What changed in this filing

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Item 1A. Risk Factors

2025-03-17 compared with 2024-03-18 · 50 added, 63 removed, 322 unchanged (26% of the section changed)

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Risks Relating to Our Business and Market

Because We Primarily Serve Central and West Central Missouri, a Decline in the Local Economic Conditions Could Lower the Company's Profitability.

The profitability of the Company is dependent on the profitability of the Bank, which operates out of central and west-central Missouri.

The financial condition of the Bank is affected by slowing or recessionary economic conditions and business activity prevailing in the portion of Missouri in which its operations are located.

Although our customers' business and financial interests may extend well beyond our market areas, the financial conditions of both the Company and the Bank would be adversely affected by deterioration in the general economic and real estate climate in Missouri.

Because We Primarily Serve Central, West Central Missouri, and Eastern Kansas, a Decline in the Local Economic Conditions Could Lower the Company's Profitability.

The profitability of the Company is dependent on the profitability of the Bank, which operates out of central and west-central Missouri, and extends into eastern Kansas as part of the Kansas City metro.

The financial condition of the Bank is affected by slowing or recessionary economic conditions and business activity prevailing in the portions of Missouri and Kansas in which its operations are located.

An increase in unemployment, a decrease in profitability of regional businesses or real estate values, or an increase in interest rates are among the factors that could weaken the local economy.

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• the value of the collateral security of the Bank's loans to borrowers may decline;

• the number of loan delinquencies and foreclosures may increase, and

• the number of loan delinquencies and foreclosures may increase;

• the overall quality of the Bank's loan portfolio may decline.

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• the Bank's ability to realize gains from the sale of loans and securities;

• the average life of the Bank's deposits, and

• the average life of the Bank's deposits;

• the Bank's ability to obtain deposits.

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In the fourth quarter of 2023, the Company repositioned its balance sheet by selling $83.7 million in book value of investment securities for an after-tax realized loss of $9.1 million.

The Bank's interest rate management strategy is designed to stabilize net interest income and preserve capital over a broad range of interest rate

movements by matching the interest rate sensitivity of assets and liabilities.

The Bank's interest rate

management strategy is designed to stabilize net interest income and preserve capital over a broad range of interest rate movements by matching the interest rate sensitivity of assets and liabilities.

Although the Company believes that the Bank's current mix of loans, mortgage-backed securities, investment securities and deposits is reasonable, significant fluctuations in interest rates may have a negative effect on the profitability of the Bank.

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The Bank attempts to minimize its credit risk through loan diversification.

Although the Bank's loan portfolio is varied, with no undue concentration in any one industry, substantially all of the loans in the portfolio have been made to borrowers in central, west central, and southwest Missouri.

Therefore, the loan portfolio is susceptible to factors affecting the central, west central, and southwest Missouri area and the level of non-performing assets is heavily dependent upon local conditions.

Therefore, the loan portfolio is susceptible to factors affecting the central, west central, and southwest Missouri, and eastern Kansas and the level of non-performing assets is heavily dependent upon local conditions.

There can be no assurance that the level of the Bank's non-performing assets will not increase above current levels.

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Any additional provision for probable credit losses, whether required as a result of regulatory review or initiated by the Company itself, may materially alter the financial outlook of the Company and the Bank and may have a material adverse effect on the Company's financial condition and results of operations.

On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) , which sets forth the current expected credit loss standard, or CECL.

Previously, the impairment model was based on incurred losses, and investments were recognized as impaired when there was no longer an assumption that future cash flows would be collected in full under the originally contracted terms.

Under the new CECL model, we are required to use historical information, current conditions and reasonable forecasts to estimate the expected loss over the life of the loan and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset.

The CECL model is expected to result in more timely recognition of credit losses.

The ASU requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities.

Entities are required to apply the standard's provisions as a cumulative-effect adjustment to retained earnings as

of the beginning of the first reporting period in which the guidance is adopted.

The adoption of the standard by the Company resulted in an increase to the allowance for credit losses of $5.8 million and a liability for unfunded commitments totaling $1.3 million.

