−Removed: The following risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business or financial performance, which in turn can affect the price of our publicly traded securities.
+Added: The following risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business, results of operations or financial performance, which in turn can affect the price of our publicly traded securities.
These are not the only risks we face.
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See Cautionary Note Regarding Forward-Looking Statements.
−Removed: Risks Related to Cybersecurity and Technology
−Removed: System failure or cybersecurity breaches of our network security could subject us to increased operating costs as well as litigation and other potential losses.
−Removed: Our computer systems and network infrastructure could be vulnerable to hardware and cybersecurity issues.
−Removed: Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event.
−Removed: We could also experience a breach by intentional or negligent conduct on the part of employees or other internal sources.
−Removed: Any damage or failure that causes an interruption in our operations could have a material adverse effect on our financial condition and results of operations.
−Removed: The importance of our online banking systems to the Company’s operations means that any problems in its functionality would have a material adverse effect on the Company’s operations, business model and growth strategy.
−Removed: Our operations are also dependent upon our ability to protect our computer systems and network infrastructure against damage from physical break-ins, cybersecurity breaches and other disruptive problems caused by the internet or other users.
−Removed: Such computer break-ins and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability, damage our reputation and inhibit the use of our internet banking services by current and potential customers.
−Removed: We could also become the target of various cyberattacks.
−Removed: We regularly add additional security measures to our computer systems and network infrastructure to mitigate the possibility of cybersecurity breaches, including firewalls and penetration testing.
−Removed: However, it is difficult or impossible to defend against every risk being posed by changing technologies as well as acts of cyber-crime.
−Removed: Increasing sophistication of cyber criminals and terrorists make keeping up with new threats difficult and could result in a system breach.
−Removed: Controls employed by our information technology department and cloud vendors could prove inadequate.
−Removed: A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations, as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs and reputational damage, any of which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We have implemented remote working and workplace protocols for our employees in accordance with government requirements.
−Removed: Working outside of our network protection may increase our risk exposure to cybersecurity breaches.
−Removed: An increase in the number of employees working offsite may correspond to an increase in the size of our risk exposure to cyber disruptions.
−Removed: Despite the implementation of security measures, our internal computer systems and those of our Strategic Program platforms, and other contractors and consultants as well as third party vendors of IT and data security systems and services, are vulnerable to damage and interruptions from security breaches, computer viruses, fraud and similar incidents involving the loss or unauthorized access of confidential information.
−Removed: We cannot be sure that our continued data protection efforts and investment in information technology will prevent future significant breakdowns, data leakages, breaches in our systems or the systems of our third party contractors and collaborators, or other cyber incidents that could have a material adverse effect upon our reputation, business, operations or financial condition.
−Removed: If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs and the development of our product candidates could be delayed.
−Removed: Our proprietary technologies and analytic models have not yet been extensively tested during down-cycle economic conditions.
−Removed: If these do not, or are perceived not to, accurately gather and interpret performance data for loans and identify attractive risk-adjusted market sectors, our performance may be worse than anticipated.
−Removed: The technologies created by and relied upon by us may not function properly, or at all, which may have a material impact on our operations and financial conditions.
−Removed: The performance of loans originated by us is dependent on the effectiveness of our credit underwriting systems used to evaluate borrowers’ credit profiles and likelihood of default.
−Removed: While our proprietary technologies and analytic models are continually adjusted to account for changes in various macroeconomic conditions, the bulk of the data gathered and the development of our enterprise data warehouse have largely occurred during a period of sustained economic growth or during the COVID-19 pandemic when extraordinary government stimulus impacted the economy.
−Removed: Our proprietary technologies have not been extensively tested during other adverse economic cycles.
−Removed: There is no assurance that our proprietary technologies can accurately predict loan performance during periods of adverse economic conditions.
−Removed: If our proprietary technologies are unable to accurately reflect the credit risk of loans under such economic conditions, we may experience greater than expected losses on such loans.
−Removed: For example, in response to the COVID-19 pandemic, the federal government quickly implemented stimulus measures.
−Removed: The subsequent discontinuation of those stimulus measures has increased, and may continue to increase, the delinquency and default rates of borrowers, which may increase uncertainty about the effectiveness of our proprietary technologies.
−Removed: We may not have the resources to keep pace with rapid technological changes in the industry or implement new technology effectively.
−Removed: The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.
−Removed: Our future success will depend, at least in part, upon our ability to address the needs of our customers by using 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 products and service offerings.
−Removed: We may experience operational challenges as we implement these new technology enhancements or products, which could impair our ability to realize the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner.
−Removed: Many of our larger competitors have substantially greater resources to invest in technological improvements.
−Removed: Third parties upon which we rely for our technology needs may not be able to develop, on a cost-effective basis, systems that will enable us to keep pace with such developments.
−Removed: As a result, our larger competitors may be able to offer additional or superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage.
−Removed: We may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services.
−Removed: The ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations.
−Removed: Our operations could be interrupted if our third-party service providers or Strategic Program service providers experience operational or other systems difficulties or terminate their services.
−Removed: We outsource some of our operational activities to third parties and counterparties for certain services, including, but not limited to, loan marketing and origination, core systems support, informational website hosting, internet services, online account opening and other processing services.
−Removed: Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party service providers.
−Removed: We also leverage the financial technology capabilities of our Strategic Program service providers to meet our enterprise risk framework and enable us to realize operating efficiencies.
−Removed: As a result, if these third-party service providers or our Strategic Program service providers experience difficulties, are subject to cybersecurity breaches, or terminate their services, and we are unable to replace them with other service providers or alternative counterparties, particularly on a timely basis, our operations could be interrupted.
−Removed: If an interruption were to continue for a significant period, our business, financial condition and results of operations could be adversely affected.
−Removed: Even if we can replace third-party service providers or Strategic Program service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations.
Risks Related to Our Banking Business
−Removed: As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions.
+Added: Our business and operations in the financial services industry may be adversely affected in numerous and complex ways by weak economic conditions.
Our business and operations, which primarily consist of lending money to clients in the form of loans, borrowing money from clients in the form of deposits and investing in interest earning deposits in other banks and securities, are sensitive to general business and economic conditions in the United States.
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Moreover, an inflationary environment combined with a competitive labor market and decreases in the market value of our equity awards could make it more costly for us to attract or retain employees.
−Removed: In order to meet the compensation expectations of our prospective and current employees due to inflationary and other factors, we may be required to increase our operating costs or risk losing skilled workers to competitors.
+Added: In order to meet the compensation
+Added: expectations of our prospective and current employees due to inflationary and other factors, we may be required to increase our operating costs or risk losing skilled workers to competitors.
Concerns about the performance of international economies, especially in Europe and emerging markets, and economic conditions in Asia, particularly the economies of China, South Korea and Japan, can impact the economy and financial markets here in the United States.
If the national, regional and local economies experience worsening economic conditions, including high levels of unemployment, our growth and profitability could be constrained.
−Removed: Our business is significantly
−Removed: affected by monetary and other regulatory policies of the U.S.
+Added: Our business is significantly affected by monetary and other regulatory policies of the U.S.
federal government, its agencies and government-sponsored entities.
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Adverse economic conditions could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Acts of terrorism, geopolitical and other external events could impact our ability to conduct business.
−Removed: Financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising operating and communication systems and remain central targets for potential acts of terrorism.
−Removed: Such events could cause significant damage, impact the stability of our facilities and result in additional expenses, impair the ability of our borrowers to repay their loans, reduce the value of collateral securing repayment of our loans, and result in the loss of revenue.
−Removed: While we have established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial condition.
−Removed: Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict, including escalating military action between Russia and Ukraine, terrorism or other geopolitical events.
Our commercial and consumer banking clients who participate in our real estate lending program and SBA 7(a) lending program are concentrated in certain geographic areas and we are sensitive to adverse changes in those regional economies.
−Removed: The success of our real estate lending programs depends substantially upon the general economic conditions in Utah, which we cannot predict with certainty.
+Added: The success of our real estate lending programs depends substantially upon the general economic conditions in Utah, which we cannot predict.
Adverse conditions in the local Utah economy such as unemployment, recession, a catastrophic event or other factors beyond our control could impact the ability of borrowers participating in our real estate lending program to repay their loans, which could impact our net interest income.
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A downturn in these regional economies generally could make it more difficult for our borrowers to repay their loans and may lead to loan losses.
−Removed: For these reasons, any national, regional or local economic downturn that affects our service regions, or existing or prospective borrowers in such regions, could have a material adverse effect on our real estate and SBA 7(a) lending and the business, financial condition and results of operations.
+Added: Any national, regional or local economic downturn that affects our service regions, or existing or prospective borrowers in such regions, could have a material adverse effect on our real estate and SBA 7(a) lending and the business, financial condition and results of operations.
We face strong competition from financial services companies and other companies that offer banking services.
We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets and product lines.
−Removed: We compete with commercial banks, savings banks, credit unions, nonbank financial services companies and other financial institutions operating both within our market areas and nationally, and in respect of our financial technology initiative we also compete with other entities in the financial technology industry, including a limited number of other banks that have developed strategic programs similar to our Strategic Programs.
+Added: We compete with commercial banks, savings banks, credit unions, nonbank financial services companies, including the private credit lending market, and other financial institutions operating both within our market areas and nationally, and in respect of our financial technology initiative we also compete with other entities in the financial technology industry, including a limited number of other banks that have developed strategic programs similar to our Strategic Programs.
Many of our non-bank competitors are not subject to the same extensive regulations that govern our activities and may have greater flexibility in competing for business.
Our inability to compete successfully in the markets in which we operate could have a material adverse effect on our business, financial condition or results of operations.
+Added: In addition, Fintech companies have been actively acquiring or pursuing bank charters to gain direct access to deposits, reduce reliance on partner banks, and lower capital costs, driven by a more permissive regulatory environment.
+Added: This shift allows Fintech companies to scale and operate with the same authority as traditional banks.
+Added: The number of federal bank charter applications in 2025 reached its highest level since 2020, with numerous, crypto-adjacent, and non-bank firms seeking licensing and the OCC and the FDIC are signaling increased openness to fintech charter applications, encouraging new entrants.
+Added: As a result of this current trend, we may lose some of our banking clients and customers who are able to seek loans from some of these Fintech companies with newly acquired bank charters, which may have a material adverse effect on our business, results of operations and financial performance.
+Added: Furthermore, several online banking operations as well as the online banking programs of conventional banks have instituted Fintech Banking and Payment Solutions strategies similar to ours.
+Added: As a consequence, we have encountered competition in this area and anticipate that we will continue to do so in the future.
+Added: This competition may increase our costs, reduce our revenues or revenue growth or, because we are a relatively small banking operation without the name
+Added: recognition of other, more established banking operations, make it difficult for us to compete effectively in obtaining these relationships.
We may not be able to measure and limit our credit risk adequately, which could lead to unexpected losses.
−Removed: Our business depends on our ability to successfully measure and manage credit risk.
+Added: Our business substantially depends on our ability to successfully measure and manage credit risk.
As a lender, we are exposed to the risk that the principal of, or interest on, a loan will not be paid timely or at all or that the value of any collateral supporting a loan will be insufficient to cover our outstanding exposure.
In addition, we are exposed to risks with respect to the period of time over which the loan may be repaid, risks relating to proper loan underwriting, closing, servicing and liquidation, risks resulting from changes in economic and industry conditions, and risks inherent in dealing with individual loans and borrowers.
