What changed in this filing

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Item 1A. Risk Factors

2019-03-15 compared with 2018-03-15 · 216 added, 240 removed, 295 unchanged (61% of the section changed)

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(ii) the fair value of the Companys financial assets and liabilities;

and (iii) the

average duration of the Companys mortgage-backed securities portfolio.

If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received

on loans and other investments, the Companys net interest income could be adversely affected, which in turn could negatively affect its earnings.

Earnings could also be adversely affected if the interest rates received on loans and other

investments fall more quickly than the interest rates paid on deposits and other borrowings.

Although management believes

it has implemented effective asset and liability management strategies to reduce the potential effects of changes in interest rates on the results of operations of the Company, any substantial, unexpected, prolonged change in market interest rates

could have a material adverse effect on the Companys financial condition and results of operations.

For the reasons set forth above, an increase in interest rates generally as a result of such a credit rating downgrade could adversely affect

out net interest income levels, thereby resulting in reduced earnings, and reduce loan demand.

Volatility in interest rates may also result in disintermediation, which is the flow of funds away from financial institutions into direct investments,

such as United States Government and Agency securities and other investment vehicles, including mutual funds, which generally pay higher rates of return than financial institutions because of the absence of federal insurance premiums and reserve

requirements.

Disintermediation could also result in material adverse effects on the Companys financial condition and results of operations.

A discussion of the policies and procedures used to identify, assess and manage certain interest rate risk is set forth in

Item 7A, Quantitative and Qualitative Disclosures about Market Risk.

and (iii) the average duration of the Companys mortgage-backed securities portfolio.

If the interest rates paid on

deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, the Companys net interest income could be adversely affected, which in turn could negatively affect its earnings.

could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings.

Although management believes it has implemented effective asset and liability management strategies to reduce the potential

effects of changes in interest rates on the results of operations of the Company, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on the Companys financial condition and results of

For the reasons set forth above, an increase in interest rates generally as a result of such a credit rating downgrade could adversely affect out net interest income levels, thereby resulting in reduced earnings, and reduce loan demand.

Volatility in interest rates may also result in disintermediation, which is the flow of funds away from financial institutions into direct investments, such as United States Government and Agency securities and other investment vehicles, including

mutual funds, which generally pay higher rates of return than financial institutions because of the absence of federal insurance premiums and reserve requirements.

Disintermediation could also result in material adverse effects on the Companys

financial condition and results of operations.

A discussion of the policies and procedures used to identify, assess and

manage certain interest rate risk is set forth in Item 7A, Quantitative and Qualitative Disclosures about Market Risk.

The Company is subject to lending risk.

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loss of earnings from these loans, an increase in the provision for possible loan losses and an increase in loan charge-offs, all of which could have a material adverse effect on the Companys financial condition and results of operations.

Delays in the Companys ability to foreclose on delinquent mortgage loans may negatively impact our

Because the Bank originates loans secured by real estate, the Bank may have to foreclose on the collateral

property to protect its investment and may thereafter own and operate such property, in which case the Company is exposed to the risks inherent in the ownership of real estate.

The amount realized after a default is dependent upon factors outside of

the Companys control, including, but not limited to:

Delays in the Companys ability to foreclose on delinquent mortgage loans may negatively impact our business.

Because the Bank originates loans secured by real estate, the Bank may have to foreclose on the collateral property to protect

its investment and may thereafter own and operate such property, in which case the Company is exposed to the risks inherent in the ownership of real estate.

The amount realized after a default is dependent upon factors outside of the Companys

control, including, but not limited to:

general or local economic conditions;

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natural disasters.

Certain expenses associated with the ownership of real estate, principally real estate taxes, insurance, and maintenance costs, may adversely

affect the net proceeds received from the real estate, if any.

Certain expenses associated with the ownership of real estate, principally real estate taxes, insurance, and maintenance

costs, may adversely affect the net proceeds received from the real estate, if any.

The ability to mitigate the losses on defaulted loans depends upon the ability to promptly foreclose upon the collateral after an appropriate cure period.

In some states, the large

number of mortgage foreclosures that have occurred has resulted in significant delays in foreclosing.

Any delay in the foreclosure process adversely affects us by increasing the expenses related to carrying such real estate and exposes us to losses

as a result of potential additional declines in the value of such collateral.

As a result, the increased cost of owning and operating such real estate may exceed the rental income earned from the real estate (if any), the Company may have to advance

additional funds to protect our investment or the Company may be required to dispose of the real estate at a loss.

