What changed in this filing

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Item 1A. Risk Factors

2021-03-15 compared with 2020-03-13 · 208 added, 423 removed, 14 unchanged (98% of the section changed)

Investments in the Corporation’s

common stock involve risk.

The market price of the Corporation’s common stock may fluctuate significantly in response to

a number of factors, including:

Investments in the Corporation’s common stock involve risk.

The market price of the Corporation’s common stock may fluctuate significantly in response to a number of factors, including:

Risks Related to the COVID-19 Pandemic

Public health crisis such as epidemics or pandemics could materially and adversely impact our business.

The COVID-19 pandemic has negatively impacted the global, national and local economies, disrupted global and national supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels.

In addition, the pandemic resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities and may result in the same or similar restrictions in the future.

As a result, the demand for our products and services

have been and may continue to be significantly impacted, which could adversely affect our revenue and results of operations.

Furthermore, the pandemic could continue to result in the recognition of credit losses in our loan portfolios, and an increase in our allowance for credit losses, particularly if businesses remain restricted or are required to close again, the impact on the global, national and local economies worsen, or more customers draw on their lines of credit or seek additional loans to help finance their businesses.

Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize impairments on the securities we hold as well as reductions in other comprehensive income.

Our business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic.

The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial conditions, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

We continue to closely monitor the COVID-19 pandemic and related risks as they evolve.

The magnitude, duration and likelihood of the current outbreak of COVID-19, further outbreaks of COVID-19, future actions taken by governmental authorities and/or other third parties in response to the COVID-19 pandemic, and its future direct and indirect effects on the global, national and local economy and our business and results of operation are highly uncertain.

The COVID-19 pandemic may cause prolonged global or national recessionary economic conditions or longer lasting effects on economic conditions than currently exist, which could have a material adverse effect on our business, results of operations and financial condition.

Due to the Corporation’s participation in the U.S.

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), the Corporation is subject to additional risks of litigation from its clients or other parties regarding the processing of loans for the PPP and risks that the SBA may not fund some or all of PPP loan guaranties.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted, which included a $349 billion loan program administered through the SBA referred to as the PPP.

Under the PPP, small businesses and other entities and individuals could apply for loans from existing SBA lenders and other approved regulated lenders.

The Corporation participated as a lender in the PPP.

Because of the short timeframe between the passing of the CARES Act and the opening of the PPP, there was some ambiguity in the laws, rules and guidance regarding the operation of the PPP along with the continually evolving nature of SBA the rules, interpretations and guidelines concerning this program, which exposes us to risks relating to the noncompliance with the PPP.

Since the launch of the PPP, several large banks have been subject to litigation regarding the process and procedures that such banks used in processing applications for the PPP.

As such, we may be exposed to the risk of litigation, from both clients and non-clients that approached the Corporation regarding PPP loans, regarding its process and procedures used in processing applications for the PPP.

If any such litigation is filed against us and is not resolved in a manner favorable to us, it may result in significant financial liability or adversely affect our reputation.

In addition, litigation can be costly, regardless of outcome.

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

The Corporation also has credit risk for PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, underwritten, certified by the borrower, funded, or serviced by the Corporation, such as an issue with the eligibility of a borrower to receive a PPP loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP.

In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, certified by the borrower, funded, or serviced by the Bank, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from us.

Business Risks

The Corporation is subject to interest rate risk.

The Corporation’s earnings and cash

flows are largely dependent upon its net interest income.

Net interest income is the difference between interest income earned

on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits

and borrowed funds.

Interest rates are highly sensitive to many factors that are beyond the Corporation’s control, including

general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Board of Governors

of the Federal Reserve System.

Changes in monetary policy, including changes in interest rates, could influence not only the interest

the Corporation receives on loans and securities and the amount of interest it pays on deposits and borrowings, but such changes

could also affect (i) the Corporation’s ability to originate loans and obtain deposits, (ii) the fair value of the Corporation’s

financial assets and liabilities, and (iii) the average duration of the Corporation’s mortgage-backed securities portfolio.

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

and other investments, the Corporation’s net interest income, and therefore earnings, could be adversely affected.

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

rates paid on deposits and other borrowings.

Although management believes it has implemented

effective asset and liability management strategies to reduce the potential effects of changes in interest rates on the Corporation’s

results of operations, any substantial, unexpected, or prolonged change in market interest rates could have a material adverse

effect on the Corporation’s financial condition and results of operations.

The Corporation’s earnings and cash flows are largely dependent upon its net interest income.

Net interest income is the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds.

Interest rates are highly sensitive to many factors that are beyond the Corporation’s control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System.

Changes in monetary policy, including changes in interest rates, could influence not only the interest the Corporation receives on loans and securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) the Corporation’s ability to originate loans and obtain deposits, (ii) the fair value of the Corporation’s financial assets and liabilities, and (iii) the average duration of the Corporation’s mortgage-backed securities portfolio.

If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, the Corporation’s net interest income, and therefore earnings, could be adversely affected.

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

Although management believes it has implemented effective asset and liability management strategies to reduce the potential effects of changes in interest rates on the Corporation’s results of operations, any substantial, unexpected, or prolonged change in market interest rates could have a material adverse effect on the Corporation’s financial condition and results of operations.

The Corporation is subject to lending risk.

As of December 31, 2019, approximately

74.5% of the Corporation’s loan portfolio consisted of Commercial and Industrial loans and Commercial Real Estate loans

(including construction loans), which both include a tax-free component.

These types of loans are generally viewed as having more

risk of default than Residential Real Estate loans or Consumer loans.