−Removed: If the overall economic climate in the United States generally, or in any of our markets specifically, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease
−Removed: in value or become illiquid, and the level of delinquencies, nonperforming loans, and charge-offs could rise and require significant additional provisions for loan losses.
+Added: If the overall economic climate in the United States generally, or in any of our markets specifically, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level of delinquencies, nonperforming loans, and charge-offs could rise and require significant additional provisions for loan losses.
Our risk management practices, such as monitoring the concentration of our loans within specific markets and our credit approval, review and administrative practices, may not adequately reduce credit risk.
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Our ACL may prove to be insufficient to absorb potential losses in our loan portfolio.
−Removed: The Financial Accounting Standards Board (the “FASB”) has issued an accounting standard for establishing allowances for loan and lease losses that replaces the prior approach under United States generally accepted accounting principles (“U.S.
−Removed: GAAP”) , which generally considers only past events and current conditions, with a forward-looking methodology that reflects the expected credit losses over the lives of financial assets, starting when such assets are first originated or acquired.
+Added: The Financial Accounting Standards Board (the “FASB”) has issued an accounting standard for establishing an allowance for credit losses under United States generally accepted accounting principles (“U.S.
+Added: GAAP”) , which generally estimates the expected credit losses over the lives of financial assets, starting when such assets are first originated or acquired.
As an emerging growth company relying on the extended transition period for new accounting standards, this standard, referred to as Current Expected Credit Loss (“CECL”), became effective for us on January 1, 2023.
−Removed: The CECL standard requires us to record, at the time of origination, credit losses expected throughout the life of the asset portfolio on loans and held-to-maturity (“HTM”) securities, as opposed to the former practice of recording losses when it is probable that a loss event has occurred.
−Removed: Moreover, the CECL standard may create more volatility in the level of allowance for credit losses.
+Added: The CECL standard requires us to record, at the time of origination, credit losses expected throughout the life of the asset portfolio on loans and held-to-maturity (“HTM”) securities.
+Added: The CECL standard may create more volatility in the level of allowance for credit losses.
If we are required to materially increase the level of our allowance for credit losses for any reason, such increase could have an adverse effect on our business, financial condition, and results of operations.
−Removed: For further information, please see Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8.
+Added: For further information, see Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8.
We maintain an ACL that represents management’s judgment of probable losses and risks inherent in our loan portfolio.
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If we are required to materially increase the level of our ACL for any reason, such increase could have an adverse effect on our business, financial condition and results of operations.
−Removed: New lines of business or new products and services may subject us to additional risks.
−Removed: From time to time, we may implement or may acquire new lines of business or pilot programs or offer new products and services within existing lines of business.
−Removed: There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed.
−Removed: To the extent we enter into new lines of business, we will face numerous risks and uncertainties, including risks associated with the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk, the required investment of capital and other resources and the loss of investors due to the perception that we are no longer focusing on our core business.
−Removed: In developing and marketing new lines of business and new products and services, we may invest significant time and resources.
−Removed: We may not achieve target timetables for the introduction and development of new lines of business and new products or services and price and profitability targets may not prove feasible.
−Removed: External factors, such as regulatory compliance obligations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
−Removed: Furthermore, any new line of business or new product or service could have a significant impact on the effectiveness of our system of internal controls.
−Removed: 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, results of operations and financial condition.
−Removed: We may be subject to certain risks in connection with growing through mergers and acquisitions.
−Removed: It is possible that we could acquire other banking institutions, other financial services companies, banking and servicing platforms, or branches of banks in the future.
−Removed: Acquisitions typically involve the payment of a premium over book and trading values and, therefore, may result in the dilution of our tangible book value per share and/or our earnings per share.
−Removed: Our ability to engage in future mergers and acquisitions depends on various factors, including:
−Removed: (1) our ability to identify
−Removed: suitable merger partners and acquisition opportunities;
−Removed: (2) our ability to finance and complete transactions on acceptable terms and at acceptable prices;
−Removed: and (3) our ability to receive the necessary regulatory and, when required, shareholder approvals.
−Removed: Furthermore, mergers and acquisitions involve a number of risks and challenges, including our ability to achieve planned synergies and to integrate the branches and operations we acquire, and the internal controls and regulatory functions into our current operations, as well as the diversion of management’s attention from existing operations, which may adversely affect our ability to successfully conduct our business and negatively impact our financial results.
Our SBA lending program is dependent upon the U.S.
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federal government.
−Removed: We are an approved participant in the SBA Preferred Lenders Program (“PLP”).
−Removed: As an SBA Preferred Lender, we are able to offer SBA loans to our clients without being subject to the potentially lengthy SBA approval process for application, servicing or liquidation actions necessary for lenders that are not SBA Preferred Lenders.
−Removed: If we lose our status as an SBA Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect on our financial results.
+Added: In 2025, we voluntarily relinquished our Preferred Lending Program (“PLP”) delegated authority.
+Added: We are now an SBA-approved General Processing(“GP”) lender.
+Added: As an SBA GP Lender, we submit all SBA loan applications to the Loan Guaranty Processing Center for final approval.
+Added: There is a risk that we may lose loan applicants and existing customers to lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect on our financial results.
Any changes to the SBA program, including but not limited to changes to the level of guarantee provided by the federal government on SBA loans, changes to program specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress or exhaustion of the available funding for SBA programs, may have a material adverse effect on our business.
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government on its obligations or any prolonged government shutdown could, among other things, impede our ability to originate SBA loans or sell such loans in the secondary market, which could materially and adversely affect our business, financial condition and results of operations.
−Removed: When we originate SBA loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA.
+Added: When we originate SBA
+Added: loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA.
If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us.
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Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our ability to operate profitably.
+Added: We are subject to interest rate risk as fluctuations in interest rates may adversely affect our earnings.
+Added: Most of our banking assets and liabilities are monetary in nature and subject to risk from changes in interest rates.
+Added: Like most financial institutions, our earnings are significantly dependent on our net interest income, the principal component of our earnings, which is the difference between interest earned by us from our interest earning assets, such as loans and investment securities, and interest paid by us on our interest-bearing liabilities, such as deposits and borrowings.
+Added: We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest earning assets, or vice versa.
+Added: In either case, if market interest rates should move contrary to our position, this gap will negatively impact our earnings.
+Added: The impact on earnings is more adverse when the slope of the yield curve flattens;
+Added: that is, when short-term interest rates increase more than long-term interest rates or when long-term interest rates decrease more than short-term interest rates.
+Added: Changes to prevailing interest rates could influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans at competitive rates and obtain deposits;
+Added: (ii) the fair value of our financial assets and liabilities;
+Added: (iii) the average duration of our loan portfolios and other interest-earning assets;
+Added: and (iv) the mix of lending products we originate.
+Added: A prolonged period of extremely volatile and unstable market conditions could increase our funding costs and negatively affect market risk mitigation strategies.
+Added: Increased interest rates may decrease borrower demand for certain of our lending products, even as inflation places pressure on consumer spending, borrowing and saving habits as consumers evaluate their prospects for future income growth and employment opportunities in the current economic environment, and as borrowers face uncertainty about the impact of rising prices on their ability to repay a loan.
+Added: A change in demand for our lending products and any steps we may take to mitigate such change could impact our credit quality and overall growth.
We rely on BFG for loan referrals associated with our SBA 7(a) lending program, any disruption of that relationship may adversely impact our SBA lending business.
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Any disruption of our relationship with BFG or reduction in SBA 7(a) loan referrals could materially adversely impact our business, financial condition, results of operation and growth plans.
−Removed: Because a significant portion of our loan portfolio held-for-investment within our local lending program, owner occupied commercial lending program and SBA 7(a) lending program is secured by real estate, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
−Removed: As of December 31, 2024, approximately $64.2 million, or 13.8%, of our total gross loans held-for-investment were local lending or owner occupied commercial lending program loans with real estate as a primary or secondary component of collateral.
−Removed: We also have approximately $254.3 million, or 54.7% , of our total gross loans held-for-investment in SBA loans that are secured with real estate as a component of collateral as of December 31, 2024.
+Added: Negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
+Added: As of December 31, 2025 , approxim ately $121.2 million, or 20.7%, of our total gross loans held-for-investment were local lending or owner occupied commercial lending program loans with real estate as a primary or secondary component of collateral.
+Added: We also have approximately $199.0 million, or 34.0%, of our total gros s loans held-for-investment in SBA loans that are secured, at least in part, with real estate collateral as of December 31, 2025 .
The market value of real estate can fluctuate significantly in a short period of time.
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If new state or federal laws or regulations are ultimately enacted that significantly raise the cost of foreclosure or raise outright barriers, such laws could have a material adverse effect on our business, financial condition and results of operation.
−Removed: We may not be able to protect our intellectual property rights, and may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful.
−Removed: We rely on a combination of copyright, trademark, trade secret laws and confidentiality provisions to establish and protect our proprietary rights.
−Removed: If we fail to successfully maintain, protect and enforce our intellectual property rights, our competitive position could suffer.
−Removed: Similarly, if we were to infringe on the intellectual property rights of others, our competitive position could suffer.
−Removed: Third parties may challenge, invalidate, circumvent, infringe or misappropriate our intellectual property, or such intellectual property may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain product or service offerings or other competitive harm.
−Removed: We may also be required to spend significant resources to monitor and police our intellectual property rights.
−Removed: Others, including our competitors, may independently develop similar technology, duplicate our products or services or design around our intellectual property, and in such cases we may not be able to assert our intellectual property rights against such parties.
−Removed: Further, our contractual arrangements may not effectively
−Removed: prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential or proprietary information.
−Removed: We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights, trade secrets and know-how, which could be time-consuming and expensive, could cause a diversion of resources and may not prove successful.
−Removed: The loss of intellectual property protection or the inability to obtain rights with respect to third party intellectual property could harm our business and ability to compete.
−Removed: In addition, because of the rapid pace of technological change in our industry, aspects of our business and our products and services rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all.
Our origination of construction loans exposes us to increased lending risks.
We originate commercial construction loans primarily to professional builders for the construction of one-to-four family residences, apartment buildings, and commercial real estate properties .
−Removed: As of December 31, 2024, we had app roximately $42.3 million of construction loans, which represents approximately 9.1% o f our total gross loan portfolio held-for-investment.
+Added: As of December 31, 2025, we had approximately $49.1 million of construction loans, which represents approximately 8.4% of o ur total gross loan portfolio held-for-investment.
Our construction loans present a greater level of risk than loans secured by improved, occupied real estate due to:
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The small- to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans.
−Removed: Small- to medium-sized businesses frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan.
+Added: Small- to medium-sized businesses frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial
+Added: volatility in operating results, any of which may impair a borrower’s ability to repay a loan.
In addition, the success of a small- and medium-sized business often depends on the management skills, talents and efforts of a small group of people, and the death, disability or resignation of one or more of these people could have a material adverse effect on the business and its ability to repay its loan.
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Our concentration of large loans to a limited number of borrowers may increase our credit risk.
−Removed: As of December 31, 2024, our 10 largest borrowing relationships accounted for approximatel y 10.5% of our total gross loans held-for-investment.
+Added: A s of December 31, 2025 our 10 largest borrowing relationships accounted for approximately 8.3% of our tota l gross loans held-for-investment.
This high concentration of borrowers presents a risk to our lending operations.
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Our most important source of funds is deposits.