The allowance for possible loan

losses may be insufficient.

Although the Company tries to maintain diversification within its loan portfolio in order

to minimize the effect of economic conditions within a particular industry, management also maintains an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, to absorb probable credit

losses inherent in the entire loan portfolio.

The appropriate level of the allowance is based on managements quarterly analysis of the loan portfolio and represents an amount that management deems adequate to provide for inherent losses,

including collective impairment.

Among other considerations in establishing the allowance for loan losses, management considers economic conditions reflected within industry segments, the unemployment rate in the Companys markets, loan

segmentation and historical losses that are inherent in the loan portfolio.

The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires management to make significant

estimates of current credit risks and future trends, all of which may undergo material changes.

Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other

factors, both within and outside of the Companys control, may require an increase in the allowance for loan losses.

In addition, bank regulatory agencies periodically review the allowance for loan

losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different than those of management.

In addition, if charge-offs in future periods exceed the allowance for loan

losses, the Company will need additional provisions to increase the allowance for loan losses.

Any increases in the allowance for loan losses will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on

the Companys financial condition and results of operations.

A discussion of the policies and procedures related to managements process for determining the appropriate level of the allowance for loan losses is set forth in Item 7,

Managements Discussion and Analysis of Financial Condition and Results of Operations.

The Company depends on the accuracy and

completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into

other transactions, the Company often relies on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information.

The Company may also rely on representations of

those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information.

Reliance on inaccurate or misleading financial statements, credit reports or other financial information

could have a material adverse impact on the Companys business and, in turn, its financial condition and results of operations.

The Company is

subject to environmental liability risk associated with lending activities.

A significant portion of the loan

portfolio is secured by real property.

During the ordinary course of business, the Company may foreclose on and take title to properties securing certain loans.

In doing so, there is a risk that hazardous or toxic substances could be found on these

If hazardous or toxic substances are found, the Company may be liable for remediation costs, as well as for personal injury and property damage.

Environmental laws may require the Company to incur substantial expenses and may materially

reduce the affected propertys value or limit the ability of the Company to use or sell the affected property.

In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase the

Companys exposure to environmental liability.

Although management has policies and procedures to perform an environmental review during the loan application process and also before initiating any foreclosure action on real property, these

reviews may not be sufficient to detect all potential environmental hazards.

The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Companys financial

condition and results of operations.

in the foreclosure process adversely affects us by increasing the expenses related to carrying such real estate and exposes us to losses as a result of potential additional declines in the value of such collateral.

As a result, the increased cost of

owning and operating such real estate may exceed the rental income earned from the real estate (if any), the Company may have to advance additional funds to protect our investment or the Company may be required to dispose of the real estate at a

The allowance for possible loan losses may be insufficient.

Although the Company tries to maintain diversification within its loan portfolio in order to minimize the effect of economic

conditions within a particular industry, management also maintains an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, to absorb probable credit losses inherent in the entire loan

The appropriate level of the allowance is based on managements quarterly analysis of the loan portfolio and represents an amount that management deems adequate to provide for inherent losses, including collective impairment.

other considerations in establishing the allowance for loan losses, management considers economic conditions reflected within industry segments, the unemployment rate in the Companys markets, loan segmentation and historical losses that are

inherent in the loan portfolio.

The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires management to make significant estimates of current credit risks and future

trends, all of which may undergo material changes.

Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of the

Companys control, may require an increase in the allowance for loan losses.

In addition, bank regulatory agencies

periodically review the allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different than those of management.

In addition, if charge-offs in

future periods exceed the allowance for loan losses, the Company will need additional provisions to increase the allowance for loan losses.

Any increases in the allowance for loan losses will result in a decrease in net income and, possibly,

capital, and may have a material adverse effect on the Companys financial condition and results of operations.

A discussion of the policies and procedures related to managements process for determining the appropriate level of the

allowance for loan losses is set forth in Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations.

The Company depends on the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions, the Company often relies on information furnished by or

on behalf of customers and counterparties, including financial statements, credit reports and other financial information.

The Company may also rely on representations of those customers, counterparties or other third parties, such as independent

auditors, as to the accuracy and completeness of that information.

Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on the Companys business and, in

turn, its financial condition and results of operations.

The Company is subject to environmental liability risk associated with lending activities.

A significant portion of the loan portfolio is secured by real property.

