What changed in this filing

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Item 1A. Risk Factors

2023-02-24 compared with 2022-02-25 · 83 added, 108 removed, 310 unchanged (38% of the section changed)

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The value of our common shares could decline due to any of these risks, and you could lose all or part of your investment.

Risks Relating to the Pandemic

The global coronavirus (COVID-19) pandemic has led, and continues to lead, to periods of significant volatility in financial, commodities and other markets and could harm our business and results of operations.

Given the ongoing and dynamic nature of the coronavirus (COVID-19) pandemic, it is difficult to predict the impact of the pandemic on our business, and there is no guarantee that our efforts to address or mitigate the adverse impacts of the COVID-19 pandemic will be effective in the future.

The impact to date has included periods of significant volatility in financial, commodities and other markets.

This volatility, if it continues, could have an adverse impact on our customers and on our business, financial condition and results of operations as well as our growth strategy.

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

The spread of COVID-19 has caused and could continue to cause severe disruptions in the U.S.

economy at large, and has resulted and may continue to result in disruptions to our customers’ businesses, and a decrease in consumer confidence and business generally.

In addition, actions by US federal, state and local governments to address the pandemic, including travel bans, stay-at-home orders and school, business and entertainment venue closures, have had and may continue to have a significant adverse effect on our customers and the markets in which we conduct our business.

The extent of further impacts resulting from the COVID-19 pandemic and other events beyond our control will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 pandemic and actions taken to contain the COVID-19 or its impact, among others.

Disruptions to our customers could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans as well as declines in wealth management revenues.

The escalation of the pandemic may also negatively impact regional economic conditions for a period of time, resulting in declines in local loan demand, liquidity of loan guarantors, loan collateral (particularly in real estate), loan originations and deposit availability.

If the global response to contain COVID-19 escalates or is unsuccessful, we could experience a material adverse effect on our business, financial condition, results of operations and cash flows.

The Company has implemented restrictions on employee business travel, conversion of in-person meetings to virtual, and a work-from-home mandate.

The Company has also worked with its customers to implement appropriate loan deferral strategies in certain circumstances.

These actions in response to the COVID-19 pandemic, and similar actions by our vendors and business partners, have not materially impaired our ability to support our employees, conduct our business and serve our customers, but there is no assurance these actions will be sufficient to successfully mitigate the risks presented by COVID-19 or that our ability to operate will not be materially affected going forward.

For instance, our business operations may be disrupted if key personnel or significant portions of our employees are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the COVID-19 pandemic.

Similarly, if any of our vendors or business partners become unable to continue to provide their products and services, which we rely upon to maintain our day-to-day operations, our ability to serve our customers could be impacted.

Unpredictable future developments related to or resulting from the COVID-19 pandemic could materially and adversely affect our business and results of operations.

Because there have been no comparable recent global pandemics that resulted in similar global impact, we do not yet know the full extent of the COVID-19 pandemic’s effects on our business, operations, or the global economy as a whole.

Any future development will be highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the effectiveness of our work from home arrangements, third party providers’ ability to support our operation, increases in inflation or interest rates, labor shortages, supply chain disruptions and any actions taken by

governmental authorities and other third parties in response to the pandemic.

We are continuing to monitor the COVID-19 pandemic and related risks, although the rapid development and fluidity of the situation precludes any specific prediction as to its ultimate impact on us.

However, if the COVID-19 outbreak continues to spread or otherwise results in a continuation or worsening of the current economic and commercial environments, our business, financial condition, results of operations and cash flows as well as our regulatory capital and liquidity ratios could be materially adversely affected and many of the risks described in this Annual Report on Form 10-K may be heightened.

Risks Relating to Economic and Market Conditions

Risks Relating to General Economic and Market Conditions

An economic downturn could adversely affect our financial condition, results of operations or cash flows.

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Adverse changes in the economies in our market areas may have a material adverse effect on our financial condition, results of operations or cash flows.

As a community bank, we bear increased risk of unfavorable local economic conditions.

Moreover, we cannot give any assurance that we will benefit from any market growth or favorable economic conditions in our primary market areas even if they do occur.

We bear increased risk of unfavorable local economic conditions.