Commercial and Industrial and Commercial Real Estate loans

are also typically larger than Residential Real Estate loans and Consumer loans.

Because the Corporation’s loan portfolio

contains a significant number of Commercial and Industrial and Commercial Real Estate loans with relatively large balances, the

deterioration of one or a few of these loans could cause a significant increase in non-performing loans.

An increase in non-performing

loans could result in a net loss of earnings from these loans, an increase in the provision for loan losses and an increase in

loan charge-offs, all of which could have a material adverse effect on the Corporation’s financial condition and results

of operations.

If the Corporation’s Allowance for Loan Losses is

not sufficient to cover actual loan losses, earnings could decrease.

The Corporation’s loan customers

may not repay their loans according to the terms of their loans, and the collateral securing the payment of their loans may be

insufficient to assure repayment.

The Corporation may experience significant credit losses, which could have a material adverse

effect on its operating results.

In determining the amount of the allowance for loan losses, the Corporation reviews its loans

and loss and delinquency experience and evaluates economic conditions.

If the Corporation’s assumptions prove to be incorrect,

the allowance for loan losses may not cover inherent losses in its loan portfolio at the date of the financial statements.

additions to the Corporation’s allowance would materially decrease net income.

At December 31, 2019, the allowance for loan

losses totaled $7.0 million, representing 1.13% of average total loans.

Although the Corporation believes its underwriting

standards are sufficient to manage normal lending risks, it is difficult to assess the future performance of the loan portfolio

due to ongoing new originations.

The Corporation cannot assure that non-performing loans will not increase or that non-performing

or delinquent loans will not adversely affect future performance.

In addition, federal regulators periodically

review the Corporation’s allowance for loan losses and may require it to increase the allowance for loan losses or recognize

further loan charge-offs.

Any increase in the allowance for loan losses or loan charge-offs as required by these regulatory agencies

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

A new accounting standard will

result in a significant change in how the Corporation recognizes credit losses and may have a material impact on the Corporation’s

financial condition or results of operations.

In June 2016,

the Financial Accounting Standards Board (“FASB”) issued an accounting standard update, “Financial Instruments-Credit

Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the current “incurred loss”

model for recognizing credit losses with an “expected loss” model referred to as the Current Expected Credit Loss

(“CECL”) model.

Under the CECL model, the Corporation will be required to present certain financial assets

carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, at the net amount

expected to be collected.

The measurement of expected credit losses is to be based on information about past events, including

historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported

This measurement will take place at the time the financial asset is first added to the balance sheet and periodically

This differs significantly from the “incurred loss” model required under current generally accepted accounting

principles (“GAAP”), which delays recognition until it is probable a loss has been incurred.

Accordingly, the Corporation

expects that the adoption of the CECL model will materially affect how the allowance for loan losses is determined and

could require a significant increase to the allowance for loan losses.

Moreover, the CECL model may create more volatility

in the level of the allowance for loan losses.

If the Corporation is required to materially increase its level of allowance for

loan losses for any reason, such increase could adversely affect its business, financial condition, and results of operations.

The new CECL standard will become effective on January 1, 2023 and for interim periods within that year, for certain

companies, including those companies that qualify as a smaller reporting company under SEC rules.

The Corporation currently expects

to continue to qualify as a smaller reporting company for a period of time.

The Corporation’s information systems may experience

an interruption or breach in security.

The Corporation relies heavily on communications

and information systems to conduct its business.

Any failure, interruption or breach in security of these systems could result

in failures or disruptions in the Corporation’s customer relationship management, general ledger, deposit, loan and other

The Corporation has policies and procedures designed to prevent or limit the effect of the failure, interruption or security

breach of its information systems;

however, there can be no assurance that any such failures, interruptions or security breaches

will not occur.

While the Corporation maintains insurance coverage that may, subject to policy terms and conditions including

significant self-insured deductibles, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover

The occurrence of any failures, interruptions or security breaches of the Corporation’s information systems

could damage the Corporation’s reputation adversely affecting customer or investor confidence, result in a loss of customer

business, subject the Corporation to additional regulatory scrutiny and possible regulatory penalties, or expose the Corporation

to civil litigation and possible financial liability, any of which could have a material adverse effect on the Corporation’s

financial condition and results of operations.

Severe weather, natural disasters, disease pandemics, acts

of war or terrorism and other external events could significantly impact the Corporation’s business.

Severe weather, natural disasters, disease

pandemics, acts of war or terrorism and other adverse external events could have a significant impact on the Corporation’s

ability to conduct business.

Such events could affect the stability of the Corporation’s deposit base;

impair the ability

of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result

in loss of revenue and/or cause the Corporation to incur additional expenses.

Severe weather, natural disasters, disease pandemics,

acts of war or terrorism or other adverse external events may occur in the future.

Although management has established disaster

recovery policies and procedures, the occurrence of any such event could have a material adverse effect on the Corporation’s

business, which, in turn, could have a material adverse effect on the Corporation’s financial condition and results of operations.

As of December 31, 2020, approximately 77.5% of the Corporation’s loan portfolio consisted of Commercial and Industrial loans and Commercial Real Estate loans (including construction loans), which both include a tax-free component.

These types of loans are generally viewed as having more risk of default than Residential Real Estate loans or Consumer loans.

Commercial and Industrial and Commercial Real Estate loans are also typically larger than Residential Real Estate loans and Consumer loans.

Because the Corporation’s loan portfolio contains a significant number of Commercial and Industrial and Commercial Real Estate loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in non-performing loans.