−Removed: As of December 31, 2024, approximately $126.8 million, or 23.3%, of our total deposits were noninterest-bearing demand accounts.
+Added: A s of December 31, 2025, approximately $168.4 million, or 22.3%, of ou r total deposits were noninterest-bearing demand accounts.
These deposits are subject to potentially dramatic fluctuations due to certain factors that may be outside of our control, such as a loss of confidence by customers in us or the banking sector generally, customer perceptions of our financial health and general reputation, any of which could result in significant outflows of deposits within short periods of time increasing our funding costs and reducing our net interest income and net income.
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We also may borrow funds from third-party lenders, such as other financial institutions.
−Removed: We currently utilize four secured lines of credit provided by the FHLB, PPPLF and the Federal Reserve and two unsecured lines of credit provided by Bankers Bank of the West and Zions Bank.
+Added: We currently utilize three secured lines of credit provided by the FHLB and the Federal Reserve and three unsecured lines of credit provided by Bankers Bank of the West, Pacific Coast Bankers’ Bank, and Zions Bank, that in the aggregate provided nearly immediate liquidity available of $230.4 million.
Our access to funding sources in amounts adequate to finance or capitalize our activities, or on terms that are acceptable to us, could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
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We have a concentration of deposit accounts with our Strategic Program service providers that is a material source of our funding, and the loss of these deposits or default on letters of credit by these Strategic Program service providers could force us to fund our business through more expensive and less stable sources.
−Removed: As of December 31, 2024, approximatel y $113.6 million, or approximately 20.8%, of our total deposits consisted of deposit accounts of our Strategic Program service providers.
+Added: A s of December 31, 2025, approximately $130.8 million, or approximately 17.3%, of our total deposits consisted of deposit accounts of our Strategic Program service providers.
Generally, the terms of our Strategic Programs require each Strategic Program service provider or purchasing entity to establish a reserve deposit account with the Bank in an amount at least equal to between 50% and 100% the total outstanding balance of loans held-for-sale by the Bank related to the Strategic Program.
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If a Strategic Program service provider defaults on its letter of credit or we experience additional unanticipated fluctuations in our Strategic Program deposit levels, we may be forced to rely more heavily on other, potentially more expensive and less stable funding sources, which could have an adverse effect on our business, financial condition and results of operations.
+Added: We may be subject to certain risks in connection with growing through mergers and acquisitions.
+Added: We could acquire other banking institutions, financial services companies, banking and servicing platforms, or branches of banks in the future.
+Added: Acquisitions typically involve the payment of a premium over book and trading values and, therefore, may result in the dilution of our tangible book value per share and/or our earnings per share.
+Added: Our ability to engage in future mergers and acquisitions depends on various factors, including:
+Added: (1) our ability to identify suitable merger partners and acquisition opportunities;
+Added: (2) our ability to finance and complete transactions on acceptable terms and at acceptable prices;
+Added: and (3) our ability to receive the necessary regulatory and, when required, shareholder approvals.
+Added: Furthermore, executing on successful mergers and acquisitions involves a number of risks and challenges, including, but not limited to, our ability to achieve planned synergies and to integrate the branches and operations we acquire, and the internal controls and regulatory functions into our current operations, as well as the diversion of management’s attention from existing operations, which may adversely affect our ability to successfully conduct our business and operations and negatively impact our financial results.
If we are unable to attract additional merchants and retain and grow our existing merchant relationships, our business, results of operations, financial condition, and future prospects could be materially and adversely affected.
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If we fail to retain any of our merchant relationships, if we do not acquire new merchant relationships, if we do not continually expand revenue and volume from the merchant relationships, or if we do not attract and retain a diverse mix of merchant relationships, our business, results of operations, financial condition, and future prospects could be materially and adversely affected.
−Removed: We are subject to interest rate risk as fluctuations in interest rates may adversely affect our earnings.
−Removed: Most of our banking assets and liabilities are monetary in nature and subject to risk from changes in interest rates.
−Removed: Like most financial institutions, our earnings are significantly dependent on our net interest income, the principal component of our earnings, which is the difference between interest earned by us from our interest earning assets, such as loans and investment securities, and interest paid by us on our interest-bearing liabilities, such as deposits and borrowings.
−Removed: We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either
−Removed: our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest earning assets, or vice versa.
−Removed: In either case, if market interest rates should move contrary to our position, this gap will negatively impact our earnings.
−Removed: The impact on earnings is more adverse when the slope of the yield curve flattens;
−Removed: that is, when short-term interest rates increase more than long-term interest rates or when long-term interest rates decrease more than short-term interest rates.
−Removed: In March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25 percent in response to the Covid-19 pandemic.
−Removed: The federal funds rate remained in this range for all of 2021.
−Removed: After a period of low interest rates, the federal funds rate was increased rapidly to 4.25%-4.50% at the end of 2022, and to 5.25%-5.5% at the end of 2023.
−Removed: In 2024 the Federal Reserve lowered the target range in three increments to 4.25%-4.5% Further changes to prevailing interest rates could influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans at competitive rates and obtain deposits;
−Removed: (ii) the fair value of our financial assets and liabilities;
−Removed: (iii) the average duration of our loan portfolios and other interest-earning assets;
−Removed: and (iv) the mix of lending products we originate.
−Removed: A prolonged period of extremely volatile and unstable market conditions could increase our funding costs and negatively affect market risk mitigation strategies.
−Removed: Increased interest rates may decrease borrower demand for certain of our lending products, even as inflation places pressure on consumer spending, borrowing and saving habits as consumers evaluate their prospects for future income growth and employment opportunities in the current economic environment, and as borrowers face uncertainty about the impact of rising prices on their ability to repay a loan.
−Removed: A change in demand for our lending products and any steps we may take to mitigate such change could impact our credit quality and overall growth.
−Removed: Any future failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets and cause the price of our common stock to decline and subject us to regulatory penalties.
+Added: New lines of business or new products and services may subject us to additional risks.
+Added: From time to time, we may implement or may acquire new lines of business or pilot programs or offer new products and services within existing lines of business.
+Added: There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed.
+Added: To the extent we enter into new lines of business, we will face numerous risks and uncertainties, including risks associated with the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk, the required investment of capital and other resources and the loss of investors due to the perception that we are no longer focusing on our core business.
+Added: In developing and marketing new lines of business and new products and services, we may invest significant time and resources.
+Added: We may not achieve target timetables for the introduction and development of new lines of business and new products or services and price and profitability targets may not prove feasible.
+Added: External factors, such as regulatory compliance obligations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
+Added: Furthermore, any new line of business or new product or service could have a significant impact on the effectiveness of our system of internal controls.
+Added: 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, results of operations and financial condition.
+Added: The failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets and cause the price of our common stock to decline and subject us to regulatory penalties.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on that system of internal control.
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As a result, if future events or regulatory views concerning such analysis differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our need to revise or restate prior period financial statements, cause damage to our reputation and the price of our common stock and adversely affect our business, financial condition and results of operations.
+Added: We implemented segment reporting into our financial results during the three months ended September 30, 2025 and this change to our financial reporting could be confusing to investors and may not have the desired effects.
+Added: Beginning with the quarter ended September 30, 2025, we implemented segment reporting following the completion of a technology initiative to capture segment-specific financial data and develop reports used by our CODM to review our financial performance and determine how to allocate resources.
+Added: Our operations are now comprised of three reportable segments:
+Added: traditional banking, banking as a service and treasury and administration.
+Added: We have provided disclosures about our new segment reporting structure elsewhere in this Report, but there is no guarantee that investors or the market will understand this change to our financial reporting.
+Added: There is also no guarantee that this change to our financial reporting will have the desired effect.
+Added: In addition, for periods prior to July 1, 2025, our operations were managed and reported as a single segment, and historical financial data by segment was not maintained.
+Added: Accordingly, it is not practicable to present segment information for prior periods.
+Added: Failure of investors or analysts to understand our revised segment reporting structure may negatively affect their ability to understand our financial performance and operating results which could adversely affect our stock price.
We could recognize losses on investment securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate.
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Factors beyond our control can significantly and adversely influence the fair value of securities in our portfolio.
−Removed: Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or
−Removed: unrealized losses in future periods, which could have a material adverse effect on our business, financial condition and results of operations.
+Added: Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or unrealized losses in future periods, which could have a material adverse effect on our business, financial condition and results of operations.
We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud.
Employee errors and employee or customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation.
−Removed: Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information.
+Added: Misconduct by our employees could include hiding unauthorized activities from us,
+Added: improper or unauthorized activities on behalf of our customers or improper use of confidential information.
It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.
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As a result, our business, results of operations, financial condition, and prospects would be materially and adversely affected.
−Removed: We may be susceptible to deposit run-off risks.
+Added: We may be susceptible to deposit run-off risks, which could adversely affect our business and financial condition.
The Bank relies significantly upon deposits for liquidity and funding business operations.
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Those rates, in turn, generally reflect prevailing market conditions.
−Removed: During the first quarter of 2023, the media highlighted the risks of an extreme form of deposit run-off, sometimes referred to as a “run on the bank.” The failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 resulted in significant
−Removed: disruption in the financial services industry and negative media attention, which has also adversely impacted the volatility and market prices of the securities of financial institutions and resulted in outflows of deposits for many other financial institutions.
+Added: During the first quarter of 2023, the media highlighted the risks of an extreme form of deposit run-off, sometimes referred to as a “run on the bank.” The failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 resulted in significant disruption in the financial services industry and negative media attention, which has also adversely impacted the volatility and market prices of the securities of financial institutions and resulted in outflows of deposits for many other financial institutions.
More moderate levels of run-off can adversely affect banks but are less dramatic and have been significantly less reported.
−Removed: The rapid rise in interest rates during 2022 and 2023 and the resulting industry-wide reduction in the fair value of securities portfolios, among other events, have increased volatility and uncertainty with respect to the health of the U.S.
−Removed: banking system.
−Removed: We believe this has resulted in a heightened awareness around liquidity, uninsured deposits, deposit composition, unrecognized investment losses, and capital.
−Removed: We believe that the increased level of public concern created by the current adverse business environment, punctuated by media reports of potential or actual bank failures, have increased the risk of some level of deposit run-off for depository institutions at the present time.
+Added: The rapid rise in interest rates during 2022 and 2023 and the resulting industry-wide reduction in the fair value of securities portfolios, among other events, increased volatility and uncertainty with respect to the health of the U.S.
+Added: banking system for a period of time.
+Added: We believe these recent experiences has resulted in a continued heightened awareness
+Added: around liquidity, uninsured deposits, deposit composition, unrecognized investment losses, and capital, , having increased the risk of some level of deposit run-off for depository institutions.
That increased run-off risk applies both generally and in relation to deposits that exceed FDIC insurance coverage.
−Removed: To manage this risk, the Bank maintains cash reserves and access to other liquidity sources to accommodate normal and, to a degree, unusual withdrawal activity, and the Bank plans to respond promptly and accurately to any customer concerns that might arise.
+Added: While the Bank maintains cash reserves and access to other liquidity sources to accommodate normal and, to a degree, unusual withdrawal activity, and the Bank plans to respond promptly and accurately to any customer concerns that might arise, we cannot assure you that we will be able to manage a deposit run-off if it were to occur and could adversely affect our business and financial condition.
We may not be able to raise the additional capital needed, in absolute terms or on terms acceptable to us, to fund our growth strategy in the future if we continue to grow at our current pace.