During the ordinary course of business,

the Company may foreclose on and take title to properties securing certain loans.

In doing so, there is a risk that hazardous or toxic substances could be found on these properties.

hazardous or toxic substances are found, the Company may be liable for remediation costs, as well as for personal injury and property damage.

Environmental laws may require the Company to incur

substantial expenses and may materially reduce the affected propertys value or limit the ability of the Company to use or sell the affected property.

In addition, future laws or more stringent interpretations or enforcement policies with

respect to existing laws may increase the Companys exposure to environmental liability.

Although management has policies and procedures to perform an environmental review during the loan application process and also before initiating any

foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards.

The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse

effect on the Companys financial condition and results of operations.

The Company is subject to risk from adverse economic conditions.

Our operations and profitability are impacted by general business and economic conditions in the State of Mississippi, and the

United States.

These conditions include recession, short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry

and finance, and the strength of the U.S.

Our operations and profitability are impacted by general business and economic conditions in the State of

Mississippi, and the United States.

broad trends in industry and finance, and the strength of the U.S.

economy and the local economies in which we operate, all of which are beyond our control.

A deterioration in economic conditions could result in an increase in loan delinquencies and nonperforming assets,

decreases in loan collateral values and a decrease in demand for our products and services, among other things, any of which could have a material adverse impact on our financial condition and results of operations.

The FRB has implemented significant economic strategies that have impacted interest rates, inflation, asset

values, and the shape of the yield curve, and currently is transitioning from many years of easing to what may be a new period of tightening.

In recent years, the FRB has begun to gradually unwind the remaining domestic monetary policy initiatives as the economy

continues to recover.

In December 2015, the Federal Reserve raised the target federal funds rate after a prolonged period of no change by 25 bps and did so again by 25 bps a year later in December 2016.

During 2017, the FRB raised the target federal

funds rate by 25 bps in March, June and December, bringing the current range to 1.25 to 1.50 percent.

These developments, along with the U.

governments credit and deficit concerns, the European sovereign debt crisis and the economic

slowdown in China, could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.

Other significant monetary strategies could be implemented in the future including, in

particular, so-called tightening strategies.

A deterioration in economic conditions could result in an increase in loan delinquencies and

nonperforming assets, decreases in loan collateral values and a decrease in demand for our products and services, among other things, any of which could have a material adverse impact on our financial condition and results of operations.

The FRB has implemented significant economic strategies that have impacted interest rates, inflation, asset values, and the shape of the yield curve,

and currently is transitioning from many years of easing to what may be a new period of tightening.

years, the FRB has begun to gradually unwind the remaining domestic monetary policy initiatives as the economy continues to recover.

During 2018, the FRB raised the target federal funds rate by 25 bps in March, June, September and December, bringing

the current range to 2.25 to 2.50 percent.

This development, along with the U.S.

governments credit and deficit concerns and international economic considerations, could cause interest rates and borrowing costs to rise, which may

negatively impact our ability to access the debt markets on favorable terms.

Other significant monetary strategies could be implemented in the future including, in particular, so-called tightening strategies.

FRB strategies can, and often are intended to, affect the domestic money supply, inflation, interest rates, and the shape of the yield curve.

Effects on the yield

curve often are most pronounced at the short end of the curve, which is of particular importance to us and other banks.

Among other things, easing strategies are intended to lower interest rates, flatten the yield curve, expand the money supply, and

stimulate economic activity, while tightening strategies are intended to increase interest rates, steepen the yield curve, tighten the money supply, and restrain economic activity.

All things being equal, the current transition from easing to

possible tightening should tend to diminish or reverse downward pressure on rates, and to diminish or eventually end the stimulus effect that low rates tend to have on the economy.

Many external factors may interfere with the effects of these plans

or cause them to be changed unexpectedly.

Such factors include significant economic trends or events as well as significant international monetary policies and events.

Risks associated with interest rates and the yield curve are discussed in this

Item 1A under the caption The Company is subject to interest rate risk. Such strategies also can affect the United States.

Effects on the yield curve often are most pronounced at the short end of the curve, which is of particular

importance to us and other banks.

Risks associated with interest rates and the yield curve are discussed in this Item 1A under the caption The Company is subject to interest rate risk. Such strategies also can affect the United States.

and world-wide financial systems in ways that may be difficult to predict.

The profitability of the Company depends significantly on economic conditions in the State of Mississippi.