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

If the Corporation’s Allowance for Loan Losses is not sufficient to cover actual loan losses, earnings could decrease.

The Corporation’s loan customers may not repay their loans according to the terms of their loans, and the collateral securing the payment of their loans may be insufficient to assure repayment.

The Corporation may experience significant credit losses, which could have a material adverse effect on its operating results.

In determining the amount of the allowance for loan losses, the Corporation reviews its loans and loss and delinquency experience and evaluates economic conditions.

If the Corporation’s assumptions prove to be incorrect, the allowance for loan losses may not cover inherent losses in its loan portfolio at the date of the financial statements.

Material additions to the Corporation’s allowance would materially decrease net income.

At December 31, 2020, the allowance for loan losses totaled $7.9 million, representing 1.16% of average total loans.

Although the Corporation believes its underwriting standards are sufficient to manage normal lending risks, it is difficult to assess the future performance of the loan portfolio due to ongoing new originations.

The Corporation cannot assure that non-performing loans will not increase or that non-performing or delinquent loans will not adversely affect future performance.

In addition, federal regulators periodically review the Corporation’s allowance for loan losses and may require it to increase the allowance for loan losses or recognize further loan charge-offs.

Any increase in the allowance for loan

losses or loan charge-offs as required by these regulatory agencies could have a material adverse effect on the results of operations and financial condition.

A new accounting standard will result in a significant change in how the Corporation recognizes credit losses and may have a material impact on the Corporation’s financial condition or results of operations.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the current “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the Current Expected Credit Loss (“CECL”) model.

Under the CECL model, the Corporation will be required to present certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, at the net amount expected to be collected.

The measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter.

This differs significantly from the “incurred loss” model required under current generally accepted accounting principles (“GAAP”), which delays recognition until it is probable a loss has been incurred.

Accordingly, the Corporation expects that the adoption of the CECL model will materially affect how the allowance for loan losses is determined and could require a significant increase to the allowance for loan losses.

Moreover, the CECL model may create more volatility in the level of the allowance for loan losses.

If the Corporation is required to materially increase its level of allowance for loan losses for any reason, such increase could adversely affect its business, financial condition, and results of operations.

The new CECL standard will become effective on January 1, 2023 and for interim periods within that year, for certain companies, including those companies that qualify as a smaller reporting company under SEC rules.

The Corporation currently expects to continue to qualify as a smaller reporting company for a period of time.

The Corporation’s information systems may experience an interruption or breach in security.

The Corporation relies heavily on communications and information systems to conduct its business.

Any failure, interruption or breach in security of these systems could result in failures or disruptions in the Corporation’s customer relationship management, general ledger, deposit, loan and other systems.

The Corporation has policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems;

however, there can be no assurance that any such failures, interruptions or security breaches will not occur.

While the Corporation maintains insurance coverage that may, subject to policy terms and conditions including significant self-insured deductibles, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses.

The occurrence of any failures, interruptions or security breaches of the Corporation’s information systems could damage the Corporation’s reputation, adversely affecting customer or investor confidence, result in a loss of customer business, subject the Corporation to additional regulatory scrutiny and possible regulatory penalties, or expose the Corporation to civil litigation and possible financial liability, any of which could have a material adverse effect on the Corporation’s financial condition and results of operations.

Severe weather, natural disasters, disease pandemics and epidemics, acts of war or terrorism and other external events could significantly impact the Corporation’s business.

Severe weather, natural disasters, disease pandemics and epidemics, acts of war or terrorism and other adverse external events could have a significant impact on the Corporation’s ability to conduct business.

Such events could affect the stability of the Corporation’s deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause the Corporation to incur additional expenses.

Severe weather, natural disasters, disease pandemics and epidemics, acts of war or terrorism or other adverse external events may occur in the future.

Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on the Corporation’s business, which, in turn, could have a material adverse effect on the Corporation’s financial condition and results of operations.

The Corporation operates in a highly competitive industry.

The Corporation faces substantial competition

in all areas of its operations from a variety of different competitors, many of which are larger and may have more financial resources

and greater technology.

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

which the Corporation operates.

The Corporation also faces competition from many other types of financial institutions, including,

without limitation, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial

intermediaries.

Also, technology has lowered

barriers to entry and made it possible for non-banks to offer

products and services traditionally provided by banks, such as online account opening, automatic transfer and automatic payment

The Corporation faces substantial competition in all areas of its operations from a variety of different competitors, many of which are larger and may have more financial resources and greater technology.

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

The Corporation also faces competition from many other types of financial institutions, including, without limitation, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial intermediaries.

Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as online account opening, automatic transfer and automatic payment systems.

Many of the Corporation’s competitors have fewer regulatory constraints and may have lower cost structures.

The Corporation’s ability to compete

successfully depends on a number of factors, including, among other things:

• The ability to develop, maintain and build upon long-term

customer relationships based on top quality service, high ethical standards and safe,

sound assets;

The Corporation’s ability to compete successfully depends on a number of factors, including, among other things:

● The ability to develop, maintain and build upon long-term customer relationships based on top quality service, high ethical standards and safe, sound assets;

● The ability to expand the Corporation’s market position;

• The scope, relevance and pricing of products and services

offered to meet customer needs and demands;

• The rate at which the Corporation introduces new products

and services relative to its competitors;

• Customer satisfaction with the Corporation’s level

● The scope, relevance and pricing of products and services offered to meet customer needs and demands;

● The rate at which the Corporation introduces new products and services relative to its competitors;

● Customer satisfaction with the Corporation’s level of service;

● Industry and general economic trends.