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The failure to meet applicable regulatory capital requirements could result in one or more of our regulators placing limitations or conditions on our activities, including our growth initiatives, or restricting the commencement of new activities, and could adversely affect customer and investor confidence, our costs of funds and FDIC insurance costs, our ability to make acquisitions, and our business, results of operations and financial condition.
−Removed: Climate change or government action and societal responses to climate change could adversely affect our results of operations.
−Removed: Climate change can increase the likelihood of the occurrence and severity of natural disasters and can also result in longer-term shifts in climate patterns such as extreme heat, sea level rise and more frequent and prolonged drought.
−Removed: Such significant climate change effects may negatively impact our geographic markets, disrupting the operations of the Company, our customers or third parties on which we rely.
−Removed: Damage to real estate collateral and declines in economic conditions in geographic markets in which our customers operate may impact their ability to repay loans or maintain deposits due to climate change effects, which could increase our delinquency rates and average credit loss.
−Removed: Our offices may be vulnerable to the adverse effects of climate change.
−Removed: We have a substantial physical presence in the Salt Lake City, Utah, region that is prone to events such as seismic activity, drought, water scarcity and severe weather.
−Removed: This region has experienced and may continue to experience, climate-related events and at an increasing rate.
−Removed: Although we maintain a disaster response plan and insurance, such events could disrupt our business, the business of our customers or third-party suppliers, and may cause us to experience losses and additional costs to maintain and resume operations.
−Removed: As the effects of climate change continue to create a level of concern for the state of the global environment, companies are facing increasing scrutiny from customers, regulators, investors and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure.
−Removed: New government regulations could result in more stringent forms of ESG oversight and reporting and diligence and disclosure requirements.
−Removed: Increased ESG related compliance costs, in turn, could result in increases to our overall operational costs.
−Removed: Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards, including with respect to our involvement in certain industries or projects associated with causing or exacerbating climate change, may negatively affect our reputation and commercial relationships, which could adversely affect our business.
+Added: Acts of war, global conflict, terrorism, geopolitical and other external events could impact our ability to conduct business.
+Added: Financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising operating and communication systems and remain central targets for potential acts of terrorism.
+Added: Such events could cause significant damage, impact the stability of our facilities and result in additional expenses, impair the ability of our borrowers to repay their loans, reduce the value of collateral securing repayment of our loans, and result in the loss of revenue.
+Added: While we have established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial condition.
+Added: Additionally, global conflicts, including the continuing conflicts involving Ukraine and the Russian Federation and those in the Middle East involving Israel and Iran, and now including the United States among other nations) or other similar events, as well as government actions of other restrictions in connection with such events, and trade negotiations between the U.S.
+Added: and other nations could adversely impact economic and market conditions for the Company and its clients and counterparties.
+Added: In addition, global supply chain disruptions resulting from these conflicts may cause prolonged inflation, adversely impact consumer and business confidence, and adversely affect the economy as well as our financial condition and results.
+Added: Political differences within the federal government, both at the regulatory and Congressional level, create significant potential for major and abrupt shifts in federal policy regarding bank regulation, taxes, and the economy, any of which could have significant and adverse impacts on our business and financial performance.
+Added: Certain of our operations and customers are dependent on the regular operation of the federal or state government or programs they administer For example, our SBA lending program depends on interaction with the SBA, an independent agency of the federal government.
+Added: During a lapse in funding, such as has occurred during previous federal government “shutdowns”, the SBA may not be able to engage in such interaction.
+Added: In addition, customers who depend directly or indirectly on providing goods and services to federal or state governments or their agencies may reduce their business with us or delay repayment of loans due to lost or delayed revenue from those relationships.
+Added: If funding for these lending programs or federal spending generally is reduced as part of the appropriations process or by administrative decision, demand for our services may be reduced.
+Added: Any of these developments could have a material adverse effect on our financial condition, results of operations or liquidity.
We expect to derive a percentage of our deposits, total assets and income from deposit accounts generated through our Fintech Banking and Payment Solutions relationships.
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We may exit relationships where such requirements are not met or be required by our regulators to exit such relationships.
−Removed: Also, our Fintech Banking and Payment Solutions customers could terminate their relationships with us for many reasons, including being able to obtain better terms from another provider or dissatisfaction with the level or quality of our services.
−Removed: If a relationship were
−Removed: to be terminated, it could materially reduce our deposits, assets and income.
−Removed: We cannot assure you that we would be able to successfully replace such relationships.
−Removed: If we cannot replace such relationships, we may be required to seek higher rate funding sources and interest expense might increase.
+Added: Also, our Fintech Banking and Payment Solutions customers could terminate their relationships with us for many reasons, including being able to
+Added: obtain better terms from another provider or dissatisfaction with the level or quality of our services.
+Added: If a relationship were to be terminated, it could materially reduce our deposits, assets and income.
+Added: We cannot assure you that we would be able to acquire the deposits initially, or successfully replace such relationships.
+Added: If we cannot acquire or replace such relationships, we may be required to seek higher rate funding sources and interest expense might increase.
We may also be required to sell securities or other assets to meet funding needs which would reduce revenues or potentially generate losses.
−Removed: Our strategy of pursuing business with our Fintech Banking and Payment Solutions customers has been adopted by other institutions with which we compete.
−Removed: Several online banking operations as well as the online banking programs of conventional banks have instituted Fintech Banking and Payment Solutions strategies similar to ours.
−Removed: As a consequence, we have encountered competition in this area and anticipate that we will continue to do so in the future.
−Removed: This competition may increase our costs, reduce our revenues or revenue growth or, because we are a relatively small banking operation without the name recognition of other, more established banking operations, make it difficult for us to compete effectively in obtaining these relationships.
Our agreements with Fintech Banking and Payment Solutions customers may expose us to credit risk.
We may enter into agreements with our Fintech Banking and Payment Solutions customers pursuant to which our Fintech Banking and Payment Solutions customers may market bank consumer checking and consumer or commercial line of credit (“LOC”) accounts using their brands and digital platforms, make underwriting determinations for the LOC accounts, cover any losses on the LOC accounts, provide cash collateral to the Bank to secure payment of such losses or be partial guarantors of losses on the LOC accounts.
−Removed: In the event the cash collateral amount is not adequately maintained or is insufficient to cover the losses on the LOC accounts and the Fintech Banking and Payment Solutions customer does not or cannot otherwise meet its partial guaranty or other obligations under its agreement with the Bank, the Bank may incur losses on the LOC accounts.
+Added: In the event the cash collateral amount is not adequately maintained or is insufficient to cover the losses on the LOC accounts and the Fintech Banking and Payment Solutions customer does not or cannot otherwise meet its obligations under its agreement with the Bank, the Bank may incur financial losses.
Losses associated with the LOC accounts (or the portfolios of other third parties with whom we enter into comparable Fintech Banking and Payment Solutions relationships) in such circumstances could have a material adverse effect on our net income, results of operations and financial condition.
6 unchanged sentences
Additionally, financial weaknesses at our Fintech Banking and Payment Solutions customers could cause us to record greater expenses or losses or suffer reputational harm.
−Removed: Risks Related to Regulation
−Removed: We are subject to regulation, which increases the cost and expense of regulatory compliance and therefore reduces our net income and may restrict our growth and ability to acquire other financial institutions.
−Removed: As a bank holding company under federal law, we are subject to regulation under the Bank Holding Company Act of 1956, as amended, or the BHC Act, and the examination and reporting requirements of the Federal Reserve.
−Removed: In addition to supervising and examining us, the Federal Reserve, through its adoption of regulations implementing the BHC Act, places certain restrictions on the activities that are deemed permissible for bank holding companies to engage in.
−Removed: Changes in the number or scope of permissible activities could have an adverse effect on our ability to realize our strategic goals.
−Removed: As a Utah state-chartered bank that is not a member of the Federal Reserve System, the Bank is separately subject to regulation by both the FDIC and the UDFI.
−Removed: The FDIC and UDFI regulate numerous aspects of the Bank’s operations,
−Removed: including adequate capital and financial condition, permissible types and amounts of extensions of credit and investments, permissible non-banking activities and restrictions on dividend payments.
−Removed: The Bank undergoes periodic examinations by the FDIC and UDFI.
−Removed: Following such examinations, the Bank may be required, among other things, to change its asset valuations or the amounts of required loan loss allowances or to restrict its operations, as well as increase its capital levels, which would likely adversely affect our results of operations.
−Removed: Supervision, regulation, and examination of the Company and the Bank by the bank regulatory agencies are intended primarily for the protection of consumers, commercial customers, bank depositors and the Deposit Insurance Fund of the FDIC, rather than holders of our common stock.
−Removed: Particularly as a result of any changes in the regulations and regulatory agencies under the Dodd-Frank Act, we may be required to invest significant management attention and resources to evaluate and make any changes necessary to comply with applicable laws and regulations.
−Removed: This allocation of resources, as well as any failure to comply with applicable requirements, may negatively impact our results of operations and financial condition.
−Removed: Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations.
−Removed: Federal and state regulatory agencies frequently adopt changes to their regulations or change the way existing regulations are applied, including the Dodd-Frank Act and the Regulatory Relief Act.
−Removed: These and other changes are more fully discussed above under “Supervision and Regulation.” Regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads and could expose us to additional costs, including increased compliance costs.
−Removed: These changes also may require us to invest significant management attention and resources to make any necessary changes to operations to comply and could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Due to Section 162(m) of the Internal Revenue Code (the “Code”), we may not be able to deduct all of the compensation of some executives, including executives of companies we may acquire in the future.
−Removed: Section 162(m) of the Code generally limits to $1 million annual deductions for compensation paid to “covered employees” of any “publicly held corporation.” A “publicly held corporation” includes any company that issues securities required to be registered under Section 12 of the Securities Exchange Act of 1934 or companies required to file reports under Section 15(d) of the Exchange Act, determined as of the last day of the company’s taxable year.
−Removed: As a consequence, Section 162(m) of the Code limited the deductibility of compensation to our covered employees to $1 million beginning with the year ended December 31, 2021.
−Removed: The definition of “covered employees” generally includes anyone who served as the chief executive officer or chief financial officer at any time during the taxable year;
−Removed: the three highest compensated executive officers (other than the chief executive officer or the chief financial officer), determined under SEC rules;
−Removed: and any individual who was a covered employee, including of a “predecessor company,” at any point during a taxable year beginning on or after January 1, 2017, even after the employee terminates employment.
−Removed: We expect that in most if not all cases a publicly traded company that we might acquire in the future will be a “predecessor company.” Accordingly, we expect that the number of our covered employees will increase if FinWise Bancorp acquires one or more publicly held corporations in the future.
−Removed: Notably, under the American Rescue Plan Act of 2021, or the ARPA, which was signed into law on March 11, 2021, for tax years beginning after December 31, 2026, the definition of “covered employees” will be expanded to include FinWise Bancorp’s next five highest paid employees (in addition, pursuant to proposed Treasury Regulations, to the chief executive officer, the chief financial officer and the three other highest compensated executive officers ).
−Removed: As a result of the foregoing, under present law, we may not be able to deduct all of the compensation paid in 2024 and future years if compensation paid to “covered employees” exceeds the thresholds established by Section 162(m) of the Code.
−Removed: Losing deductions under Section 162(m) of the Code could increase our income taxes and reduce our net income.
−Removed: A reduction in net income could negatively affect the price of our stock.
−Removed: Because of the Dodd-Frank Act and related rulemaking, the Company is subject to more stringent capital requirements.