These one-time cumulative adjustments resulted in a $5.6 million tax-effected decrease to retained earnings.

The transition to the CECL model brings with it significantly greater data requirements and changes to methodologies to accurately account for expected losses under the new parameters.

Adverse Market Conditions in the U.S.

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Concerns over the stability of the financial markets and the economy have resulted in decreased lending by financial institutions to their customers and to each other.

This market turmoil and tightening of credit has led to increased commercial and consumer deficiencies, lack of customer confidence, increased market volatility and widespread reduction in general business activity.

Competition among depository institutions for deposits has increased significantly.

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There is no assurance that any such losses would not materially and adversely affect the Company's results of operations.

The recent bank failures of Silicon Valley Bank in California, Signature Bank in New York, and First Republic Bank in California during the first and second quarters of 2023 have caused a degree of panic and uncertainty in the investor community and among bank customers generally.

While the Company does not believe that the circumstances of these three banks' failures are indicators of broader issues with the banking system, the failures may reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have a negative reputational ramification for the banking industry, including the Company.

The Company will continue to monitor the ongoing events concerning these three banks as well as any future potential bank failures and volatility within the banking industry generally, together with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry.

Bank failures, such as the failures of Silicon Valley Bank, Signature Bank and First Republic Bank in 2023, may cause a degree of panic and uncertainty in the investor community and among bank customers generally.

Bank failures may also reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets or have a negative reputational ramification for the banking industry, including the Company.

The Company will monitor events concerning any future potential bank failures and volatility within the banking industry generally, together with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry.

Liquidity Risk Could Impair Our Ability to Fund Operations and Meet Our Obligations as They Become Due, and Failure to Maintain Sufficient Liquidity Could Materially Adversely Affect Our Growth, Business, Profitability and Financial Condition.

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Liquidity risk can increase due to a number of factors, including an over-reliance on a particular source of funding or market-wide phenomena such as market dislocation and major disasters.

Factors that could detrimentally impact access to liquidity sources include, but are not limited to, a decrease in the level of our business activity as a result of a slowdown in our market, adverse regulatory actions against us, or changes

in the liquidity needs of our depositors.

Market conditions or other events could also negatively affect the level or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth and new business transactions at a reasonable cost, in a timely manner, and without adverse consequences.

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We rely on customer deposits, including brokered deposits, and to a lesser extent on advances from the FHLB and federal funds purchased to fund our operations.

Although we have historically been able to replace customer deposit withdrawals, maturing deposits, and advances if desired, we may not be able to replace such funds in the future if our financial condition, the financial condition of the FHLB or market conditions were to change.

Although we have historically been able to replace customer deposit withdrawals, maturing deposits, and advances if desired, we may not be able to replace such funds in the future if our

financial condition, the financial condition of the FHLB or market conditions were to change.

FHLB borrowings and other current sources of liquidity may not be available or, if available, sufficient to provide adequate funding for operations.

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The FDIC has the statutory authority to impose special assessments on insured depository institutions in an amount, and for such purposes, as the FDIC may deem necessary.

The FDIC issued a final rule in November 2023 to implement a special assessment to recover the significant losses incurred by the FDIC in connection with the 2023 bank failures, but that special assessment did not apply to the Bank.

The FDIC issued a final rule in November 2023 to implement a special assessment to recover the significant losses incurred by the FDIC in connection with the 2023 bank failures (Silicon Valley Bank in California, Signature Bank in New York and First Republic Bank in California), but that special assessment did not apply to the Bank.

The change in the calculation methodology for deposit insurance premiums and the possible emergency special assessments could increase non-interest expense and may adversely affect the Company's profitability.

We May Elect Or Be Compelled To Seek Additional Capital In The Future, But That Capital May Not Be Available When It Is Needed.

We May Elect or Be Compelled To Seek Additional Capital In The Future, But That Capital May Not Be Available When Needed.

We are required by regulatory authorities to maintain adequate levels of capital to support operations.