Failure to perform in any of these areas

could significantly weaken the Corporation’s competitive position, which could adversely affect the Corporation’s

growth and profitability, which, in turn, could have a material adverse effect on the Corporation’s financial condition

and results of operations.

New lines of business or new products and services may subject

the Corporation to additional risks.

From time-to-time, the Corporation may

implement new lines of business or offer new products and services within existing lines of business.

There are substantial risks

and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed.

In developing

and marketing new lines of business and/or new products and services, the Corporation may invest significant time and resources.

Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved

and price and profitability targets may not prove feasible.

External factors, such as compliance with regulations, competitive

alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new

product or service.

Furthermore, any new line of business and/or new product or service could have a significant impact on the

effectiveness of the Corporation’s system of internal controls.

Failure to successfully manage these risks in the development

and implementation of new lines of business or new products or services could have a material adverse effect on the Corporation’s

business, results of operations and financial condition.

The Basel III capital

requirements may require the Corporation to maintain higher levels of capital, which could reduce its profitability.

III targets higher levels of base capital, certain capital buffers and a migration toward common equity as the key source

of regulatory capital.

Basel III signals a growing effort by domestic and international bank regulatory agencies to require financial

institutions, including depository institutions, to maintain higher levels of capital.

Although Basel III is implemented, regulatory

viewpoints could change or require additional capital to support the Corporation’s business risk profile.

If the Corporation

and the Bank are required to maintain higher levels of capital, the Corporation and the Bank may have fewer opportunities to invest

capital into interest-earning assets, which could limit the profitable business operations available to the Corporation and the

Bank and adversely impact its financial condition and results of operations.

Federal income tax reform could have unforeseen effects

on our financial condition and results of operations.

On December 22, 2017, the President of

the United States signed into law H.R.

1, originally known as the “Tax Cuts and Jobs Act.” The Tax Cuts and Jobs

Act includes a number of provisions, including the lowering of the U.S.

corporate tax rate from 34 percent to 21 percent,

effective January 1, 2018.

Failure to perform in any of these areas could significantly weaken the Corporation’s competitive position, which could adversely affect the Corporation’s growth and profitability, which, in turn, could have a material adverse effect on the Corporation’s financial condition and results of operations.

New lines of business or new products and services may subject the Corporation to additional risks.

From time-to-time, the Corporation may implement new lines of business or offer new products and services within existing lines of business.

There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed.

In developing and marketing new lines of business and/or new products and services, the Corporation may invest significant time and resources.

Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible.

External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.

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

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

The Basel III capital requirements may require the Corporation to maintain higher levels of capital, which could reduce its profitability.

Basel III targets higher levels of base capital, certain capital buffers and a migration toward common equity as the key source of regulatory capital.

Basel III signals a growing effort by domestic and international bank regulatory agencies to require financial institutions, including depository institutions, to maintain higher levels of capital.

Although Basel III is implemented, regulatory viewpoints could change or require additional capital to support the Corporation’s business risk profile.

If the Corporation and the Bank are required to maintain higher levels of capital, the Corporation and the Bank may have fewer opportunities to invest capital into interest-earning assets, which could limit the profitable business operations available to the Corporation and the Bank and adversely impact its financial condition and results of operations.

Federal income tax reform could have unforeseen effects on our financial condition and results of operations.

On December 22, 2017, the President of the United States signed into law H.R.

1, originally known as the “Tax Cuts and Jobs Act.” The Tax Cuts and Jobs Act includes a number of provisions, including the lowering of the U.S.

corporate tax rate from 34 percent to 21 percent, effective January 1, 2018.

There are also provisions that may partially offset the benefit of such rate reduction.

Financial statement

impacts include adjustments for, among other things, the re-measurement of deferred tax assets and liabilities.

While there are

benefits, there is also substantial uncertainty regarding the details of U.S.

The long-term intended and unintended

consequences of Tax Cuts and Jobs Act on our business and on holders of our common shares is uncertain and could be

The Corporation anticipates that the long-term impact of Tax Cuts and Jobs Act may be material to our business,

financial condition and results of operations.

If the Corporation concludes that the decline in value of

any of its securities is other than temporary, the Corporation will be required to write down the credit-related portion of the

impairment of that security through a charge to earnings.

Management reviews its securities portfolio

at each quarter-end reporting period to determine whether the fair value is below the current carrying value.

When the fair value

of any of its investment securities has declined below its carrying value, management is required to assess whether the decline

is other than temporary.

If management concludes that the decline is other than temporary, management will be required to write

down the credit-related portion of the impairment of that security through a charge to earnings.

Due to the complexity of the

calculations and assumptions used in determining whether an asset is impaired, the impairment disclosed may not accurately reflect

the actual impairment in the future.

The changes in control of the United States government and

issues relating to debt and the deficit may adversely affect the Corporation.

Changes in elected officials in the federal

government could result in significant changes (or uncertainty) in governmental policies, regulatory environments, spending sentiment

and many other factors and conditions, some of which could adversely impact the Corporation’s business, financial condition

and results of operations.

addition, as a result of past difficulties of the federal government to reach agreement over federal debt and the ongoing issues

connected with the debt ceiling, certain rating agencies placed the United States government’s long-term sovereign debt

rating on their equivalent of negative watch and announced the possibility of a rating downgrade.

The rating agencies, due

to constraints related to the rating of the United States, also placed government-sponsored enterprises in which the Corporation

invests and receives lines of credit on negative watch and a downgrade of the United States’ credit rating would trigger

a similar downgrade in the credit rating of these government sponsored enterprises.