−Removed: The Bank’s failure to maintain the minimum leverage ratio under the Community Bank Leverage Ratio framework under the Regulatory Relief Act could result in one or more of our regulators placing limitations or conditions on our activities, including our growth initiatives, or restricting the commencement of new activities, and could affect customer and investor confidence, our costs of funds and FDIC insurance costs, our ability to pay dividends on our common stock, our ability to make acquisitions, and our business, results of operations and financial condition.
−Removed: See “Supervision and Regulation—Capital Adequacy Guidelines.”
−Removed: Federal and state banking agencies periodically conduct examinations of our business, including our compliance with laws and regulations, and our failure to comply with any regulatory actions, if any, could adversely impact us.
−Removed: As part of the bank regulatory process, the Federal Reserve, the FDIC and the UDFI, periodically conduct examinations of our business, including compliance with laws and regulations.
−Removed: If, based on an examination, the UDFI or a federal banking agency were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, asset sensitivity, risk management or other aspects of any of our operations have become unsatisfactory, or that the Company or its management were in violation of any law or regulation, it may take such remedial actions as it deems appropriate.
−Removed: If we become subject to such regulatory actions, our business, financial condition, results of operations and reputation would likely be adversely affected.
−Removed: Financial institutions, such as the Bank, face risks of noncompliance and enforcement actions related to the Bank Secrecy Act and other anti-money laundering statutes and regulations.
−Removed: The Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or 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 as appropriate.
−Removed: To administer the Bank Secrecy Act, FinCEN is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S.
−Removed: Department of Justice, Drug Enforcement Administration and the IRS.
−Removed: There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets Control.
−Removed: Our compliance with the anti-money laundering laws is in part dependent on our ability to adequately screen and monitor our customers for their compliance with these laws.
−Removed: We have developed policies and procedures to screen and monitor these customers.
−Removed: To comply with regulations, guidelines and examination procedures in this area, we have dedicated significant resources to our anti-money laundering program.
−Removed: If our policies, procedures and systems are deemed deficient, we could be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the inability to obtain regulatory approvals to proceed with certain aspects of our business plans, including acquisitions and de novo branching.
−Removed: Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities.
−Removed: We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws.
−Removed: Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach.
−Removed: Moreover, legislators and regulators in the U.S.
−Removed: are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or planned business activities.
−Removed: This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives.
−Removed: This includes increased privacy-related enforcement activity at the federal level by the Federal Trade Commission, as well as at the state level.
−Removed: For example, in March 2022, Utah enacted the Utah Consumer Privacy Act.
−Removed: Also, the Federal Trade Commission recently issued a staff report on digital “dark patterns,” sophisticated design practices that can trick or manipulate consumers into buying products or services or giving up their private information, that, among other things, highlighted marketing and disclosure practices by some financial technology companies that the Federal Trade Commission claimed were deceptive because of their use of dark patterns.
−Removed: Based upon prior enforcement actions, staff reports, and statements by Federal Trade Commission officials, we believe this scrutiny of financial technology company marketing and disclosure practices will continue for the foreseeable future.
−Removed: Compliance with current or future privacy, data protection and information security laws (including those regarding security breach notification) affecting customer or employee data to which we are subject could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could have a material adverse effect on our business, financial conditions or results of operations.
−Removed: Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations.
−Removed: We are subject to numerous laws and regulations, designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws or regulations could lead to a wide variety of sanctions.
−Removed: The Community Reinvestment Act, or CRA, directs all insured depository institutions to help meet the credit needs of the local communities in which they are located, including low- and moderate-income neighborhoods.
−Removed: Each institution is examined periodically by its primary federal regulator, which assesses the institution’s performance.
−Removed: The Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.
−Removed: The CFPB, the U.S.
−Removed: Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.
−Removed: The CFPB was created under the Dodd-Frank Act to centralize responsibility for consumer financial protection with broad rulemaking authority to administer and carry out the purposes and objectives of federal consumer financial laws with respect to all financial institutions that offer financial products and services to consumers.
−Removed: The CFPB is also authorized to prescribe rules applicable to any covered person or service provider, identifying and prohibiting acts or practices that are “unfair, deceptive, or abusive” in any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product, or service.
−Removed: The ongoing broad rulemaking powers of the CFPB have potential to have a significant impact on the operations of financial institutions offering consumer financial products or services.
−Removed: A successful regulatory challenge to an institution’s performance under the CRA, fair lending or consumer 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.
−Removed: Private parties may also challenge an institution’s performance under fair lending laws in private class action litigation.
−Removed: Such actions could have a material adverse effect on our reputation, business, financial condition and results of operations.
−Removed: We may be subject to liability for potential violations of predatory lending laws, which could adversely impact our results of operations, financial condition and business.
−Removed: federal, state and local laws have been enacted that are designed to discourage “predatory” lending practices.
−Removed: Home Ownership and Equity Protection Act of 1994, or HOEPA, prohibits inclusion of certain provisions in mortgages that have interest rates or origination costs in excess of prescribed levels and requires that borrowers be given certain disclosures prior to origination.
−Removed: The Military Lending Act limits the interest rate that can be charged to active-duty service members and their dependents.
−Removed: Some states have enacted, or may enact, similar laws or regulations, which in some cases impose restrictions and requirements greater than those in HOEPA.
−Removed: In addition, under the anti-predatory lending laws of some states, the origination of certain mortgages, including loans that are not classified as “high-cost” loans under applicable law, must satisfy a net tangible benefit test with respect to the related borrower.
−Removed: Such tests may be highly subjective and open to interpretation.
−Removed: As a result, a court may determine that a home mortgage, for example, does not meet the test even if the related originator reasonably believed that the test was satisfied.
−Removed: If any of our mortgages or other loans are found to have been originated in violation of predatory or abusive lending laws, we could incur losses, which could adversely impact our results of operations, financial condition and business.
−Removed: Regulatory agencies and consumer advocacy groups have asserted claims that the practices of lenders and loan servicers result in a disparate impact on protected classes.
−Removed: Anti-discrimination statutes, such as FHA and ECOA, prohibit creditors from discriminating against loan applicants and borrowers based on certain characteristics, such as race, religion and national origin.
−Removed: Various federal regulatory agencies and departments, including the DOJ and the CFPB, have taken the position that these laws apply not only to intentional discrimination, but also to facially neutral practices that have a disparate impact on a group that shares a characteristic that a creditor may not consider in making credit decisions protected classes (i.e., creditor or servicing practices that have a disproportionate negative affect on a protected class of individuals).
−Removed: Further, the CFPB has issued an update to its examination manual that contains a novel interpretation of its authority to prohibit unfair, deceptive, or abusive acts or practices that would authorize the agency to treat any instance of discrimination against a protected class as an unfair act or practice under the Dodd-Frank Act.
−Removed: These regulatory agencies, as well as consumer advocacy groups and plaintiffs’ attorneys, have focused greater attention on “disparate impact” claims.
−Removed: Supreme Court has confirmed that the “disparate impact” theory applies to cases brought under FHA, while emphasizing that a causal relationship must be shown between a specific policy of the defendant and a discriminatory result that is not justified by a legitimate objective of the defendant.
−Removed: Although it is still unclear whether the theory applies under ECOA, regulatory agencies and private plaintiffs may continue to apply it to both FHA and ECOA in the context of mortgage lending and servicing.
−Removed: To the extent that the “disparate impact” theory continues to
−Removed: apply, we are faced with significant administrative burdens in attempting to comply and potential liability for failures to comply.
−Removed: In addition to reputational harm, violations of FHA and ECOA can result in actual damages, punitive damages, injunctive or equitable relief, attorneys’ fees and civil money penalties.
−Removed: Increases in FDIC insurance premiums could adversely affect our earnings and results of operations.
−Removed: The deposits of our Bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments as determined according to the calculation described in “Supervision and Regulation—Deposit Insurance.” In October 2022, the FDIC issued a final rule to increase the initial base deposit insurance assessment rate by two basis points for all insured depository institutions beginning in 2023.
−Removed: Any future special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could have a material adverse effect on our business, financial condition and results of operations.
Risks Relating to Our Strategic Programs
8 unchanged sentences
Compliance with these laws is costly, time-consuming and limits operational flexibility.
−Removed: In addition, both we and our Strategic Program service providers may be criticized by third party consumer advocacy groups regarding compliance with fair lending or consumer lending laws and regulations, which may result in negative publicity of our Strategic Program service providers and the Bank.
+Added: In addition, both we and our Strategic Program service providers may be criticized by third party consumer advocacy groups regarding compliance with fair lending or consumer lending laws and
+Added: regulations, which may result in negative publicity of our Strategic Program service providers and the Bank.
Non-compliance or alleged non-compliance could subject a Strategic Program service provider, and/or the Bank, to damages, revocation of required licenses, arbitration, lawsuits (including class action lawsuits), enforcement actions, increased regulatory scrutiny of the Bank’s internal controls and oversight of our third-party vendor risk management, penalties, termination of our relationship with a Strategic Program service provider, injunctions which require the cessation or curtailment of a Strategic Program or operation by the Bank, rescission rights held by investors in securities offerings and civil and criminal liability.
11 unchanged sentences
If we are unable to maintain our relationships with our Strategic Program service providers, our business will suffer.
−Removed: A significant portion of our loan origination is conducted through our Strategic Programs.
−Removed: Approximately $54.1 , or 55.9% of our total revenues for the year ended December 31, 2024, were generated through our Strategic Programs.
−Removed: Our agreements with service providers to the Strategic Programs are non-exclusive and do not prohibit the service providers from working with our competitors upon payment of a fee or from offering competing services.
+Added: A significant portion of our loan origination is conducted through our Str ategic Programs.
+Added: Approximately $76.1 million, or 50.4% of our total revenues for the year ended December 31, 2025, were generated through our Strategic Programs.
+Added: Our agreements with service providers to the Strategic Programs are non-exclu sive and do not prohibit the service providers from working with our competitors upon payment of a fee or from offering competing services.
In addition, the Strategic Program service providers may not perform as expected under our agreements including potentially being unable to accommodate our projected growth in loan volume and revenue.
5 unchanged sentences
Our failure to adequately oversee the actions of our third-party service providers could result in regulatory actions against the Bank.
−Removed: Furthermore, our regulators could require us to terminate certain relationships with our Strategic Program service providers or POS merchants or restrict our ability to form new relationships with other Strategic Program service providers or POS merchants, either of which could result in a decrease in our loan originations, which in turn could adversely affect our growth, business prospects, financial condition and results of operations.
+Added: Furthermore, our regulators could require us to terminate certain relationships with our Strategic Program service providers or POS merchants or restrict our ability to
+Added: form new relationships with other Strategic Program service providers or POS merchants, either of which could result in a decrease in our loan originations, which in turn could adversely affect our growth, business prospects, financial condition and results of operations.
The regulatory framework for Strategic Programs is evolving and uncertain as federal and state agencies consider new laws to regulate online marketplaces such as ours, as well as the withdrawal of certain proposed rules.
5 unchanged sentences
In April 2022, the CFPB announced that it intends to examine nonbank financial companies, which may include some of our Strategic Program service providers, that pose risks to consumers and in June 2022, the Deputy Director of the CFPB indicated that relationships between banks and nonbank lenders will be an area of increased regulatory focus for the agency in the near future.
−Removed: Subsequently, in November
−Removed: 2022, the Treasury Department issued a report encouraging the CFPB to increase its supervisory activity with respect to larger nonbank lenders.