In addition, we may elect to raise additional capital to support the growth of the Company's business or to

finance acquisitions, if any, or we may elect to raise additional capital for other reasons.

In addition, we may elect to raise additional capital to support the growth of the Company's business or to finance acquisitions, if any, or we may elect to raise additional capital for other reasons.

In that regard, a number of financial institutions have recently raised considerable amounts of capital as a result of a deterioration in their results of operations and financial condition arising from the turmoil in the mortgage loan market, deteriorating economic conditions, declines in real estate values and other factors.

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As part of the Company's general strategy, it may continue to acquire banks and businesses that it believes provide a strategic fit with its business.

To the extent that the Company does grow, there can be no assurances that we will

be able to adequately and profitably manage such growth.

To the extent that the Company does grow, there can be no assurances that we will be able to adequately and profitably manage such growth.

Acquiring other banks and businesses will involve risks commonly associated with acquisitions, including:

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If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating results could be materially adversely affected.

Fraudulent Activity Could Damage Our Reputation, Disrupt Our Business, Increase our Costs and Cause Losses.

The Actual or Perceived Occurrence of Fraudulent Activity, Breaches or Failures of our Information Security Controls, or Cybersecurity Related Incidents Could Damage Our Reputation, Disrupt Our Business, Increase our Costs and Cause Losses.

Financial institutions are inherently exposed to operational risk in the form of theft and other fraudulent activity by employees, clients and other third parties targeting us and our customers or data.

Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, and other dishonest acts.

Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us, our customers or third-party vendors, denial or degradation of service attacks, and malware or other cyber attacks.

Although the Company devotes substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, the Company or the Bank may experience financial losses or reputational harm as a result of fraud.

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The Company's Success Largely Depends on the Efforts of its Executive Officers .

The success of the Company and the Bank has been largely dependent on the efforts of David Turner, Executive and Director, and Brent M.

Giles, CEO and Director, and the other executive officers.

The success of the Company and the Bank has been largely dependent on the efforts of Brent M.

Giles, CEO and Director, Gregg Bexten, President and Director, and the other executive officers.

These individuals are expected to continue to perform their services.

However, the loss of the services of Mr.

Turner or Mr.

Giles, or any of the other key executive officers could have a materially adverse effect on the Company and the Bank.

Bexten, or any of the other key executive officers could have a materially adverse effect on the Company and the Bank.

If We Fail to Maintain an Effective System of Internal Control Over Financial Reporting, We May Not Be Able to Accurately Report Our Financial Results or Prevent Fraud, and, as a Result, Investors and Depositors Could Lose Confidence in Our Financial Reporting, Which Could Adversely Affect Our Business, the Trading Price of Our Stock, and Our Ability to Attract Additional Deposits .

We are required to include in our annual reports filed with the SEC a report from our management regarding internal control over financial reporting.

As a result, we documented and evaluated our internal control over financial reporting in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and SEC rules and regulations, which require an annual management report on our internal control over financial reporting, including, among other matters, management's assessment of the effectiveness of internal

control over financial reporting.

Failure or circumvention of our system of internal control could have an adverse effect on our business, profitability, and financial condition, and could result in regulatory actions and loss of investor confidence.

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Severe Weather, Natural Disasters, Pandemics, and Other External Events Could Significantly Impact Our Business.

Severe weather, including tornadoes, droughts, hailstorms and other natural disasters, pandemics, such as the outbreak of COVID-19, acts of war or terrorism and other adverse external events could have a significant impact on our ability to conduct business.

Severe weather, including tornadoes, droughts, hailstorms and other natural disasters, pandemics, or public health emergencies such as the outbreak of COVID-19, acts of war or terrorism and other adverse external events could

have a significant impact on our ability to conduct business.

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

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These regulations are not necessarily designed to maximize the profitability of banking institutions.

In July 2010, President Barack Obama signed into law the Dodd-Frank Act, which enacted substantial changes to the legal framework of the entire financial services industry.