Moreover, we cannot give any assurance we will benefit from any market growth or favorable economic conditions in our primary market areas even if they do occur.

We face potential risk from changes in governmental monetary policies.

The Company’s earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies.

The Company’s earnings are affected by domestic economic conditions and the monetary and fiscal policies of the U.S.

government and its agencies.

The Federal Reserve’s monetary policies have had, and are likely to continue to have, an important impact on the operating results of commercial banks through its power to implement national monetary policy in order, among other things, to curb inflation or combat a recession.

The monetary policies of the Federal Reserve affect the levels of bank loans, investments, and deposits through its control over the issuance of United States government securities, its regulation of the discount rate applicable to member banks, and its influence over reserve requirements to which member banks are subject.

The monetary policies of the Federal Reserve affect the levels of bank loans, investments, and deposits through its control over the issuance of U.S.

government securities, its regulation of the discount rate applicable to member banks, and its influence over reserve requirements to which member banks are subject.

The Company cannot predict the nature or impact of future changes in monetary and fiscal policies.

Legal, Regulatory and Tax Risks

Our participation in the SBA PPP loan program exposes us to risks related to noncompliance with the PPP, as well as litigation risk related to our administration of the PPP loan program, which could have a material adverse impact on our business, financial condition and results of operations.

The Company is a participating lender in the PPP, a loan program administered through the SBA, that was created to help eligible businesses, organizations and self-employed persons fund their operational costs during the COVID-19 pandemic.

Under this program, the SBA guarantees 100% of the amounts loaned under the PPP.

The PPP opened on April 3, 2020 and expired on May 31, 2021;

however, because of the short window between the passing of the CARES Act and the initial opening of the PPP, there is some ambiguity in the laws, rules and guidance regarding the operation of the PPP, which exposes the Company to risks relating to noncompliance with the PPP.

For instance, other financial institutions have experienced litigation related to their process and procedures used in processing applications for the PPP.

Any financial liability, litigation costs or reputational damage caused by PPP related litigation could have a material adverse impact on our business, financial condition and results of operations.

In addition, the Company may be exposed to credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced.

If a deficiency is identified, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from the Company.

SBA lending is an important part of our business.

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As an approved participant in the SBA Preferred Lender’s Program (a “Preferred Lender”), we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not Preferred Lenders.

The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the

lender exhibits prudent risk management.

The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management.

When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the Preferred Lender status.

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Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.

A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines.

injunctive relief;

and restrictions on mergers and acquisitions activity, expansion, and new business lines.

Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation.

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We are subject to compliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations, and failure to comply with these laws could lead to a wide variety of sanctions.

The Bank Secrecy Act, the USA PATRIOT Act of 2001, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports when appropriate.

In addition to other bank regulatory agencies, the federal Financial Crimes Enforcement Network of the Department of the Treasury is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the state and federal banking regulators, as well as the U.S.

The Bank Secrecy Act, the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports when appropriate.

In addition to other bank regulatory agencies, the federal Financial Crimes Enforcement Network of the Department of the Treasury is authorized to impose significant civil money penalties for violations of those requirements and engages in coordinated enforcement efforts with the state and federal banking regulators, as well as the U.S.

Department of Justice, CFPB, Drug Enforcement Administration, and Internal Revenue Service.

We are also subject to increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control of the Department of the Treasury regarding, among other things, the prohibition of transacting business with, and the need to freeze assets of, certain persons and organizations identified as a threat to the national security, foreign policy or economy of the United States.

We are also subject to compliance with the rules enforced by the Office of Foreign Assets Control of the Department of the Treasury regarding, among other things, the prohibition of transacting business with, and the need to freeze assets of, certain persons and organizations identified as a threat to the national security, foreign policy or economy of the United States.

If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including any acquisition plans.

Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have

serious reputational consequences for us.

Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.

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

If the Company or the Bank incur losses that erode its capital, it may become subject to enhanced regulation or supervisory action.

Under federal and state laws and regulations pertaining to the safety and soundness of insured depository institutions, the Missouri Division of Finance, the Federal Reserve Board, and the FDIC have the authority to compel or restrict certain actions if the Company’s or the Bank’s capital should fall below adequate capital standards as a result of future operating losses, or if its bank regulators determine that it has insufficient capital.