+Added: Subsequently, in November 2022, the Treasury Department issued a report encouraging the CFPB to increase its supervisory activity with respect to larger nonbank lenders.
State regulators have also increased the level of regulatory scrutiny on financial technology companies.
6 unchanged sentences
If the laws of such jurisdictions were found to apply to the loans originated by the Bank through a marketplace, those loans could be in violation of such laws or it could impact the ability to sell such loans to investors.
−Removed: Approxim ately $24.6, or 25.5% of our total revenues for the year ended December 31, 2024, were generated from Strategic Programs with annual interest rates above 36%.
There has been (and will likely continue to be) litigation challenging lending arrangements where a bank or other third-party has made a loan and then sells and assigns it to an entity that is engaged in assisting with the origination and servicing of a loan.
34 unchanged sentences
GAAP or other errors in our financial statements.
−Removed: Although we have implemented controls to enhance our risk assessment, control and evaluation procedures over third-party reports to ensure compliance with the Company’s accounting policies, any control, design or implementation deficiencies with respect to third-party reports could adversely impact our results of operations or financial condition, or result in our failure to meet our periodic reporting obligations.
+Added: Although we have implemented controls to enhance our risk assessment, control and evaluation procedures over third-party reports to ensure compliance with the Company’s
+Added: accounting policies, any control, design or implementation deficiencies with respect to third-party reports could adversely impact our results of operations or financial condition, or result in our failure to meet our periodic reporting obligations.
In deciding whether to extend credit or enter into other transactions with borrowers and counterparties in our Strategic Programs, we may rely on information furnished to us by our Strategic Program service providers, including credit profile, financial statements and other financial information, as well as with respect to the accuracy and completeness of that information.
4 unchanged sentences
Moreover, our reliance on any such information could result in suboptimally and inefficiently priced loans or incorrect approvals or denials of loans, which in turn could adversely affect our reputation and ability to attract new borrowers, counterparties or Strategic Program service providers.
−Removed: Risks Related to Potential Strategic Transactions
−Removed: We may pursue strategic acquisitions in the future, and we may not be able to overcome risks associated with such transactions.
−Removed: Although we plan to continue to grow our business organically, we may explore opportunities to invest in, or to acquire, other financial institutions, financial service companies and businesses that we believe would complement our existing business.
−Removed: Our investment or acquisition activities could be material to our business and involve a number of risks including the following:
−Removed: • difficulty in estimating the value of any target company;
−Removed: • investing time and incurring expense associated with identifying and evaluating potential investments or acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business;
−Removed: • the lack of history among our management team in working together on acquisitions and related integration activities;
−Removed: • obtaining necessary regulatory approvals, which we may have difficulty obtaining or be unable to obtain;
−Removed: • the time, expense and difficulty of integrating the operations and personnel of any combined businesses;
−Removed: • unexpected asset quality problems with acquired companies;
−Removed: • inaccurate estimates and judgments used to evaluate credit, operations, management and market risks with respect to any target institution or assets;
−Removed: • risks of impairment to goodwill or other-than-temporary impairment of investment securities;
−Removed: • potential exposure to unknown or contingent liabilities of banks and businesses we acquire;
−Removed: • an inability to realize expected synergies or returns on investment;
−Removed: • potential disruption of our ongoing banking business;
−Removed: • maintaining adequate regulatory capital;
−Removed: • loss of key employees, key customers or key business counterparties following our investment or acquisition.
−Removed: We may not be successful in overcoming these risks or other problems encountered in connection with potential investments or acquisitions.
−Removed: Our inability to overcome these risks could have an adverse effect on our ability to implement our business strategy and enhance shareholder value, which, in turn, could have an adverse effect on our business, financial condition and results of operations.
−Removed: Additionally, if we record goodwill in connection with any acquisition, our business, financial condition and results of operations may be adversely affected if that goodwill is determined to be impaired, which would require us to take an impairment charge.
−Removed: We have entered into, and expect to continue to enter into, joint venture, strategic collaboration, teaming and other business arrangements, and these activities involve risks and uncertainties.
−Removed: A failure of any such relationship could have a material adverse effect on our business and results of operations.
−Removed: We have entered into, and expect to continue to enter into, significant joint venture, strategic collaboration, teaming and other arrangements, including our Strategic Programs we have established with various third-party consumer and commercial loan origination platforms.
−Removed: These activities involve risks and uncertainties, including the risk of the joint venture or applicable Strategic Program platform failing to satisfy its obligations, which may result in certain liabilities to us for any related commitments, the uncertainty created by challenges in achieving strategic objectives and expected benefits of the business arrangement, the risk of conflicts arising between us and our business collaborations and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise monitoring such business arrangements.
−Removed: In addition, in these joint ventures, strategic collaborations and alliances, we may have certain overlapping
−Removed: control over the operation of the assets and businesses.
−Removed: As a result, such joint ventures, strategic collaborations and alliances may involve risks such as the possibility that a counterparty in a business arrangement might become bankrupt, be unable to meet its contractual obligations, have economic or business interests or goals that are inconsistent with our business interests or goals, or take actions that are contrary to our instructions or to applicable laws and regulations.
−Removed: In addition, we may be unable to take action without the approval of our business partners, or our partners could take binding actions without our consent.
−Removed: Consequently, actions by a partner or other third party could expose us to claims for damages, financial penalties, and reputational harm, any of which could have an adverse effect on our business, financial condition, and results of operations.
−Removed: A failure of our business relationships could have a material adverse effect on our business and results of operations.
−Removed: Acquisitions and strategic collaborations may never materialize.
−Removed: We intend to explore a variety of acquisitions and strategic collaborations with our existing Strategic Program service providers or other third parties, and related businesses in various states.
−Removed: We are likely to face significant competition in seeking appropriate acquisitions or strategic collaborators, and these acquisitions and strategic collaborations can be complicated and time consuming to negotiate and document.
−Removed: We may not be able to negotiate acquisitions and strategic collaborations on acceptable terms, or at all, and we are unable to predict when, if ever, we will enter into any such acquisitions or strategic collaborations due to the numerous risks and uncertainties associated with them.
+Added: Our credit enhancement arrangements with certain of our Strategic Program service providers exposes us to counterparty risk which may result in increased credit or fraud risk or losses to us.
+Added: We have entered into agreements with certain of our Strategic Program service providers pursuant to which the service providers provide credit enhancement on loans which protects the Bank by indemnifying or reimbursing the Bank for incurred credit and fraud losses.
+Added: Reimbursement or indemnification for incurred losses is provided for through a deposit reserve account that is replenished periodically by the respective service provider.
+Added: In the event that cash flow from the loans covered by the agreement is insufficient to fund the deposit reserve account in an amount required to support the service provider’s indemnification or reimbursement obligations due to deterioration of the performance of such loans or otherwise, and the service provider is unable or unwilling to fund any shortfalls or otherwise breaches its obligations under the agreement, we will generally retain all income related to such loans (which may be reduced) and assume responsibility for primarily servicing the loans.
+Added: Consequently, we would retain all the contractual interest but would be exposed to increased credit or fraud risk or losses on such loans as a result of this counterparty risk.
+Added: Risks Related to Technology
+Added: System failure or cybersecurity breaches of our network security could subject us to increased operating costs as well as litigation and other potential losses.
+Added: Our computer systems and network infrastructure could be vulnerable to hardware and cybersecurity issues.
+Added: Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event.
+Added: We could also experience a breach by intentional or negligent conduct on the part of employees or other internal sources.
+Added: Any damage or failure that causes an interruption in our operations could have a material adverse effect on our financial condition and results of operations.
+Added: The importance of our online banking systems to the Company’s operations means that any problems in its functionality would have a material adverse effect on the Company’s operations, business model and growth strategy.
+Added: Our operations are also dependent upon our ability to protect our computer systems and network infrastructure against damage from physical break-ins, cybersecurity breaches and other disruptive problems caused by the internet or other users.
+Added: Such computer break-ins and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability, damage our reputation and inhibit the use of our internet banking services by current and potential customers.
+Added: We could also become the target of various cyberattacks.
+Added: We regularly add additional security measures to our computer systems and network infrastructure to mitigate the possibility of cybersecurity breaches, including firewalls and penetration testing.
+Added: However, it is difficult or impossible to defend against every risk being posed by changing technologies as well as acts of cyber-crime.
+Added: Increasing sophistication of cyber criminals and terrorists make keeping up with new threats difficult and could result in a system breach.
+Added: Controls employed by our information technology department and cloud vendors could prove inadequate.
+Added: A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations, as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs and reputational damage, any of which could have a material adverse effect on our business, financial condition and results of operations.
+Added: We have implemented remote working and workplace protocols for our employees in accordance with government requirements.
+Added: Working outside of our network protection may increase our risk exposure to cybersecurity breaches.
+Added: An increase in the number of employees working offsite may correspond to an increase in the size of our risk exposure to cyber disruptions.
+Added: Despite the implementation of security measures, our internal computer systems and those of our Strategic Program platforms, and other contractors and consultants as well as third party vendors of IT and data security systems and services, are vulnerable to damage and interruptions from security breaches, computer viruses, fraud and similar incidents involving the loss or unauthorized access of confidential information.
+Added: We cannot be sure that our continued data protection efforts and investment in information technology will prevent future significant breakdowns, data leakages, breaches in our systems or the systems of our third party contractors and collaborators, or other cyber incidents that could have a material adverse effect upon our reputation, business, operations or financial condition.
+Added: If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs and the development of our product candidates could be delayed.
+Added: Our proprietary technologies and analytic models have not yet been exposed to longer term down-cycle economic conditions.
+Added: If these do not, or are perceived not to, accurately gather and interpret performance data for loans and identify attractive risk-adjusted market sectors, our performance may be worse than anticipated.
+Added: The technologies created by and relied upon by us may not function properly, or at all, which may have a material impact on our operations and financial conditions.
+Added: The performance of loans originated by us is dependent on the effectiveness of our credit underwriting systems used to evaluate borrowers’ credit profiles and likelihood of default.
+Added: While our proprietary technologies and analytic models are continually adjusted to account for changes in various macroeconomic conditions, the bulk of the data gathered and the development of our enterprise data warehouse have largely occurred during a period of sustained economic growth or during the COVID-19 pandemic when extraordinary government stimulus impacted the economy.
+Added: Our proprietary technologies have not been exposed to other adverse economic cycles.
+Added: There is no assurance that our proprietary technologies can accurately predict loan performance during periods of adverse economic conditions.
+Added: If our proprietary technologies are unable to accurately reflect the credit risk of loans under such economic conditions, we may experience greater than expected losses on such loans.
+Added: We may not be able to protect our intellectual property rights, including our proprietary technologies and analytic models, and may become involved in lawsuits to protect or enforce our proprietary rights and information, which could be expensive, time consuming and unsuccessful.
+Added: We rely on a combination of copyright, trademark, trade secret laws and confidentiality provisions to establish and protect our intellectual property rights, including our proprietary technologies and our analytic models.
+Added: If we fail to successfully maintain, protect and enforce our intellectual property rights, our competitive position could suffer.
+Added: Similarly, if we were to infringe on the intellectual property rights of others, our competitive position could suffer.
+Added: Third parties may challenge, invalidate, circumvent, infringe or misappropriate our intellectual property, or such intellectual property may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain product or service offerings or other competitive harm.
+Added: We may also be required to spend significant resources to monitor and police our intellectual property rights.