Furthermore, the credit rating of other

entities, such as state and local governments, may also be downgraded should the United States credit rating be downgraded.

impact that a credit rating downgrade may have on the national and local economy could have an adverse effect on the Corporation’s

financial condition and results of operations.

The Corporation’s profitability depends significantly

on economic conditions in the Commonwealth of Pennsylvania.

The Corporation’s success depends

primarily on the general economic conditions of the Commonwealth of Pennsylvania and the specific local markets in which the Corporation

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

and financial services to customers primarily in Columbia, Luzerne, Montour, Monroe, and Northampton counties.

The local economic

conditions in these areas have a significant impact on the demand for the Corporation’s products and services as well as

the ability of the Corporation’s customers to repay loans, the value of the collateral securing loans and the stability

of the Corporation’s deposit funding sources.

Also, a significant decline in general economic conditions could impact the

local economic conditions and, in turn, have a material adverse effect on the Corporation’s financial condition and results

of operations.

The Corporation’s future acquisitions could dilute

stockholders’ ownership and may cause the Corporation to become more susceptible to adverse economic events.

The Corporation may use its common stock

to acquire other companies or make investments in banks and other complementary businesses in the future.

The Corporation may

issue additional shares of common stock to pay for future acquisitions, which would dilute stockholders’ ownership interest

in the Corporation.

Future business acquisitions could be material to the Corporation, and the degree of success achieved in acquiring

and integrating these businesses into the Corporation could have a material effect on the value of the Corporation’s common

Financial statement impacts include adjustments for, among other things, the re-measurement of deferred tax assets and liabilities.

While there are benefits, there is also substantial uncertainty regarding the details of U.S.

The long-term intended and unintended consequences of Tax Cuts and Jobs Act on our business and on holders of our common shares is uncertain and could be adverse.

The Corporation anticipates that the long-term impact of the Tax Cuts and Jobs Act may be material to our business, financial condition and results of operations.

If the Corporation concludes that the decline in value of any of its securities is other than temporary, the Corporation will be required to write down the credit-related portion of the impairment of that security through a charge to earnings.

Management reviews its securities portfolio at each quarter-end reporting period to determine whether the fair value is below the current carrying value.

When the fair value of any of its investment securities has declined below its carrying value, management is required to assess whether the decline is other than temporary.

If management concludes that the decline is other than temporary, management will be required to write down the credit-related portion of the impairment of that security through a charge to earnings.

Due to the complexity of the calculations and assumptions used in determining whether an asset is impaired, the impairment disclosed may not accurately reflect the actual impairment in the future.

Economic and Strategic Risks

The changes in control of the United States government and issues relating to debt and the deficit may adversely affect the Corporation.

Changes in elected officials in the federal government could result in significant changes (or uncertainty) in governmental policies, regulatory environments, spending sentiment and many other factors and conditions, some of which could adversely impact the Corporation’s business, financial condition and results of operations.

In addition, as a result of past difficulties of the federal government to reach agreement over federal debt and the ongoing issues connected with the debt ceiling, certain rating agencies placed the United States government’s long-term sovereign debt rating on their equivalent of negative watch and announced the possibility of a rating downgrade.

The rating agencies, due to constraints related to the rating of the United States, also placed government-sponsored enterprises in which the Corporation invests and receives lines of credit on negative watch and a downgrade of the United States’ credit rating would trigger a similar downgrade in the credit rating of these government sponsored enterprises.

Furthermore, the credit rating of other entities, such as state and local governments, may also be downgraded should the United States credit rating be downgraded.

The impact that a credit rating downgrade may have on the national and local economy could have an adverse effect on the Corporation’s financial condition and results of operations.

The Corporation’s profitability depends significantly on economic conditions in the Commonwealth of Pennsylvania.

The Corporation’s success depends primarily on the general economic conditions of the Commonwealth of Pennsylvania and the specific local markets in which the Corporation operates.

Unlike larger national or other regional banks that are more geographically diversified, the Corporation provides banking and financial services to customers primarily in Columbia, Luzerne, Montour, Monroe, and Northampton counties.

The local economic conditions in these areas have a significant impact on the demand for the Corporation’s products and services as well as the ability of the Corporation’s customers to repay loans, the value of the collateral securing loans and the stability of the Corporation’s deposit funding sources.

Also, a significant decline in general economic conditions could impact the local economic conditions and, in turn, have a material adverse effect on the Corporation’s financial condition and results of operations.

The Corporation’s future acquisitions could dilute stockholders’ ownership and may cause the Corporation to become more susceptible to adverse economic events.

The Corporation may use its common stock to acquire other companies or make investments in banks and other complementary businesses in the future.

The Corporation may issue additional shares of common stock to pay for future acquisitions, which would dilute stockholders’ ownership interest in the Corporation.

Future business acquisitions could be material to the Corporation, and the degree of success achieved in acquiring and integrating these businesses into the Corporation could have a material effect on the value of the Corporation’s common stock.

In addition, any acquisition could require the Corporation to use substantial cash or other liquid assets or to incur debt.

In those events, the Corporation could become more susceptible to economic downturns and competitive pressures.

The Corporation may not be able to attract and retain skilled

The Corporation’s success depends,

in large part, on its ability to attract and retain key people.

Competition for the best people in most activities engaged in

by the Corporation can be intense and the Corporation may not be able to hire people or to retain them.