Under federal and state laws and regulations pertaining to the safety and soundness of insured depository institutions, the Missouri Division of Finance, the Federal Reserve, and the FDIC have the authority to compel or restrict certain actions if the Company’s or the Bank’s capital should fall below adequate capital standards.

Among other matters, the corrective actions include but are not limited to requiring affirmative action to correct any conditions resulting from any violation or practice;

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restricting the Bank’s operations;

limiting the rate of interest the bank may pay on brokered deposits;

limiting the interest rate the Bank may pay on brokered deposits;

restricting the amount of distributions and dividends and payment of interest on its trust preferred securities;

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Financial Risks

Our business is subject to interest rate risk and variations in interest rates may negatively affect our financial performance.

A substantial portion of our income is derived from the differential or “spread” between the interest earned on loans, investment securities, and other interest-earning assets, and the interest paid on deposits, borrowings, and other interest-bearing liabilities.

Because of the differences in the maturities and repricing characteristics of our interest-earning assets and interest-bearing liabilities, changes in interest rates may not produce equivalent changes in interest income earned on interest-earning assets and interest paid on interest-bearing liabilities.

Our assets and liabilities may react differently to changes in overall interest rates or conditions.

Significant fluctuations in market interest rates could materially and adversely affect not only our net interest spread, but also our asset quality and loan origination volume, deposits, funding availability, and/or net income.

Our allowance for credit losses may not be adequate to cover actual loan losses.

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Additional provisions to increase the allowance for credit losses, should they become necessary, would result in a decrease in net income and a reduction in capital, and may have a material adverse effect on our financial condition and results of operations.

Increased regulatory oversight, changes in the method of determining LIBOR and the phase-out of LIBOR after 2021 may adversely affect the results of our operations.

The transition from LIBOR may adversely affect the results of our operations.

On December 31, 2021, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates the LIBOR, ceased issuance of 24 of the 35 LIBOR settings.

dollar settings (overnight, 1-month, 3-month, 6-month and 1-year) will continue to be published using panel bank issuances through June 2023.

However, new contracts indexed to LIBOR are prohibited after December 31, 2021.

In the United States, efforts to identify a set of alternative U.S.

dollar reference interest rates are ongoing, and the Alternative Reference Rate Committee (“ARRC”) has recommended the use of SOFR, which is different from LIBOR in that it is a backward looking secured rate rather than a forward looking unsecured rate.

These differences could lead to a greater disconnect between our costs to raise funds for SOFR as compared to LIBOR.

For cash products and loans, the ARRC has also recommended Term SOFR, which is a forward looking SOFR based on SOFR futures and may in part reduce differences between SOFR and LIBOR.

Successor or replacement interest rates to LIBOR may perform differently and we may incur significant costs to transition both our borrowing arrangements and the loan agreements with our customers from LIBOR, which may have an adverse effect on our results of operations.

The Company has not yet selected a replacement index, but has begun issuing loans using SOFR published by the Federal Reserve Bank of New York.

The Company has material contracts that are indexed to LIBOR.

The full impact of alternatives to LIBOR on the valuations, pricing and operation of our financial instruments is not yet known.

Our business is subject to interest rate risk and variations in interest rates may negatively affect our financial performance.

Our assets and liabilities may react differently to changes in overall interest rates or conditions.

dollar settings (overnight, 1-month, 3-month, 6-month and 1-year) will no longer be representative after June 30, 2023.

New contracts indexed to LIBOR were prohibited after December 31, 2021.

The Company has selected SOFR as a replacement rate to LIBOR.

SOFR is different from LIBOR in that it is a backward looking secured rate rather than a forward looking unsecured rate.

These differences could lead to a greater disconnect between our costs to raise funds using SOFR as compared to LIBOR.

Replacement interest rates to LIBOR may perform differently and we may incur significant costs to transition both our borrowing arrangements and the loan agreements with our customers from LIBOR, which may have an adverse effect on our results of operations.

We may not be able to maintain our historical rate of growth or profitability, which could have a material adverse effect on our ability to successfully implement our business strategy.