The Companys success depends primarily on the general economic conditions of the State of Mississippi and the specific

local markets in which it operates.

Unlike larger national or other regional banks that are more geographically diversified, the Company provides banking and financial services to customers primarily in East Central and South Mississippi.

economic conditions in this area have a significant impact on the demand for the Companys products and services, as well as the ability of its customers to repay loans, the value of the collateral securing loans and the stability of its

deposit funding sources.

The profitability of the Company depends significantly on economic

conditions in the State of Mississippi.

The Companys success depends primarily on the general economic

conditions of the State of Mississippi and the specific local markets in which it operates.

Unlike larger national or other regional banks that are more geographically diversified, the Company provides banking and financial

services to customers primarily in East Central and South Mississippi.

The local economic

conditions in this area have a significant impact on the demand for the Companys products and services, as well as the ability of its customers to repay loans, the value of the collateral securing loans and the stability of its deposit funding

The Company is subject to extensive government regulation and supervision.

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The information under the heading Supervision and Regulation in Item 1, Business, and Note 16, Regulatory Matters

to the Consolidated Financial Statements of the Company in Item 8, Financial Statements and Supplementary Data, provides more information regarding the regulatory environment in which the Company and the Bank operate.

descriptions of the laws, regulations or policies applicable to us.

We are subject to claims and litigation.

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operates in a highly competitive industry and market area.

The Company faces substantial competition in all areas of

its operations from a variety of different competitors, many of which are larger and have more financial resources.

Such competitors primarily include national, regional and community banks within the various markets in which the Company operates.

The Company also faces competition from many other types of financial institutions, including savings and loans, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial intermediaries.

information under the heading Competition in Item 1, Business, provides more information regarding the competitive conditions in the Companys markets.

The Company faces substantial competition in all areas

of its operations from a variety of different competitors, many of which are larger and have more financial resources.

Such competitors primarily include national, regional and community banks within the various markets in which the Company

intermediaries.

The information under the heading Competition in Item 1, Business, provides more information regarding the competitive conditions in the Companys markets.

The Companys industry could become even more competitive as a result of legislative, regulatory and technological

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Companys competitive position, which could adversely affect its growth and profitability, which, in turn, could have a material adverse effect on the Companys financial condition and results of operations.

We are subject to a variety of operational risks, including the risk of fraud or theft by employees, which may adversely affect our business and results of

We are exposed to many types of operational risks, including liquidity risk, credit risk, market risk,

interest rate risk, legal and compliance risk, strategic risk, information security risk, and reputational risk.

We are also reliant upon our employees, and our operations are subject to the risk of fraud, theft or malfeasance by our employees.

have established processes and procedures intended to identify, measure, monitor, report and analyze these risks, however, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we

have not appropriately anticipated, monitored or identified.

If our risk management framework proves ineffective, we could suffer unexpected losses, we may have to expend resources detecting and correcting the failure in our systems and we may be

subject to potential claims from third parties and government agencies.

We are subject to a variety of operational risks, including the risk of fraud or theft by employees, which may adversely affect our business and results

of operations.

We are exposed to many types of operational risks, including liquidity risk, credit risk, market

risk, interest rate risk, legal and compliance risk, strategic risk, information security risk, and reputational risk.

We are also reliant upon our employees, and our operations are subject to the risk of fraud, theft or malfeasance by our

We have established processes and procedures intended to identify, measure, monitor, report and analyze these risks, however, there are inherent limitations to our risk management strategies as there may exist, or develop in the future,

risks that we have not appropriately anticipated, monitored or identified.

If our risk management framework proves ineffective, we could suffer unexpected losses, we may have to expend resources detecting and correcting the failure in our systems

and we may be subject to potential claims from third parties and government agencies.

We may also suffer severe reputational damage.

Any of these consequences could adversely affect our business, financial condition or results of operations.

In particular, the

unauthorized disclosure, misappropriation, mishandling or misuse of personal, non-public, confidential or proprietary information of customers could result in significant regulatory consequences, reputational

damage and financial loss.

Our risk management policies and procedures may not be fully effective in identifying or mitigating risk exposure in all

market environments or against all types of risk, including employee misconduct.

We have devoted significant

resources to develop our risk management policies and procedures and will continue to do so.

Nonetheless, our policies and procedures to identify, monitor and manage risks may not be fully effective in mitigating our risk exposure in all market

environments or against all types of risk.