The unexpected loss of

services of one or more of the Corporation’s key personnel could have a material adverse impact on the Corporation’s

business because of their skills, knowledge of the Corporation’s market, years of industry experience and the difficulty

of promptly finding qualified replacement personnel.

The Corporation is subject to extensive government regulation

and supervision.

The Corporation, primarily through the

Bank, is subject to extensive federal and state regulation and supervision.

Banking regulations are primarily intended to protect

depositors’ funds, federal deposit insurance funds and the banking system as a whole, not shareholders.

These regulations

affect the Corporation’s lending practices, capital structure, investment practices, dividend policy and growth, among other

The Corporation may not be able to attract and retain skilled people.

The Corporation’s success depends, in large part, on its ability to attract and retain key people.

Competition for the best people in most activities engaged in by the Corporation can be intense and the Corporation may not be able to hire people or to retain them.

The unexpected loss of services of one or more of the Corporation’s key personnel could have a material adverse impact on the Corporation’s business because of their skills, knowledge of the Corporation’s market, years of industry experience and the difficulty of promptly finding qualified replacement personnel.

The Corporation is subject to extensive government regulation and supervision.

The Corporation, primarily through the Bank, is subject to extensive federal and state regulation and supervision.

Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not shareholders.

These regulations affect the Corporation’s lending practices, capital structure, investment practices, dividend policy and growth, among other things.

Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes.

Changes to statutes, regulations or regulatory policies could affect the Corporation in substantial and unpredictable ways.

changes could subject the Corporation to additional costs, limit the types of financial services and products the Corporation

may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things.

to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation

damage, which could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

The Corporation is subject to claims and litigation pertaining

to fiduciary responsibility.

From time to time, customers make claims

and take legal action pertaining to the Corporation’s performance of its fiduciary responsibilities.

Whether customer claims

and legal action related to the Corporation’s performance of its fiduciary responsibilities are founded or unfounded, and

if such claims and legal actions are not resolved in a manner favorable to the Corporation, they may result in significant financial

liability and/or adversely affect the market perception of the Corporation and its products and services as well as impact customer

demand for those products and services.

Any financial liability or reputation damage could have a material adverse effect on the

Corporation’s financial condition and results of operations.

The trading volume in the Corporation’s common stock

is less than that of other larger financial services companies.

The Corporation’s common stock is

not currently listed on a national stock exchange, but traded on the Over the Counter Market.

As a result, trading volume is less

than that of other larger financial services companies.

A public trading market having the desired characteristics of depth, liquidity

and orderliness depends on the presence in the marketplace of willing buyers and sellers of the Corporation’s common stock

at any given time.

This presence depends on the individual decisions of investors and general economic and market conditions over

which the Corporation has no control.

Given the lower trading volume of the Corporation’s common stock, significant sales

of the Corporation’s common stock, or the expectation of these sales, could cause the Corporation’s stock price to

The Corporation’s controls and procedures may fail

or be circumvented.

Management regularly reviews and updates

the Corporation’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures.

Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable,

not absolute, assurances that the objectives of the system are met.

Any failure or circumvention of the Corporation’s controls

and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on

the Corporation’s business, results of operations and financial condition.

Such changes could subject the Corporation to additional costs, limit the types of financial services and products the Corporation may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things.

Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

The Corporation is subject to claims and litigation pertaining to fiduciary responsibility.

From time to time, customers make claims and take legal action pertaining to the Corporation’s performance of its fiduciary responsibilities.

Whether customer claims and legal action related to the Corporation’s performance of its fiduciary responsibilities are founded or unfounded, and if such claims and legal actions are not resolved in a manner favorable to the Corporation, they may result in significant financial liability and/or adversely affect the market perception of the Corporation and its products and services as well as impact customer demand for those products and services.

Any financial liability or reputation damage could have a material adverse effect on the Corporation’s financial condition and results of operations.

The trading volume in the Corporation’s common stock is less than that of other larger financial services companies.

The Corporation’s common stock is not currently listed on a national stock exchange, but traded on the Over the Counter Market.

As a result, trading volume is less than that of other larger financial services companies.

A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of the Corporation’s common stock at any given time.

This presence depends on the individual decisions of investors and general economic and market conditions over which the Corporation has no control.

Given the lower trading volume of the Corporation’s common stock, significant sales of the Corporation’s common stock, or the expectation of these sales, could cause the Corporation’s stock price to fall.

The Corporation’s controls and procedures may fail or be circumvented.

Management regularly reviews and updates the Corporation’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures.

Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.

Any failure or circumvention of the Corporation’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Corporation’s business, results of operations and financial condition.

The Corporation continually encounters technological change.

The financial services industry is continually

undergoing rapid technological change with frequent introductions of new technology-driven products and services.

The effective

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

The Corporation’s

future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products

and services that will satisfy customer demands, as well as to create additional efficiencies in the Corporation’s operations.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services.

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

The Corporation’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Corporation’s operations.

Many of the Corporation’s competitors have substantially greater resources to invest in technological improvements.

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

these products and services to its customers.

Failure to successfully keep pace with technological change affecting the financial

services industry could have a material adverse impact on the Corporation’s business and, in turn, the Corporation’s

financial condition and results of operations.

The Corporation may need or be compelled to raise additional

capital in the future, but that capital may not be available when it is needed and on terms favorable to current shareholders.

Federal banking regulators require the

Corporation and Bank to maintain adequate levels of capital to support their operations.

These capital levels are determined and

dictated by law, regulation and banking regulatory agencies.

In addition, capital levels are also determined by the Corporation’s

management and board of directors, based on capital levels that they believe are necessary to support the Corporation’s

business operations.