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Significant negative industry or economic trends, including the lack of recovery in the market price of our common stock, or reduced future cash flows or disruptions to our business, could result in impairments to goodwill.

Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and to rely on projections of future operating performance.

Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on experience and to rely on projections of future operating performance.

We operate in competitive environments and projections of future operating results and cash flows may vary significantly from actual results.

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Declines in asset values may result in impairment charges and adversely impact the value of our investments and our financial performance and capital.

We hold an investment portfolio that includes, but is not limited to, government securities and agency mortgage-backed securities.

We hold an investment portfolio that includes, but is not limited to, municipal bonds, government securities and agency mortgage-backed securities.

Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.

These factors include, but are not limited to, rating agency actions in respect to the securities, defaults by the issuer or with respect to the underlying securities, changes in market interest rates and/or spread, and instability and other factors impacting the capital markets.

Any of these factors, among others, could cause other-than-temporary impairments and realized or unrealized losses in future periods and declines in other comprehensive income (loss), which could have a material adverse effect on our business, results of operations, financial condition and future prospects.

Any of these factors, among others, could cause realized or unrealized losses in future periods and declines in other comprehensive income (loss), which could have a material adverse effect on our business, results of operations, financial condition and future prospects.

The process for determining whether impairment of a security is other-than-temporary often requires complex, subjective judgments about whether there has been significant deterioration in the financial condition of the issuer, whether management has the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value, the future financial performance and liquidity of the issuer and any collateral underlying the security and other relevant factors.

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Our investment portfolio includes mortgage-backed obligations primarily secured by pools of mortgages on single-family residences.

in respect of government-sponsored enterprises such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”), which guarantee such obligations.

The value of mortgage-backed obligations in our investment portfolio may fluctuate for several reasons, including (i) delinquencies and defaults on the mortgages underlying such obligations, due in part to high unemployment rates, (ii) falling home prices, (iii) lack of a liquid market for such obligations, and (iv) uncertainties in respect of government-sponsored enterprises such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”), which guarantee such obligations.

If the value of homes were to materially decline, the fair value of the mortgage-backed obligations in which we invest may also decline.

Any such decline in the fair value of mortgage-backed obligations, or perceived market uncertainty about their fair value, could adversely affect our financial position and results of operations.

In addition, when we acquire a mortgage-backed security, we anticipate that the underlying mortgages will prepay at a projected rate, thereby generating an expected yield.

In addition, when we acquire a mortgage-backed security, we anticipate the underlying mortgages will prepay at a projected rate, thereby generating an expected yield.

Prepayment rates generally increase as interest rates fall and decrease when rates rise, but changes in prepayment rates are difficult to predict.

In light of historically low interest rates, many of our mortgage-backed securities have a higher interest rate than prevailing market rates, resulting in a premium purchase price.

At the time of purchase, many of our mortgage-backed securities had a higher interest rate than prevailing market rates, resulting in a premium purchase price.

In accordance with applicable accounting standards, we amortize the premium over the expected life of the mortgage-backed security.

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These loans are funded by deposits in the same metropolitan areas.

The regional economic conditions in areas where we conduct our business have an impact on the demand for our products and services as well as the ability of our clients to repay loans, the value of the collateral securing loans, and the stability of our deposit funding sources.

The regional economic conditions in areas where we conduct our business

have an impact on the demand for our products and services as well as the ability of our clients to repay loans, the value of the collateral securing loans, and the stability of our deposit funding sources.

Consequently, a decline in local economic conditions may adversely affect our earnings.

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Our business plan calls for continued efforts to increase our assets invested in commercial loans.

Our commercial loans include loans that are secured by real estate (commercial property, multi-family residential property, 1-4 family residential property, and construction and land).

Our commercial loans include loans secured by real estate (commercial property, construction and land, 1-4 family residential property, and multi-family residential property).

Commercial loans generally involve a higher degree of credit risk than residential mortgage loans due, in part, to their larger average size and less marketable collateral.

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Credit market tightening could adversely affect our commercial borrowers through declines in their business activities and adversely impact their overall liquidity through the diminished availability of other borrowing sources or otherwise.

The ability of our borrowers to repay their loans may be adversely affected by an increase in market interest rates which could result in increased credit losses.