Many of our methods of managing risk and exposures are based upon our use of observed historical market behavior or statistics based on historical models.

During periods of market volatility or due to

unforeseen events, the historically derived correlations upon which these methods are based may not be valid.

particular, the unauthorized disclosure, misappropriation, mishandling or misuse of personal, non-public, confidential or proprietary information of customers could result in significant regulatory

consequences, reputational damage and financial loss.

Our risk management policies and procedures may not be fully effective in identifying or

mitigating risk exposure in all market environments or against all types of risk, including employee misconduct.

We have devoted significant resources to develop our risk management policies and procedures and will continue to do so.

Nonetheless, our policies and procedures to identify, monitor and manage risks may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk.

Many of our methods of managing risk and exposures are

based upon our use of observed historical market behavior or statistics based on historical models.

During periods of market volatility or due to unforeseen events, the historically derived correlations upon which these methods are based may not be

As a result, these methods may not predict future exposures accurately, which could be significantly greater than what our models indicate.

This could cause us to incur investment losses or cause our hedging and other risk management strategies to be ineffective.

Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or

other matters that are publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated.

This could cause us to incur investment losses or cause our hedging and other risk management

strategies to be ineffective.

Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that are publicly available or otherwise accessible to us, which may not always

be accurate, complete, up-to-date or properly evaluated.

Moreover, we are subject to the risks of errors and misconduct by our employees and advisors, such as fraud, non-compliance with policies, recommending transactions that are not suitable, and improperly using or disclosing confidential information.

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Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, and

these policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk.

Insurance and other traditional risk-shifting tools may be held by or available to us in order to

manage certain exposures, but they are subject to terms such as deductibles, coinsurance, limits and policy exclusions, as well as risk of counterparty denial of coverage, default or insolvency.

The Company may be subject to more stringent capital and liquidity requirements which would adversely affect

its net income and future growth.

The Dodd-Frank Act applies the same leverage and risk-based capital requirements

that apply to insured depository institutions to most bank holding companies, which, among other things, will change the way in which hybrid securities, such as trust preferred securities, are treated for purposes of determining a bank holding

companys regulatory capital.

In 2011, the federal banking agencies published a final rule regarding minimum leverage and risk-based capital requirements for banks and bank holding companies consistent with the requirements of Section 171

of the Dodd-Frank Act.

For a more detailed description of the minimum capital requirements see Supervision and Regulation Capital Standards.

The Dodd-Frank Act also increased regulatory oversight, supervision and examination of

banks, bank holding companies and their respective subsidiaries by the appropriate regulatory agency.

These requirements, and any other new regulations, could adversely affect the Companys ability to pay dividends, or could require the Company

to reduce business levels or to raise capital, including in ways that may adversely affect the Companys results of operations or financial condition.

In addition, in 2010, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking

Supervision, announced agreement on the calibration and phase-in arrangements for a strengthened set of capital requirements, known as Basel III.

these policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types

Insurance and other traditional risk-shifting tools may be held by or available to us in order to manage certain exposures, but they are subject to terms such as deductibles,

coinsurance, limits and policy exclusions, as well as risk of counterparty denial of coverage, default or insolvency.

The Company may be subject to

more stringent capital and liquidity requirements which would adversely affect its net income and future growth.

The Dodd-Frank Act applies the same leverage and risk-based capital requirements that apply to insured depository institutions

to most bank holding companies, which, among other things, will change the way in which hybrid securities, such as trust preferred securities, are treated for purposes of determining a bank holding companys regulatory capital.

federal banking agencies published a final rule regarding minimum leverage and risk-based capital requirements for banks and bank holding companies consistent with the requirements of Section 171 of the Dodd-Frank Act.

For a more detailed

description of the minimum capital requirements see Supervision and Regulation Capital Standards.

The Dodd-Frank Act also increased regulatory oversight, supervision and examination of banks, bank holding companies and their

respective subsidiaries by the appropriate regulatory agency.

These requirements, and any other new regulations, could adversely affect the Companys ability to pay dividends, or could require the Company to reduce business levels or to raise

capital, including in ways that may adversely affect the Companys results of operations or financial condition.

addition, in 2010, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced agreement on the calibration and phase-in arrangements for a

strengthened set of capital requirements, known as Basel III.

In 2013, regulators adopted enhancements to United States.

capital standards based on Basel III.

The revised standards create a new emphasis on Tier 1 common equity, modify eligibility criteria for regulatory capital instruments, and modify the methodology for calculating risk-weighted assets.

standards require the following:

The revised standards create a new emphasis on Tier 1 common equity, modify eligibility

criteria for regulatory capital instruments, and modify the methodology for calculating risk-weighted assets.

The revised standards require the following:

Tier 1 Common Equity.

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risk-weighted assets must be at least 6%.

The threshold is raised from the current 4%, and the risk-weighting method is changed as mentioned above.

The threshold is raised from the prior 4%, and the risk-weighting method is changed as mentioned above.

To be well capitalized the Tier 1 capital ratio must be at least 8%.

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ratio of total capital to risk-weighted assets must be at least 8%.

Although this threshold is unchanged from current requirements, as mentioned above the method for risk-weighting assets has been changed.

As a result of that method change, many

banks could have experienced a reduction in this ratio if the change had been effective immediately when the rules were adopted.

Although this threshold is unchanged from prior requirements, as mentioned above the method for risk-weighting assets has been changed.

As a result of that method change, many banks

could have experienced a reduction in this ratio if the change had been effective immediately when the rules were adopted.

Leverage Ratio Base.

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restrict future growth or operations.

Negative perceptions or publicity could damage our reputation among existing and potential customers, investors,

employees and advisors.

Negative perceptions or publicity could damage our reputation among existing and potential customers,

investors, employees and advisors.

Our reputation is one of our most important assets.

Our ability to attract and retain

customers, investors, employees and advisors is highly dependent upon external perceptions of our company.

Damage to our reputation could cause significant harm to our business and prospects and may arise from numerous sources, including litigation

or regulatory actions, failing to deliver minimum standards of service and quality, compliance failures, any perceived or actual weakness in our financial strength or liquidity, technological, cybersecurity, or other security breaches resulting in

improper disclosure of client or employee personal information, unethical behavior and the misconduct of our employees, advisors and counterparties.

Negative perceptions or publicity regarding these matters could damage our reputation among existing

and potential customers, investors, employees and advisors.

Adverse developments with respect to our industry may also, by association, negatively impact our reputation or result in greater regulatory or legislative scrutiny or litigation against

Our ability to attract and

retain customers, investors, employees and advisors is highly dependent upon external perceptions of our company.

Damage to our reputation could cause significant harm to our business and prospects and may arise from numerous sources, including

litigation or regulatory actions, failing to deliver minimum standards of service and quality, compliance failures, any perceived or actual weakness in our financial strength or liquidity, technological, cybersecurity, or other security breaches

resulting in improper disclosure of client or employee personal information, unethical behavior and the misconduct of our employees, advisors and counterparties.

Negative perceptions or publicity regarding these matters could damage our reputation

among existing and potential customers, investors, employees and advisors.

Adverse developments with respect to our industry may also, by association, negatively impact our reputation or result in greater regulatory or legislative scrutiny or

litigation against us.

In addition, the SEC and other federal and state regulators have increased their scrutiny of potential conflicts of interest.

It is possible that potential or perceived conflicts could give rise to litigation or enforcement actions.

possible also that the regulatory scrutiny of, and litigation in connection with, conflicts of interest will make our clients less willing to enter into transactions in which such a conflict may occur and will adversely affect our businesses.

It is possible that potential or perceived conflicts could give rise to litigation or enforcement

It is possible also that the regulatory scrutiny of, and litigation in connection with, conflicts of interest will make our clients less willing to enter into transactions in which such a conflict may occur and will adversely affect our

The Company may be required to pay significantly higher FDIC premiums in the future.

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institutions premiums to maintain the Deposit Insurance Fund at an adequate level.

In light of current economic conditions, the FDIC has increased its assessment rates and imposed special assessments.

The FDIC may further increase these rates and

impose additional special assessments in the future, which could have a material adverse effect on future earnings.

The FDIC may increase these rates and impose additional special assessments in the future, which could have a material adverse effect on future earnings.

The Companys controls and procedures may fail or be circumvented.

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on the Companys financial condition and results of operations.

The Company relies on third party vendors for a number of key components of its

The Company relies on third party vendors for a number of key components of

its business.

The Company contracts with a number of third party vendors to support its infrastructure.

Many of these

vendors are large national companies who are dominant in their area of expertise and would be difficult to quickly replace.

Failures of certain vendors to provide services could adversely affect the Companys ability to deliver products and

services to its customers, disrupting its business and causing it to incur significant expense.

these vendors are large national companies who are dominant in their area of expertise and would be difficult to quickly replace.

Failures of certain vendors to provide services could adversely affect the Companys ability to deliver products

and services to its customers, disrupting its business and causing it to incur significant expense.

External vendors also present information security risks.

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These dividends are the principal source of funds to pay dividends on its common stock and interest and principal on debt.

federal and state laws and regulations limit the amount of dividends that the Bank may pay to the Company.

In the event the Bank is unable to pay dividends to the Company, it may not be able to

service debt, pay obligations or pay dividends on the Companys common stock.

The inability to receive dividends from the Bank could have a material adverse effect on the Companys business, prospects, financial condition and results of

The information under the heading Supervision and Regulation in Item 1, Business, provides a discussion about the restrictions governing the Banks ability to transfer funds to the Company.

Potential acquisitions may disrupt the Companys business and dilute shareholder value.

From time-to-time, the Company evaluates

merger and acquisition opportunities and conducts due diligence activities related to possible transactions with other financial institutions.

As a result, merger or acquisition discussions and, in some cases, negotiations may take place, and future

mergers or acquisitions involving cash, debt or equity securities may occur at any time.

Acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among other things:

Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to

the Bank is unable to pay dividends to the Company, it may not be able to pay obligations or pay dividends on the Companys common stock.

The inability to receive dividends from the Bank

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

The information under the heading Supervision and Regulation in Item 1, Business, provides a

discussion about the restrictions governing the Banks ability to transfer funds to the Company.

Potential acquisitions may disrupt the

Companys business and dilute shareholder value.

From time-to-time, the Company evaluates merger and acquisition opportunities and conducts due diligence activities related to possible transactions with other financial institutions.

As a result, merger or

acquisition discussions and, in some cases, negotiations may take place, and future mergers or acquisitions involving cash, debt or equity securities may occur at any time.

Acquiring other banks, businesses or branches involves various risks

commonly associated with acquisitions, including, among other things:

potential exposure to unknown or contingent liabilities of the target company;

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technological change.

The Companys industry is continually undergoing rapid technological change with frequent

introductions of new technology-driven products and services.

The Companys industry is continually undergoing rapid technological change with

frequent introductions of new technology-driven products and services.

The effective use of technology increases efficiency and enables financial institutions to better serve customers and reduce costs.

The Companys future success depends, in part,

upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Companys operations.

Many of the Companys

competitors have substantially greater resources to invest in technological improvements.

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

its customers.

Failure to successfully keep pace with technological change affecting the Companys industry could have a material adverse impact on its business and, in turn, the Companys financial condition and results of operations.

The operational functions of business counterparties may experience similar disruptions that could adversely impact us and over which the Company may

have limited or no control.

For example, in 2015, 2016 and 2017 major retailers experienced data systems incursions

reportedly resulting in the thefts of credit and debit card information, online account information, and other financial data of tens of millions of the retailers customers.

Retailer incursions affect cards issued and deposit accounts

maintained by many banks, including the Bank.

Although the Bank systems are not breached in retailer incursions, these events can cause the Bank to reissue a

significant number of cards and take other costly steps to avoid significant theft loss to the Bank and its customers.

Other possible points of incursion or disruption not within the Banks

control include internet service providers, electronic mail portal providers, social media portals, distant-server (cloud) service providers, electronic data security providers, telecommunications companies, and smart phone

manufacturers.

The Companys future success depends, in

part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Companys operations.

Companys competitors have substantially greater resources to invest in technological improvements.

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

and services to its customers.

The operational functions of business counterparties may experience similar disruptions that could adversely impact us and over which

the Company may have limited or no control.

Over the course of the past few years, companies such as major

retailers have experienced data systems incursions reportedly resulting in the thefts of credit and debit card information, online account information, and other financial data of tens of millions of the retailers customers.

incursions affect cards issued and deposit accounts maintained by many banks, including the Bank.

Although the Bank systems are not breached in retailer incursions, these events can cause the Bank to reissue a significant number of cards and take

other costly steps to avoid significant theft loss to the Bank and its customers.

Other possible points of incursion or disruption not within the Banks control include internet service providers, electronic mail portal providers, social media

portals, distant-server (cloud) service providers, electronic data security providers, telecommunications companies, and smart phone manufacturers.

Consumers may decide not to use banks to complete their financial transactions.

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as a source of funds could have a material adverse effect on the Companys financial condition and results of operations.

Severe weather, natural

disasters, acts of war or terrorism and other external events could significantly impact the Companys business.

Severe weather, natural disasters, acts of war or terrorism, and other adverse external events could have a significant impact

on the ability of the Company to conduct business.

Such events could affect the stability of the Companys deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause

significant property damage, result in loss of revenue or cause the Company to incur additional expenses.

The occurrence of any such event could have a material adverse effect on the Companys business, prospects, financial condition and

results of operations.

The Company is subject to Accounting Estimate Risks.

The preparation of the Companys consolidated financial statements in conformity with generally accepted accounting

principles requires management to make significant estimates that affect the financial statements.

Severe weather,

natural disasters, acts of war or terrorism and other external events could significantly impact the Companys business.

The Bank has branches along the coast of Mississippi that are subject to risks from hurricanes from time to time.

weather, natural disasters, acts of war or terrorism, and other adverse external events could have a significant impact on the ability of the Company to conduct business.

Such events could affect the stability of the Companys deposit base,

impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue or cause the Company to incur additional expenses.

The occurrence of any such

event could have a material adverse effect on the Companys business, prospects, financial condition and results of operations.

The Company is

subject to Accounting Estimate Risks.

The preparation of the Companys consolidated financial statements in

conformity with generally accepted accounting principles requires management to make significant estimates that affect the financial statements.

The Companys most critical estimate is the level of the allowance for credit losses.

However, other estimates occasionally become highly

significant, especially in volatile situations such as litigation and other loss contingency matters.

other estimates occasionally become highly significant, especially in volatile situations such as litigation and other loss contingency matters.

Estimates are made at specific points in time;

as actual events unfold, estimates are adjusted accordingly.

Due to the inherent nature of these

estimates, it is possible that, at some time in the future, the Company may significantly increase the allowance for credit losses or sustain credit losses that are significantly higher than the provided allowance, or the Company may make some other

adjustment that will differ materially from the estimates that the Company makes today.

as actual events unfold, estimates are adjusted

Due to the inherent nature of these estimates, it is possible that, at some time in the future, the Company may significantly increase the allowance for credit losses or sustain credit losses that are significantly higher than the

provided allowance, or the Company may make some other adjustment that will differ materially from the estimates that the Company makes today.

Expense Control could have an effect on the Companys earnings.

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result in dilution for existing shareholders and may adversely affect the market price of our stock.

We may issue, in

the future, shares of our common stock to acquire additional banks, bank holding companies, and other businesses related to the financial services industry that may complement our organizational structure.

We may issue,

in the future, shares of our common stock to acquire additional banks, bank holding companies, and other businesses related to the financial services industry that may complement our organizational structure.

Resales of substantial amounts of common

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common stock.

We may issue debt or equity securities or securities convertible into equity securities, any of which may be senior to our common stock

as to distributions and in liquidation, which could negatively affect the value of our common stock.

In the future,

we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured by all or up to all of our assets, or by issuing additional debt or equity securities, which could include issuances of

secured or unsecured commercial paper, medium-term notes, senior notes, subordinated notes, preferred stock or securities convertible into or exchangeable for equity securities.

We may issue debt or equity securities or securities convertible into equity securities, any of which may be senior to our common

stock as to distributions and in liquidation, which could negatively affect the value of our common stock.

future, we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured by all or up to all of our assets, or by issuing additional debt or equity securities, which could include issuances

of secured or unsecured commercial paper, medium-term notes, senior notes, subordinated notes, preferred stock or securities convertible into or exchangeable for equity securities.

In the event of our liquidation, our lenders and holders of our debt

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securities in the future.

The Companys Articles of Incorporation and Bylaws, as well as certain banking laws, may have an anti-takeover effect.

Provisions of the Companys Articles of Incorporation and Bylaws, which are exhibits to this Annual Report on

Form 10-K, and the federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire the Company, even if doing so would be perceived to be beneficial

to the Companys shareholders.

The Companys Articles of Incorporation and Bylaws, as well as certain banking laws, may have an anti-takeover

Provisions of the Companys Articles of Incorporation and Bylaws, which are exhibits to this Annual

Report on Form 10-K, and the federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire the Company, even if doing so would be perceived to be

beneficial to the Companys shareholders.

The combination of these provisions impedes a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of 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