The Corporation is evaluating its present and future capital requirements and needs, is developing a comprehensive

capital plan and is analyzing capital raising alternatives, methods and options.

Even if the Corporation succeeds in meeting the

current regulatory capital requirements, the Corporation may need to raise additional capital in the near future to support possible

loan losses during future periods or to meet future regulatory capital requirements.

Further, the Corporation’s regulators

may require it to increase its capital levels.

If the Corporation raises capital through the issuance of additional shares of

its common stock or other securities, it would likely dilute the ownership interests of current investors and would likely dilute

the per-share book value and earnings per share of its common stock.

Furthermore, it may have an adverse impact on the Corporation’s

New investors may also have rights, preferences and privileges senior to the Corporation’s current shareholders,

which may adversely impact its current shareholders.

The Corporation’s ability to raise additional capital will depend on

conditions in the capital markets at that time, which are outside its control, and on its financial performance.

the Corporation cannot assure the shareholders of its ability to raise additional capital on terms and time frames acceptable

to it or to raise additional capital at all.

If the Corporation cannot raise additional capital in sufficient amounts when needed,

its ability to comply with regulatory capital requirements could be materially impaired.

Additionally, the inability to raise

capital in sufficient amounts may adversely affect the Corporation’s operations, financial condition and results of operations.

The Corporation is subject to environmental liability risk

associated with lending activities.

A significant portion of the Corporation’s

loan portfolio is secured by real property.

During the ordinary course of business, the Corporation may foreclose on and take

title to properties securing certain loans.

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

these properties.

If hazardous or toxic substances are found, the Corporation may be liable for remediation costs, as well as

for personal injury and property damage.

Environmental laws may require the Corporation to incur substantial expenses and may

materially reduce the affected property’s value or limit the Corporation’s ability to use or sell the affected property.

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

the Corporation’s exposure to environmental liability.

Although the Corporation has policies and procedures to perform an

environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect

all potential environmental hazards.

The remediation costs and any other financial liabilities associated with an environmental

hazard could have a material adverse effect on the Corporation’s financial condition and results of operations.

The Corporation’s ability to pay dividends is subject

to limitations.

The Corporation is a bank holding company

and its operations are conducted by the Bank, which is a separate and distinct legal entity.

Substantially all of the Corporation’s

assets are held by the Bank.

The Corporation’s ability to pay

dividends depends on its receipt of dividends from the Bank, its primary source of dividends.

Dividend payments from the Bank

are subject to legal and regulatory limitations, generally based on net profits and retained earnings, imposed by the various

banking regulatory agencies.

The ability of banking subsidiaries to pay dividends is also subject to their profitability, financial

condition, capital expenditures and other cash flow requirements.

There is no assurance that the Bank will be able to pay dividends

in the future or that the Corporation will generate adequate cash flow to pay dividends in the future.

The Corporation’s

failure to pay dividends on its common stock could have a material adverse effect on the market price of its common stock.

Pennsylvania Business Corporation Law and various anti-takeover

provisions under its Articles of Incorporation and Bylaws could impede the takeover of the Corporation.

Various Pennsylvania laws affecting business

corporations may have the effect of discouraging offers to acquire the Corporation, even if the acquisition would be advantageous

to shareholders.

In addition, the Corporation has various anti-takeover measures in place under its Articles of Incorporation

and Bylaws, including a staggered board of directors and the absence of cumulative voting.

Any one or more of these measures may

impede the takeover of the Corporation without the approval of its Board of Directors and may prevent its shareholders from taking

part in a transaction in which they could realize a premium over the current market price of its common stock.

The Corporation’s banking subsidiary may be required

to pay higher FDIC insurance premiums or special assessments which may adversely affect its earnings.

Since the Great Recession, poor economic

conditions and the resulting bank failures increased the costs of the FDIC and depleted its deposit insurance fund.

In more recent

history, the FDIC fund position has improved and the cost basis has been updated which in some cases can result in decreased costs

of the insurance fund.

Additional bank failures may prompt the FDIC to increase its premiums above the recently increased levels

or to issue special assessments.

The Corporation is generally unable to control the amount of premiums or special assessments

that its subsidiary is required to pay for FDIC insurance.

Any future changes in the calculation or assessment of FDIC insurance

premiums may have a material adverse effect on the Corporation’s results of operations, financial condition, and its ability

to continue to pay dividends on its common stock at the current rate or at all.

The increasing use of social media platforms presents new risks and challenges and our inability or failure to recognize, respond

to and effectively manage the accelerated impact of social media could materially adversely impact our business.

There has been a marked increase in the

use of social media platforms, including weblogs (blogs), social media websites, and other forms of Internet-based communications

which allow individuals access to a broad audience of consumers and other interested persons.

Social media practices in the banking

industry are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business.

value readily available information concerning businesses and their goods and services and often act on such information without

further investigation and without regard to its accuracy.

Many social media platforms immediately publish the content their subscribers

and participants post, often without filters or checks on accuracy of the content posted.

Information posted on such platforms

at any time may be adverse to our interests and/or may be inaccurate.

The dissemination of information online could harm our business,

prospects, financial condition, and results of operations, regardless of the information’s accuracy.

The harm may be immediate

without affording us an opportunity for redress or correction.

Other risks associated with the use of

social media include improper disclosure of proprietary information, negative comments about our business, exposure of personally

identifiable information, fraud, out-of-date information, and improper use by employees and customers.