These increased credit losses, where the Bank has retained credit exposure, could decrease our assets, net income and available cash.

The loans we make to our borrowers may bear interest at a variable interest rate.

When market interest rates increase, the amount of revenue borrowers need to service their debt also increases.

Some borrowers may be unable to make their debt service payments.

As a result, an increase in market interest rates may increase the risk of loan default.

An increase in non-performing loans could result in a net loss of earnings from these loans, an increase in the provision for loan and covered loan losses, and an increase in loan charge-offs, all of these factors could impact allowance, earnings and/or capital levels.

Our loan portfolio includes loans secured by real estate, which could result in increased credit risk.

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Our ability to recover on defaulted loans secured by property in those states may be delayed and our recovery efforts are lengthened due to this process.

In addition, other states have anti-deficiency statutes with regards to certain types of residential mortgage loans.

In addition, some states have anti-deficiency statutes with regards to certain types of residential mortgage loans.

Our ability to recover on defaulted loans secured by residential mortgages in anti-deficiency statute states may be limited to the fair value of the real estate securing the loan at the time of foreclosure.

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In the case of our senior cash flow loans, we generally take a lien on substantially all of a client’s assets, but the value of those assets is typically substantially less than the amount of money we advance to the client under a cash flow transaction.

In addition, some of our cash flow loans may be viewed as stretch loans, meaning they may be at leverage multiples that exceed traditional accepted bank lending standards for senior cash flow loans.

In addition, some of our cash flow loans may be viewed as stretch loans, meaning they may be at leverage multiples that exceed traditional accepted bank

lending standards for senior cash flow loans.

Thus, if a cash flow transaction becomes non-performing, our primary recourse to recover some or all of the principal of our loan or other debt product would be to force the sale of all or part of the company as a going concern.

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Best evaluate the life insurance providers that are the payors on the life insurance policies that we finance.

The value of our collateral could be materially impaired in the event there are widespread financial difficulties among life insurance providers or the NRSROs downgrade the financial strength ratings or credit ratings of the life insurance providers, indicating the NRSROs’ opinion that the life insurance provider’s ability to meet policyholder obligations is impaired, or the ability of the life insurance provider to meet the terms of its debt obligations is impaired.

The value of our collateral is also subject to the risk that a life insurance provider could become insolvent.

The value of our collateral could be materially impaired in the event there are widespread financial difficulties among life insurance providers or the NRSROs downgrade the financial strength ratings or credit ratings of the life insurance providers, indicating the NRSROs’ opinion is the life insurance provider’s ability to meet policyholder obligations is impaired, or the ability of the life insurance provider to meet the terms of its debt obligations is impaired.

The value of our collateral is also subject to the risk a life insurance provider could become insolvent.

In particular, if one or more large nationwide life insurance providers were to fail, the value of our portfolio could be significantly negatively impacted.

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Construction, land acquisition and development lending involves additional risks because funds are advanced based upon the projected value of the project, which is inherently uncertain prior to the project’s completion.

relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio.

Because of the uncertainties inherent in estimating construction costs, as well as the fair value of the completed project and the effects of governmental regulation of real property and the general effects of the national and local economies, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio.

As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell or lease the property, rather than the ability of the borrower or guarantor to repay principal and interest.

If our appraisal of the value of the completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project.

If we are forced to foreclose on a project prior to or at completion due to a default, there can be no assurance that we will be able to recover all of the unpaid balance of, and accrued interest on, the loan or the related foreclosure, sale and holding costs.

If we are forced to foreclose on a project prior to or at completion due to a default, there can be no assurance we will be able to recover all of the unpaid balance of, and accrued interest on, the loan or the related foreclosure, sale and holding costs.

In addition, we may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time.

If any of these events occur, our financial condition, results of operations and cash flows could be materially and adversely affected.

The ability of our borrowers to repay their loans may be adversely affected by an increase in market interest rates which could result in increased credit losses.

These increased credit losses, where the Bank has retained credit exposure, could decrease our assets, net income and cash available.

The loans we make to our borrowers may bear interest at a variable or floating interest rate.

When market interest rates increase, the amount of revenue borrowers need to service their debt also increases.

Some borrowers may be unable to make their debt service payments.

As a result, an increase in market interest rates will increase the risk of loan default.

An increase in non-performing loans could result in a net loss of earnings from these loans, an increase in the provision for loan and covered loan losses, and an increase in loan charge-offs, all of which could have a material adverse effect on our business, financial condition and results of operations.

We are subject to environmental risks associated with owning real estate or collateral.

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We may also own and lease premises where branches and other facilities are located.

While we have lending, foreclosure and facilities guidelines intended to exclude properties with an unreasonable risk of contamination, hazardous substances could exist on some of the properties that the Company may own, manage or occupy.

We face the risk that environmental laws could force us to clean up the properties at the Company’s expense.

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We may use other derivative financial instruments to help manage other economic risks, such as liquidity and credit risk, including exposures that arise from business activities that result in the receipt or payment of future known or uncertain cash amounts, the value of which are determined by interest rates.

We also have derivatives that result from a service we provide to

certain qualifying clients approved through our credit process, and therefore, these derivatives are not used to manage interest rate risk in our assets or liabilities.

We also have derivatives that result from a service we provide to certain qualifying clients approved through our credit process and therefore, these derivatives are not used to manage interest rate risk in our assets or liabilities.

The Company does not enter into derivative financial instruments for trading purposes.

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The loss of any of our executive officers or other key employees, or the inability to recruit highly skilled and other key employees, may adversely affect our operations.

The Company believes that its growth and continued success will depend in large part on its executive team and other key employees.

The Company believes its growth and continued success will depend in large part on its executive team and other key employees.

The loss of any of our executive officers or other key employees, the failure to successfully transition key roles, or the inability to hire, train, retain, and manage qualified personnel, could have a material adverse effect on our business strategy, financial condition, results of operations and cash flows.

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In addition to better serving customers, the effective use of technology increases our efficiency and enables us to reduce costs.

Our future success will depend, in part, upon our ability to address the needs of our customers using innovative methods, processes and technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in our operations as we

continue to grow and expand our market areas.

Our future success will depend, in part, upon our ability to address the needs of our customers using innovative methods, processes and technology to provide products and services that will satisfy customer demands for convenience as well as to add efficiencies in our operations as we continue to grow and expand our market areas.

Many national vendors provide turn-key services to community banks, such as Internet banking and remote deposit capture, that allow smaller banks to compete with institutions that have substantially greater resources to invest in technological improvements.

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Furthermore, any new line of business and new product or service could have a significant impact on the effectiveness of our system of internal controls.

Failure to successfully manage these risks in the development and implementation of new lines of business

or new products or services could have a material adverse effect on our business, financial condition and results of operations.

Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, financial condition and results of operations.

As we expand outside our current markets, we may encounter additional risks that may adversely affect us.

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A failure in or breach, or the inability to recognize a potential breach of our operational or security systems, or those of our third party service providers, including as a result of cyber-attacks, could disrupt our business, result in unintentional disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and adversely impact our earnings.

As a financial institution, our operations rely heavily on the secure processing, storage and transmission of confidential and other information on our computer systems and networks.

Any failure, interruption or breach in security or operational integrity of these systems could result in failures or disruptions in our internet banking system, treasury management products, check and document imaging, remote deposit capture systems, general ledger, and other systems.

The security and integrity of our systems could be threatened by a variety of interruptions or information security breaches, including those caused by computer hacking, cyber-attacks, electronic fraudulent activity or attempted theft of financial assets.

We cannot assure any such failures, interruption or security breaches will not occur, or if they do occur, that they will be adequately addressed.

While we have certain protective policies and procedures in place, the nature and sophistication of the threats continue to evolve.

We may be required to expend significant additional resources in the future to modify and enhance our protective measures.

Information security, including cybersecurity, is a high priority for the Company.

Recent highly publicized events have highlighted the importance of cybersecurity, including cyberattacks against other financial institutions, governmental agencies, and other organizations that resulted in the compromise of personal and/or confidential information, the theft or destruction of corporate information, and demands for ransom payments to release corporate information encrypted by “ransomware.” A successful cyberattack could harm the Bank’s reputation and/or impair its ability to provide services to its clients.

The Company has bolstered, and may in the future bolster, significant resources to implement technologies and various response and recovery plans and procedures as part of its information security program.

Additionally, we face the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate our business activities, including exchanges, clearing agents, clearing houses or other financial intermediaries.

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In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies.

These broad market

fluctuations could make it more difficult for you to resell your common stock or depositary shares when you want and at prices you find attractive.

These broad market fluctuations could make it more difficult for you to resell your common stock or depositary shares when you want and at prices you find attractive.

Our stock price and the price of our depositary shares can fluctuate significantly in response to a variety of factors including, among other things:

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• changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts;

• reputation;

• failure to meet analysts’ revenue or earnings estimates;

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The Company depends on payments from the Bank, including dividends, management fees and payments under tax sharing agreements, for substantially all of the Company’s liquidity requirements.

Federal and state regulations limit the amount of dividends and the amount of payments that the Bank may make to the Company under tax sharing agreements.

certain circumstances, the Missouri Division of Finance, FDIC, or Federal Reserve Board could restrict or prohibit the Bank from distributing dividends or making other payments to us.

In the event that the Bank was restricted from paying dividends to the Company or making payments under the tax sharing agreement, the Company may not be able to service its debt, pay its other obligations or pay dividends on its common stock or preferred stock.

Federal and state regulations limit the amount of dividends and the amount of payments the Bank may make to the Company under tax sharing agreements.

In certain circumstances, the Missouri Division of Finance, FDIC, or Federal Reserve Board could restrict or prohibit the Bank from distributing dividends or making other payments to us.

In the event the Bank was restricted from paying dividends to the Company or making payments under the tax sharing agreement, the Company may not be able to service its debt, pay its other obligations or pay dividends on its common stock or preferred stock.

If we are unable or determine not to pay dividends on our outstanding equity securities, the market price of such securities could be materially adversely affected.

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These and other provisions could make it more difficult for a third party to acquire us even if an acquisition might be in the best interests of our shareholders.

Although we have no present intention to issue any shares of our authorized preferred stock, there can be no assurance that the Company will not do so in the future.

Although we have no present intention to issue any additional shares of our authorized preferred stock, there can be no assurance that the Company will not do so in the future.

General Risk Factors

Climate-related Risk

The global coronavirus (“COVID-19”) pandemic may continue to lead to periods of significant volatility in financial, commodities and other markets and could harm our business and results of operations.

Given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict the impact of the pandemic on our business, and there is no guarantee that our efforts to address or mitigate the adverse impacts of the COVID-19 pandemic will be effective in the future.

We do not yet know the full extent of the COVID-19 pandemic’s effect on our business, operations, or the global economy as a whole.

Any future development will be highly uncertain and cannot be predicted, including continued rise in inflation or interest rates, labor shortages or supply chain disruptions.

The full impact of the COVID-19 pandemic could have a material adverse effect on our business, financial condition and results of operations, growth strategy, cash flows as well as our regulatory capital and liquidity ratios, and will depend on highly uncertain and unpredictable future developments, including:

• The duration, extent, and severity of the pandemic.

A spread of COVID-19 and the rise of new variants could cause severe disruptions in the U.S.

economy, to our clients’ business or their willingness to conduct banking and other financial transactions.

We may continue to see the economic effects of the COVID-19 pandemic that could affect our business, financial condition, and results of operations.

• The ongoing effect on our customers, counterparties, employees and third-party providers.

The COVID-19 pandemic and its associated consequences and uncertainties are affecting individuals, households, and businesses differently and unevenly.

Negative impacts to our customers could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans, and their willingness and ability to conduct banking and other financial transactions.

• The effect on economies and markets.

The continuation of the COVID-19 pandemic may also negatively impact regional economic conditions for a period of time, resulting in declines in local loan demand, liquidity of loan guarantors, loan collateral (particularly in real estate), loan originations and deposit availability, which could adversely affect our business, financial condition, results of operations and cash flows.

In addition, actions by U.S.

federal, state and local governments to address the pandemic could had a significant adverse effect on the markets in which we conduct our business.

Climate change may materially adversely affect our business and results of operations.

Political and social attention to the issue of climate change has increased.

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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