+Added: Others, including our competitors, may independently develop similar analytic model technology, duplicate our products or services or design around our intellectual property, and in such cases we may not be able to assert our intellectual property rights against such parties.
+Added: Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential or proprietary information.
+Added: We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights, trade secrets and know-how, which could be time-consuming and expensive, could cause a diversion of resources and may not prove successful.
+Added: The loss of intellectual property protection or the inability to obtain rights with respect to third party intellectual property could harm our business and ability to compete.
+Added: In addition, because of the rapid pace of technological change in our industry, including the use of AI, aspects of our business and our products and services rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all.
+Added: We may not have the resources to keep pace with rapid technological changes in the industry or implement new technology effectively.
+Added: The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.
+Added: Our future success will depend, at least in part, upon our ability to address the needs of our
+Added: customers by using 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 products and service offerings.
+Added: We may experience operational challenges as we implement these new technology enhancements or products, which could impair our ability to realize the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner.
+Added: Many of our larger competitors have substantially greater resources to invest in technological improvements.
+Added: Third parties upon which we rely for our technology needs may not be able to develop, on a cost-effective basis, systems that will enable us to keep pace with such developments.
+Added: As a result, our larger competitors may be able to offer additional or superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage.
+Added: We may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services.
+Added: The ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations.
+Added: The use of AI in the banking industry is developing and growing.
+Added: Customer demand may cause us and others to offer products or services incorporating AI.
+Added: As with many developing technologies, artificial intelligence presents risks and challenges that could affect its further development, adoption, and use, and therefore our business.
+Added: Our future success will depend, in part, upon our ability to invest in and use appropriate technology, which may include AI.
+Added: To effectively make such investments, we may need to expend significant financial, human, and other resources.
+Added: However, we may not be able to implement AI in an effective or timely way, thus adversely impacting our operations.
+Added: This may also adversely impact our ability to compete with financial institutions which have greater resources to invest in such technological improvements.
+Added: Ultimately, any AI we develop or use may be flawed.
+Added: If our use of AI, or its use by third parties with which we do business or otherwise interact, is deficient, biased, or inaccurate, or compromises customer privacy or implicates other ethics issues, we could be subject to competitive harm, potential legal liability, and brand or reputational harm.
+Added: The development and use of artificial intelligence present risks and challenges that may adversely impact our business.
+Added: We selectively employ AI through productivity tools, third-party solutions, and internal systems.
+Added: We use generative AI for certain tasks like document drafting and data analysis, with an implementation of strict controls to protect customer data.
+Added: Third-party AI assists us in cybersecurity, fraud detection, and code review, while our own agents handle compliance, policy analysis, and workflow optimization.
+Added: A disciplined AI adoption approach remains the most effective strategy for us.
+Added: However, the advances in generative AI are opening new opportunities for efficiency and automation.
+Added: We are actively exploring opportunities to broaden the deployment of these capabilities across our Company to drive efficiency and long term value, with a disciplined focus on safeguarding sensitive data through secure and controlled implementation.
+Added: However, the continued development and use of AI presents a number of risks and challenges to our business.
+Added: The legal and regulatory environment relating to AI is uncertain and rapidly evolving and includes regulation targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment and other laws applicable to the use of AI.
+Added: These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance, including in relation to data privacy and security laws, which mandate the protection of consumer financial information.
+Added: AI models, particularly generative AI models, may produce output or take action that is incorrect, that results in the release of private, confidential or proprietary information, that reflects biases included in the data on which they are trained, that produces output that is, or is perceived to be, discriminatory or unfair, that infringes on the intellectual property rights of others, or that is otherwise harmful.
+Added: While we have policies prohibiting our employees from using non-approved generative AI applications or websites on the Company or the Bank’s network, there can be no assurances that our employees will adhere to these policies or that such policies will be effective in mitigating the risks associated with using AI technology.
+Added: Furthermore, although we have not authorized the use of any AI tools with personally identifiable or nonpublic information, employees may intentionally or inadvertently violate our policy by using personally identifiable or nonpublic information, including sensitive client information, with AI technologies.
+Added: Since personally identifiable or nonpublic information may be used with such technologies, these technologies are capable of generating output that improperly discloses such personally identifiable or nonpublic information.
+Added: The use of personally identifiable or nonpublic information could result in a violation of certain laws, including data privacy laws and the data privacy and security laws, exposing us to legal liability or regulatory penalties.
+Added: Furthermore, we may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data
+Added: for their models, and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which we may have limited visibility.
+Added: Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures, which could have an adverse effect on our business, financial condition or results of operations.
+Added: Our operations could be interrupted if our third-party service providers or Strategic Program service providers experience operational or other systems difficulties or terminate their services.
+Added: We outsource some of our operational activities to third parties and counterparties for certain services, including, but not limited to, loan marketing and origination, core systems support, informational website hosting, internet services, online account opening and other processing services.
+Added: Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party service providers.
+Added: We also leverage the financial technology capabilities of our Strategic Program service providers to meet our enterprise risk framework and enable us to realize operating efficiencies.
+Added: As a result, if these third-party service providers or our Strategic Program service providers experience difficulties, are subject to cybersecurity breaches, or terminate their services, and we are unable to replace them with other service providers or alternative counterparties, particularly on a timely basis, our operations could be interrupted.
+Added: If an interruption were to continue for a significant period, our business, financial condition and results of operations could be adversely affected.
+Added: Even if we can replace third-party service providers or Strategic Program service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations .
+Added: Risks Related to Regulatory, Legal and Compliance
+Added: We are subject to substantial regulation, which increases the cost and expense of regulatory compliance and therefore reduces our net income and may negatively impact our opportunity to grow our business.
+Added: As a bank holding company under federal law, we are subject to regulation under the Bank Holding Company Act of 1956, as amended, or the BHC Act, and the examination and reporting requirements of the Federal Reserve.
+Added: In addition to supervising and examining us, the Federal Reserve, through its adoption of regulations implementing the BHC Act, places certain restrictions on the activities that are deemed permissible for bank holding companies to engage in.
+Added: Changes in the number or scope of permissible activities could have an adverse effect on our ability to realize our strategic goals.
+Added: As a Utah state-chartered bank that is not a member of the Federal Reserve System, the Bank is separately subject to regulation by both the FDIC and the UDFI.
+Added: The FDIC and UDFI regulate numerous aspects of the Bank’s operations, including adequate capital and financial condition, permissible types and amounts of extensions of credit and investments, permissible non-banking activities and restrictions on dividend payments.
+Added: The Bank undergoes periodic examinations by the FDIC and UDFI.
+Added: Following such examinations, the Bank may be required, among other things, to change its asset valuations or the amounts of required loan loss allowances or to restrict its operations, as well as increase its capital levels, which would likely adversely affect our results of operations.
+Added: Supervision, regulation, and examination of the Company and the Bank by the bank regulatory agencies are intended primarily for the protection of consumers, commercial customers, bank depositors and the Deposit Insurance Fund of the FDIC, rather than holders of our common stock.
+Added: Particularly as a result of any changes in the regulations and regulatory agencies under the Dodd-Frank Act, we may be required to invest significant management attention and resources to evaluate and make any changes necessary to comply with applicable laws and regulations.
+Added: The allocation of our resources to address regulatory compliance, as well as any failure to comply with applicable requirements, may negatively impact our results of operations and financial condition.
+Added: Legislative and regulatory actions taken now or in the future, including deregulation, may increase our competition and costs and impact our business, governance structure, financial condition or results of operations.
+Added: Federal and state regulatory agencies frequently adopt changes to their regulations or change the way existing regulations are applied, which are more fully discussed above in Item I.
+Added: Business - “Supervision and Regulation.” Regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads and could expose us to additional costs, including increased compliance costs.
+Added: In addition, recent changes in the U.S.
+Added: political landscape have increased the risk of deregulation of certain aspects of the financial services and banking sector, including a more relaxed enforcement policy with respect to digital assets and FinTech companies.
+Added: Our profitability depends, in part, upon our
+Added: ability to successfully compete with these other financial service providers and to maintain and increase market share and less regulation lowers the barrier for entry in the financial services and banking sectors, increasing our competition.
+Added: These legislative and regulatory changes, both the adoption and repeal of laws, may require us to invest significant management attention and resources to make any necessary changes to operate appropriately and efficiently and could have a material adverse effect on our business, financial condition and results of operations.
+Added: Due to Section 162(m) of the Internal Revenue Code (the “Code”), we may not be able to deduct all of the compensation of some executives, including executives of companies we may acquire in the future.
+Added: Section 162(m) of the Code generally limits to $1.0 million annual deductions for compensation paid to “covered employees” of any “publicly held corporation.” A “publicly held corporation” includes any company that issues securities required to be registered under Section 12 of the Securities Exchange Act of 1934 or companies required to file reports under Section 15(d) of the Exchange Act, determined as of the last day of the company’s taxable year.
+Added: As a consequence, Section 162(m) of the Code limited the deductibility of compensation to our covered employees to $1.0 million beginning with the year ended December 31, 2021.
+Added: The definition of “covered employees” generally includes anyone who served as the chief executive officer during the taxable year;
+Added: the two highest compensated executive officers (other than the chief executive officer), determined under SEC rules;
+Added: and any individual who was a covered employee, including of a “predecessor company,” at any point during a taxable year beginning on or after January 1, 2017, even after the employee terminates employment.
+Added: Notably, under the American Rescue Plan Act of 2021, or the ARPA, which was signed into law on March 11, 2021, for tax years beginning after December 31, 2026, the definition of “covered employees” will be expanded to include FinWise Bancorp’s next five highest paid employees (in addition, pursuant to proposed Treasury Regulations, to the chief executive officer, the chief financial officer and the three other highest compensated executive officers ).
+Added: As a result of the foregoing, we may not be able to deduct all of the compensation paid in 2025 and future years if compensation paid to “covered employees” exceeds the thresholds established by Section 162(m) of the Code.
+Added: Losing deductions under Section 162(m) of the Code could increase our income taxes and reduce our net income.
+Added: A reduction in net income could negatively affect our results of operations and the price of our stock.
+Added: Because of the Dodd-Frank Act and related rulemaking, the Company is subject to more stringent capital requirements.
+Added: The Bank’s failure to maintain the minimum leverage ratio under the Community Bank Leverage Ratio framework under the Regulatory Relief Act could result in one or more of our regulators placing limitations or conditions on our activities, including our growth initiatives, or restricting the commencement of new activities, and could affect customer and investor confidence, our costs of funds and FDIC insurance costs, our ability to pay dividends on our common stock, our ability to make acquisitions, and our business, results of operations and financial condition.
+Added: See “Supervision and Regulation—Capital Adequacy Guidelines.”
+Added: Federal and state banking agencies periodically conduct examinations of our business, including our compliance with laws and regulations, and our failure to comply with any regulatory actions, if any, could adversely impact us.
+Added: As part of the bank regulatory process, the Federal Reserve, the FDIC and the UDFI, periodically conduct examinations of our business, including compliance with laws and regulations.
+Added: If, based on an examination, the UDFI or a federal banking agency were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, asset sensitivity, risk management or other aspects of any of our operations have become unsatisfactory, or that the Company or its management were in violation of any law or regulation, it may take such remedial actions as it deems appropriate.
+Added: If we become subject to such regulatory actions, our business, financial condition, results of operations and reputation would likely be adversely affected.
+Added: Financial institutions, such as the Bank, face risks of noncompliance and enforcement actions related to the Bank Secrecy Act and other anti-money laundering statutes and regulations.
+Added: The Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or 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 as appropriate.
+Added: To administer the Bank Secrecy Act, FinCEN is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S.
+Added: Department of Justice, Drug Enforcement
+Added: Administration and the IRS.
+Added: There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets Control.
+Added: Our compliance with the anti-money laundering laws is in part dependent on our ability to adequately screen and monitor our customers for their compliance with these laws.
+Added: We have developed policies and procedures to screen and monitor these customers.
+Added: To comply with regulations, guidelines and examination procedures in this area, we have dedicated significant resources to our anti-money laundering program.
+Added: If our policies, procedures and systems are deemed deficient, we could be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the inability to obtain regulatory approvals to proceed with certain aspects of our business plans, including acquisitions and de novo branching.
+Added: Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities.
+Added: We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws.
+Added: Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach.
+Added: Moreover, legislators and regulators in the U.S.
+Added: are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or planned business activities.
+Added: This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives.
+Added: This includes increased privacy-related enforcement activity at the federal level by the Federal Trade Commission, as well as at the state level.
+Added: For example, in March 2022, Utah enacted the Utah Consumer Privacy Act, which provides for an additional state level regulation.
+Added: Also, the Federal Trade Commission has issued a staff report on digital “dark patterns,” sophisticated design practices that can trick or manipulate consumers into buying products or services or giving up their private information, that, among other things, highlighted marketing and disclosure practices by some financial technology companies that the Federal Trade Commission claimed were deceptive because of their use of dark patterns, and this has led to numerous enforcement actions, staff reports, and statements by Federal Trade Commission officials scrutinizing marketing and disclosure practices of financial technology companies.
+Added: Compliance with current or future privacy, data protection and information security laws (including those regarding security breach notification) affecting customer or employee data to which we are subject could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could have a material adverse effect on our business, financial conditions or results of operations.
+Added: Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations.
+Added: We are subject to numerous laws and regulations, designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws or regulations could lead to a wide variety of sanctions.
+Added: The Community Reinvestment Act, or CRA, directs all insured depository institutions to help meet the credit needs of the local communities in which they are located, including low- and moderate-income neighborhoods.
+Added: Each institution is examined periodically by its primary federal regulator, which assesses the institution’s performance.
+Added: The Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.
+Added: The CFPB, the U.S.
+Added: Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.
+Added: The CFPB was created under the Dodd-Frank Act to centralize responsibility for consumer financial protection with broad rulemaking authority to administer and carry out the purposes and objectives of federal consumer financial laws with respect to all financial institutions that offer financial products and services to consumers.
+Added: The CFPB is also authorized to prescribe rules applicable to any covered person or service provider, identifying and prohibiting acts or practices that are “unfair, deceptive, or abusive” in any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product, or service.
+Added: The ongoing broad rulemaking powers of the CFPB have potential to have a significant impact on the operations of financial institutions offering consumer financial products or services.
+Added: A successful regulatory challenge to an institution’s performance under the CRA, fair lending or consumer 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.
+Added: Private parties may also challenge an institution’s performance under fair lending laws in private class action litigation.
+Added: Such actions could have a material adverse effect on our reputation, business, financial condition and results of operations.
+Added: We may be subject to liability for potential violations of predatory lending laws, which could adversely impact our results of operations, financial condition and business.
+Added: federal, state and local laws have been enacted that are designed to discourage “predatory” lending practices.
+Added: Home Ownership and Equity Protection Act of 1994, or HOEPA, prohibits inclusion of certain provisions in mortgages that have interest rates or origination costs in excess of prescribed levels and requires that borrowers be given certain disclosures prior to origination.
+Added: The Military Lending Act limits the interest rate that can be charged to active-duty service members and their dependents.
+Added: Some states have enacted, or may enact, similar laws or regulations, which in some cases impose restrictions and requirements greater than those in HOEPA.
+Added: In addition, under the anti-predatory lending laws of some states, the origination of certain mortgages, including loans that are not classified as “high-cost” loans under applicable law, must satisfy a net tangible benefit test with respect to the related borrower.
+Added: Such tests may be highly subjective and open to interpretation.
+Added: As a result, a court may determine that a home mortgage, for example, does not meet the test even if the related originator reasonably believed that the test was satisfied.
+Added: If any of our mortgages or other loans are found to have been originated in violation of predatory or abusive lending laws, we could incur losses, which could adversely impact our results of operations, financial condition and business.
+Added: Regulatory agencies and consumer advocacy groups have asserted claims that the practices of lenders and loan servicers result in a disparate impact on protected classes.
+Added: Anti-discrimination statutes, such as FHA and ECOA, prohibit creditors from discriminating against loan applicants and borrowers based on certain characteristics, such as race, religion and national origin.
+Added: Various federal regulatory agencies and departments, including the DOJ and the CFPB, have taken the position that these laws apply not only to intentional discrimination, but also to facially neutral practices that have a disparate impact on a group that shares a characteristic that a creditor may not consider in making credit decisions protected classes (i.e., creditor or servicing practices that have a disproportionate negative affect on a protected class of individuals).
+Added: Further, the CFPB has issued an update to its examination manual that contains a novel interpretation of its authority to prohibit unfair, deceptive, or abusive acts or practices that would authorize the agency to treat any instance of discrimination against a protected class as an unfair act or practice under the Dodd-Frank Act.
+Added: These regulatory agencies, as well as consumer advocacy groups and plaintiffs’ attorneys, have focused greater attention on “disparate impact” claims.
+Added: Supreme Court has confirmed that the “disparate impact” theory applies to cases brought under FHA, while emphasizing that a causal relationship must be shown between a specific policy of the defendant and a discriminatory result that is not justified by a legitimate objective of the defendant.
+Added: Although it is still unclear whether the theory applies under ECOA, regulatory agencies and private plaintiffs may continue to apply it to both FHA and ECOA in the context of mortgage lending and servicing.
+Added: To the extent that the “disparate impact” theory continues to apply, we are faced with significant administrative burdens in attempting to comply and potential liability for failures to comply.
+Added: In addition to reputational harm, violations of FHA and ECOA can result in actual damages, punitive damages, injunctive or equitable relief, attorneys’ fees and civil money penalties.
+Added: Increases in FDIC insurance premiums could adversely affect our earnings and results of operations.
+Added: The deposits of our Bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments as determined according to the calculation described in “Supervision and Regulation—Deposit Insurance.” In October 2022, the FDIC issued a final rule to increase the initial base deposit insurance assessment rate by two basis points for all insured depository institutions beginning in 2023.
+Added: Any future special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could have a material adverse effect on our business, financial condition and results of operations.
+Added: Climate change a nd related legislative and regulatory initiatives may materially affect our business and results of operations.
+Added: The effects of climate change continue to raise significant concerns about the state of the environment.
+Added: Federal and state policy approaches to climate change continue to evolve, and changes in legislative or regulatory priorities could alter the requirements and expectations placed on businesses, including banks, to address climate-related risks.
+Added: empirical data regarding the financial and credit risks posed by climate change still makes it difficult to predict its specific impact on our financial condition and results of operations.
+Added: However, the physical effects of climate change, such as more frequent and severe weather disasters, could directly affect us.
+Added: For instance, such events may damage real property securing loans in our portfolios or reduce the value of that collateral.
+Added: If our borrowers’ insurance is insufficient to cover these losses or if insurance becomes unavailable, the value of the collateral securing our loans could be negatively affected, potentially impacting our financial condition and results of operations.
+Added: Moreover, climate change may adversely affect regional and local economic activity, harming our clients and the communities in which we operate.
+Added: In addition, our offices may be vulnerable to the adverse effects of climate change.
+Added: We have a substantial physical presence in the Salt Lake City, Utah, region that is prone to events such as seismic activity, drought, water scarcity and severe weather.
+Added: This region has experienced and may continue to experience, climate-related events at an increasing rate.
+Added: Although we maintain a disaster response plan and insurance, such events could disrupt our business, the business of our customers or third-party suppliers, and may cause us to experience losses and additional costs to maintain and resume operations.
+Added: Regardless of changes in federal policy, the effects of climate change and its unknown long-term impacts could still have a material adverse effect on our financial condition and results of operations.
+Added: Evolving ESG expectations could increase our costs and risks.
+Added: Regulatory, investor, and stakeholder expectations around environmental, social, and governance (“ESG”) practices continue to evolve, potentially increasing compliance costs and operational burdens.
+Added: Recent shifts in U.S.
+Added: policies have altered the landscape of ESG practices.
+Added: The Trump Administration has rolled back several climate initiatives and withdrawn from international agreements, such as the Paris Climate Accord.
+Added: These changes may reduce certain compliance requirements but also introduce uncertainty regarding future regulations.
+Added: Stakeholders, including investors and customers, continue to scrutinize corporate ESG practices, and failure to meet their evolving expectations could impact our reputation and financial performance.
+Added: Additionally, state-level regulations and international standards may impose differing ESG requirements, leading to potential operational complexities.
Risks Related to Ownership of Our Common Stock
6 unchanged sentences
Our executive management and board of directors have significant control over our business.
−Removed: As of December 31, 2024, our directors and executive officers beneficially owned an aggregat e of 2,907,932 shares, or approximately 21.2% of ou r issued and outstanding common stock.
+Added: As of December 31, 2025, our directors and executive officers beneficially owned an aggregate of 3,183,677 shares, or approximately 23.3% of our issued and outstanding common stock.
Consequently, our executive management and board of directors may be able to significantly affect the outcome of the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, such as mergers, the sale of substantially all our assets and other extraordinary corporate matters.
3 unchanged sentences
For as long as we continue to be an emerging growth company we may take advantage of reduced regulatory and reporting requirements that are otherwise generally applicable to public companies.
−Removed: These include, without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced financial reporting requirements, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding shareholder advisory votes on executive compensation or golden parachute payments.
+Added: These include, without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced financial reporting requirements, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding shareholder
+Added: advisory votes on executive compensation or golden parachute payments.
The JOBS Act also permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
20 unchanged sentences
Our Articles and Bylaws contain an exclusive forum provision that limits the judicial forums where our shareholders may initiate derivative actions and certain other legal proceedings against us and our directors and officers.
−Removed: Our Articles and Bylaws provide that the United States District Court for the District of Utah and any Utah state court sitting in Salt Lake County, Utah will, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to the Company or the Company’s shareholders, (c) any action asserting a claim against us or any of our directors or officers arising pursuant to the Utah Revised Business Corporation Act, our Articles, or our Bylaws, or (d) any other action asserting a claim against us or any of our directors or officers that is governed by the internal affairs doctrine.
+Added: Our Articles and Bylaws provide that the United States District Court for the District of Utah and any Utah state court sitting in Salt Lake County, Utah will, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any
+Added: derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to the Company or the Company’s shareholders, (c) any action asserting a claim against us or any of our directors or officers arising pursuant to the Utah Revised Business Corporation Act, our Articles, or our Bylaws, or (d) any other action asserting a claim against us or any of our directors or officers that is governed by the internal affairs doctrine.
The choice of forum provision in our Articles and Bylaws may limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
−Removed: Alternatively, if a court were to find the
−Removed: choice of forum provision contained in our Articles and Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.
+Added: Alternatively, if a court were to find the choice of forum provision contained in our Articles and Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.
Our common stock is not an insured deposit and is subject to risk of loss.
2 unchanged sentences
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.