The inappropriate use of

social media by our customers or employees could result in negative consequences including remediation costs including training

for employees, additional regulatory scrutiny and possible regulatory penalties, litigation or negative publicity that could damage

our reputation adversely affecting customer or investor confidence.

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

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

The Corporation may need or be compelled to raise additional capital in the future, but that capital may not be available when it is needed and on terms favorable to current shareholders.

Federal banking regulators require the Corporation and Bank to maintain adequate levels of capital to support their operations.

These capital levels are determined and dictated by law, regulation and banking regulatory agencies.

In addition, capital levels are also determined by the Corporation’s management and board of directors, based on capital levels that they believe are necessary to support the Corporation’s business operations.

The Corporation is evaluating its present and future capital requirements and needs, is developing a comprehensive capital plan and is analyzing capital raising alternatives, methods and options.

Even if the Corporation succeeds in meeting the current regulatory capital requirements, the Corporation may need to raise additional capital in the near future to support possible loan losses during future periods or to meet future regulatory capital requirements.

Further, the Corporation’s regulators may require it to increase its capital levels.

If the Corporation raises capital through the issuance of additional shares of its common stock or other securities, it would likely dilute the ownership interests of current investors and would likely dilute the per-share book value and earnings per share of its common stock.

Furthermore, it may have an adverse impact on the Corporation’s stock price.

New investors may also have rights, preferences and privileges senior to the Corporation’s current shareholders, which may adversely impact its current shareholders.

The Corporation’s ability to raise additional capital will depend on conditions in the capital markets at that time, which are outside its control, and on its financial performance.

Accordingly, the Corporation cannot assure the shareholders of its ability to raise additional capital on terms and time frames acceptable to it or to raise additional capital at all.

If the Corporation cannot raise additional capital in sufficient amounts when needed, its ability to comply with regulatory capital requirements could be materially impaired.

Additionally, the inability to raise capital in sufficient amounts may adversely affect the Corporation’s operations, financial condition and results of operations.

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

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

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

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

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

Environmental laws may require the Corporation to incur substantial expenses and may materially reduce the affected property’s value or limit the Corporation’s ability to use or sell the affected property.

In addition, future laws, or more stringent interpretations or enforcement policies with respect to existing laws, may increase the Corporation’s exposure to environmental liability.

Although the Corporation has policies and procedures to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards.

The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Corporation’s financial condition and results of operations.

The Corporation’s ability to pay dividends is subject to limitations.

The Corporation is a bank holding company and its operations are conducted by the Bank, which is a separate and distinct legal entity.

Substantially all of the Corporation’s assets are held by the Bank.

The Corporation’s ability to pay dividends depends on its receipt of dividends from the Bank, its primary source of dividends.

Dividend payments from the Bank are subject to legal and regulatory limitations, generally based on net profits and retained earnings, imposed by the various banking regulatory agencies.

The ability of banking subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements.

There is no assurance that the Bank will be able to pay dividends in the future or that the Corporation will generate adequate cash flow to pay dividends in the future.

The Corporation’s failure to pay dividends on its common stock could have a material adverse effect on the market price of its common stock.

Pennsylvania Business Corporation Law and various anti-takeover provisions under its Articles of Incorporation and Bylaws could impede the takeover of the Corporation.

Various Pennsylvania laws affecting business corporations may have the effect of discouraging offers to acquire the Corporation, even if the acquisition would be advantageous to shareholders.

In addition, the Corporation has various anti-takeover measures in place under its Articles of Incorporation and Bylaws, including a staggered board of directors and the absence of cumulative voting.

Any one or more of these measures may impede the takeover of the Corporation without the approval of its Board of Directors and may prevent its shareholders from taking part in a transaction in which they could realize a premium over the current market price of its common stock.

The Corporation’s banking subsidiary may be required to pay higher FDIC insurance premiums or special assessments which may adversely affect its earnings.

Since the Great Recession, poor economic conditions and the resulting bank failures increased the costs of the FDIC and depleted its deposit insurance fund.

In more recent history, the FDIC fund position has improved and the cost basis has been updated which in some cases can result in decreased costs of the insurance fund.

Additional bank failures may prompt the FDIC to increase its premiums above the recently increased levels or to issue special assessments.

The Corporation is generally unable to control the amount of premiums or special assessments that its subsidiary is required to pay for FDIC insurance.

Any future changes in the calculation or assessment of FDIC insurance premiums may have a material adverse effect on the Corporation’s results of operations, financial condition, and its ability to continue to pay dividends on its common stock at the current rate or at all.

The increasing use of social media platforms presents new risks and challenges and our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could materially adversely impact our business.

There has been a marked increase in the use of social media platforms, including weblogs (blogs), social media websites, and other forms of Internet-based communications which allow individuals access to a broad audience of consumers and other interested persons.

Social media practices in the banking industry are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business.

Consumers value readily available information concerning businesses and their goods and services and often act on such information without further investigation and without regard to its accuracy.

Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted.

Information posted on such platforms at any time may be adverse to our interests and/or may be inaccurate.

The dissemination of information online could harm our business, prospects, financial condition, and results of operations, regardless of the information’s accuracy.

The harm may be immediate without affording us an opportunity for redress or correction.

Other risks associated with the use of social media include improper disclosure of proprietary information, negative comments about our business, exposure of personally identifiable information, fraud, out-of-date information, and improper use by employees and customers.

The inappropriate use of social media by our customers or employees could result in negative consequences including remediation costs including training for employees, additional regulatory scrutiny and possible regulatory penalties, litigation or negative publicity that could damage our reputation adversely affecting customer or investor confidence.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors