the Federal Deposit Insurance Act, more commonly known as the Bank Merger Act, and for national banks relying on

certain other sources of merger authority, prior written approval from a bank's primary federal regulator is required before any insured depository institution may consummate a merger transaction, which includes a merger, consolidation, assumption of deposit liabilities, and certain asset transfers between or among two or more institutions.

Prior written approval of a bank's primary federal regulator is also required for merger transactions between or among affiliated institutions, as well as for merger transactions between or among non-affiliated institutions.

7 unchanged sentences

The OCC’s final rule also includes a new policy statement that addresses the substantive standards that it will use to evaluate bank merger applications, including indicators that point in favor of likely approval or rejection.

Concurrent with the FDIC and OCC announcements, the DOJ withdrew from its 1995 Bank Merger Guidelines and announced that it would consider bank mergers under its 2023 Merger Guidelines, which are not industry specific, as well as under a separate, recently adopted bank merger addendum.

On March 3, 2025, the FDIC approved a proposal to rescind the 2024 Statement and reinstate, on an interim basis, the statement of policy on bank merger transactions that was in effect prior to the 2024

It remains unclear whether the OCC under anticipated new leadership will also reconsider its recent regulation and policy statement.

Concurrent with the FDIC and OCC announcements, the DOJ withdrew its 1995 Bank Merger Guidelines and announced that it would consider bank mergers under its 2023 Merger Guidelines, which are not industry specific, as well as under a separate, recently adopted bank merger addendum.

In May 2025, the OCC adopted an interim final rule amending the 2024 final rule to restore the expedited review and the use of the streamlined business combination.

The OCC also rescinded its 2024 policy statement.

Additionally, in July 2025, the FDIC rescinded the 2024 Statement and reinstated, on an interim basis, the statement of policy on bank merger transactions that was in effect prior to the 2024 Statement.

Customer Information Privacy and Cybersecurity

3 unchanged sentences

The Gramm‑Leach‑Bliley Act of 1999 (the “GLBA”) requires financial institutions to implement policies and procedures regarding the disclosure of non-public personal information about consumers to non‑affiliated third parties.

The GLBA requires disclosures to consumers on policies and procedures regarding the disclosure of such non-public personal information and, except as otherwise required by law, prohibits disclosing such information except as provided in the Bank’s policies and procedures.

The GLBA requires disclosures to consumers on policies and procedures regarding the disclosure of such non-public personal information and, except as otherwise required by

law, prohibits disclosing such information except as provided in the Bank’s policies and procedures.

We have implemented privacy policies addressing these restrictions that are distributed regularly to all existing and new customers of the Bank.

12 unchanged sentences

These SEC rules, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.

Risk Factors for a further discussion of risks related to

cybersecurity and Item 1C.

Risk Factors for a further discussion of risks related to cybersecurity and Item 1C.

Cybersecurity for a further discussion of the Company’s risk management strategies and governance processes related to cybersecurity.

13 unchanged sentences

This rule only applies to card issuers, that together with their affiliates, have one million or more open credit card accounts.

Smaller card issuers, like the Bank, may continue to charge a higher safe harbor threshold for credit card late fees and automatically increase the safe harbor dollar amount based on the Consumer Price Index.

Although the final rule exempts smaller card issuers, the Company will continue to monitor penalty fee policies, particularly as the CFPB and other regulators have demonstrated a focus on regulating so-called junk fees.

In April 2025, the final rule was vacated by the U.S.

District Court for the Northern District of Texas.

In December 2024, the CFPB issued a final rule that subjects (with certain exceptions) overdraft services provided by financial institutions with more than $10 billion in assets to the provisions of the Truth in Lending Act and other consumer financial protection laws.

Although the CFPB excluded banks with under $10 billion in assets from this rule, the Company is currently evaluating this rule and assessing its potential impact on the Company and the Bank.

With the recent change in presidential administration and control of Congress, the scope of regulation by the CFPB and other federal agencies remains uncertain.

In May 2025, President Trump signed a Congressional Review Act resolution that overturned the CFPB’s December 2024 final rule, which would have taken effect October 1, 2025.

In February 2025, the acting director of the CFPB directed the CFPB’s staff to cease all supervision and examination activity and stakeholder engagement, stop all work on proposed rulemaking, suspend the effective dates of any finalized but not yet effective rules, and halt other actions relating to investigations, enforcement, and litigation.

The extent to which these recent or other future developments will ultimately impact the CFPB’s regulation of the Bank’s business remains uncertain.

Beyond the initial halt, the CFPB moved toward a more deregulatory stance in 2025, significantly reducing the volume of final rules and enforcement actions compared to 2024.

Under the current U.S.

administration, a level of heightened uncertainty exists with respect to the future of the CFPB, including its structure, staffing, and responsibilities.

It remains uncertain whether, or to what extent, changes at the CFPB will impact our business and the overall regulatory environment.

Deposit Insurance

5 unchanged sentences

Under the current system, premiums are assessed quarterly and could increase if, for example, criticized loans and leases and/or other higher risk assets increase or balance sheet liquidity decreases.

Under the Federal Deposit Insurance Act, the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

In the event any insured depository institution, such as the Bank, is placed into FDIC receivership due to the termination of deposit insurance, or for any other reason, and the institution is sold or liquidated, the chances of the institution's parent BHC's shareholders recovering any value is very unlikely.

3 unchanged sentences

We cannot determine the ultimate effect that potential legislation, if enacted, or implementing regulations and interpretations with respect thereto, would have on our financial condition or results of operations.

The new presidential administration and many members of Congress have advocated for changes in financial services regulation, potentially including amendments to the Dodd-Frank Act and other federal banking laws, and structural changes to the CFPB.

It is possible, though uncertain, that Congress and/or the relevant federal agencies may seek to roll back or modify some or much of the rulemaking and regulatory guidance issued under the previous presidential administration.

Additionally, the full impact of the leadership changes at banking regulatory agencies on the enforcement and supervisory priorities of each agency is not fully known at this time.

The current presidential administration and many members of Congress have advocated for changes in financial services regulation, potentially including amendments to the Dodd-Frank Act and other federal banking laws, and structural changes to the CFPB.

We cannot predict whether or in what form any other proposed regulations or statutes will be adopted or the extent to which our business may be affected by any new regulation or statute.

These changes become less predictable, yet more likely to occur, following the transition of power from one presidential administration to another, especially as occurred in 2025, when it involves a change in the governing political party.

New agency leaders have different priorities and, as a result, there have been and will be a number of proposed changes to regulations, guidance and supervisory tactics that impact our business.

It is therefore unclear at the present time what effect the aforementioned changes will have on the banking industry as a whole or the Company specifically.

RISK FACTOR SUMMARY

The following provides an overview of the significant risks discussed more fully in Item 1A.

Risks Related to Our Business

• Adverse economic conditions could negatively affect us, our customers, or counterparties, leading to reduced loan demand and higher credit losses.

• Adverse developments in the financial services industry could weaken customer confidence and materially impact our liquidity and stock.

• Geographic concentration increases sensitivity to adverse changes in the local economy.

• Government shutdowns and federal spending reductions may impair borrowers’ ability to repay and pressure liquidity.

• Lending is inherently risky and we may be unable to measure or limit credit risk, resulting in unexpected losses.

• Our allowance for credit losses may be insufficient under CECL methodologies, requiring additional provisions or charge-offs in stressed environments.

• Small and medium-sized business exposure heightens loss susceptibility because those borrowers often have fewer resources to withstand economic stress.

• Commercial real estate and construction lending risks arise from sensitivity to market conditions, construction cost overruns, and challenges recovering collateral value.

• Real estate value and appraisal risks can lead to inaccurate collateral valuations, higher losses, or insufficient ACL levels.

• Foreclosure-related risks may increase costs or delay recoveries.

• Liquidity risk could arise from deposit attrition or limited market liquidity that restricts lending and weakens financial performance.

• Large depositor concentration poses the risk that major withdrawals could force reliance on more expensive or volatile funding sources, pressuring net interest margin.

• Mortgage banking volatility may reduce noninterest income due to interest rate shifts, market disruptions, or lower loan officer productivity.

• Secondary market and repurchase risk could lower operating income if market disruptions occur or loan repurchases are required.

• OpenSky ™ credit card portfolio risks include fraud, credit losses, ACH issues, and delinquency trends that could materially affect performance and reduce earnings if losses exceed the ACL.

• Government-guaranteed lending risks stem from borrower defaults, processing deficiencies, or potential changes to federal programs.

• Renewable energy tax credit risks may reduce financing opportunities if federal tax incentives or program structures change.

• Interest rate risk may negatively affect the value of securities and loans as rates fluctuate.

• Changes to interest rates or the economic environment could force us to recognize losses on our investment securities portfolio.

• Competitive pressures from banks and nonbank providers may limit our ability to grow loans, deposits, and fee income.

• Cybersecurity and technology risks involve potential system failures or cyberattacks that could cause operational disruption, financial loss, legal exposure and reputational harm.

Risks Related to Our Operations and Industry Regulation

• Extensive regulatory requirements may increase operational and compliance burdens or restrict business activities.

• Regulatory examinations and enforcement could result in penalties, restrictions, or other adverse impacts if we fail to meet expectations or comply with requirements.

• Elevated levels of CRE or construction concentration may require enhanced risk management policies or higher capital levels, as well as limit our ability to lend.

• External events and climate-related risks could disrupt operations or impair collateral.

• AI risks may arise from model errors, data issues, operational failures, regulatory scrutiny, or reputational concerns tied to AI use.

Risks Related to Strategic Growth

• A merger or acquisition requires us to make estimates which impact presentation of our financial condition and are subject to revision.

• If goodwill were determined to be impaired, it could have a negative impact on our profitability.

• Acquisitions may disrupt our business.

Risks Related to Ownership of Our Common Stock

• Market volatility may cause significant fluctuations in our stock price.

• Future equity offerings or issuances of convertible instruments could result in substantial dilution.

• Insider ownership and control may influence shareholder votes and elections.

• Subordination to debt and preferred stock means common shareholders face lower priority relative to senior instruments, affecting value and rights.

• Anti-takeover protections under corporate governance provisions and applicable law may deter or delay change-of-control transactions.

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 1. Business