The Dodd-Frank Act mandates the passage of numerous rules and regulations by various regulatory agencies over the next few years.

This legislation will change banking regulation and the operating environment of the Company in substantial and unpredictable ways.

It could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions and other financial institutions.

The Company cannot predict the impact that the Dodd-Frank Act, and the various regulations issued thereunder will have on its business.

These, and other future changes in the banking laws and regulations and tax and accounting rules applicable to financial institutions, could have a material adverse effect on the operations and financial condition of the Company and the Bank.

As a financial holding company, we are subject to extensive regulation and supervision and undergo periodic examinations by our regulators, who have extensive discretion and authority to prevent or remedy unsafe or unsound practices or violations of law by banks and financial holding companies.

Failure to comply with applicable laws, regulations or policies could result in sanctions by regulatory agencies, civil monetary penalties and/or damage to our reputation, which could have a material adverse effect on us.

Although we have policies and procedures designed to mitigate the risk of any such violations, there can be no assurance that such violations will not occur.

Current or proposed regulatory or legislative changes to laws applicable to the financial industry may impact the profitability of our business activities and may change certain of our business practices, including our 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.

In addition, political developments, including the possible implementation of policies proposed by the new presidential administration, including tariffs, mass deportations and tax or financial regulations or the appointment of new personnel in regulatory agencies, add uncertainty to the implementation, scope and timing of regulatory reforms.

These changes may also require us to invest significant management attention and resources to make any necessary changes to operations in order to comply and could therefore materially and adversely affect our business, financial condition and results of operations.

The Federal Reserve May Require the Company to Commit Capital Resources to Support the Bank.

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Thus, any borrowing incurred by the Company to make required capital injections to the Bank are difficult and expensive, and will adversely impact our financial condition, results of operations and future prospects.

The Short-Term And Long-Term Impact of the Changing Regulatory Capital Requirements and New Capital Rules is Uncertain.

The federal banking agencies have substantially amended the regulatory capital rules applicable to us and the Bank.

The Short-Term and Long-Term Impact of any Change to Regulatory Capital Requirementsis Uncertain.

The Company and the Bank are subject to various regulatory capital requirements.

The federal banking agencies have substantially amended the regulatory capital rules applicable to us and the Bank in the past and may do so again in the future.

The amendments implement the Basel III Rules and changes required by the Dodd-Frank Act.

The amended rules include new minimum risk-based capital and leverage ratios, which became effective in January 2015, with certain requirements to be phased in beginning in 2016, and refined the definition of what constitutes "capital" for purposes of calculating those ratios.

The amended rules include new minimum risk-based capital and leverage ratios, which became effective in January 2015 (with certain phase-ins), and refined the definition of what constitutes "capital" for purposes of calculating those ratios.

The application of more stringent capital requirements to us and the Bank could, among other things, result in lower returns on invested capital, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements.

Implementation of changes to asset risk weightings for risk based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its business strategy and could further limit the Company's ability to make distributions, including paying out dividends or buying back shares.

The EGRRCPA directs the federal banking agencies to develop a specified CBLR (that is, the ratio of a bank's equity capital to its consolidated assets) of not less than 8% and not more than 10%.

On November 4, 2019, federal regulators issued final rules effective January 1, 2020 that provide certain banks and their holding companies with the option to elect out of complying with the Basel III Rules.

Under this new rule, a qualifying community banking organization is eligible to elect the CBLR framework if it has a CBLR greater than 9% at the time of election.

The final rule is described in more detail above under the section entitled "Regulatory Capital Requirements." As of December 31, 2020, the Company and the Bank each qualified to elect the CBLR framework because they had a CBLR of greater than 9% and satisfied the other requirements.

The Company has not opted in to CBLR framework.

The Company does not have immediate plans to elect to use the CBLR framework but may make such an election in the future.

Higher FDIC Deposit Insurance Premiums and Assessments Could Adversely Affect our Financial Condition .

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These rules also require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts.

Failure or the inability to comply with the USA PATRIOT Act and Bank Secrecy Act statutes and

regulations could result in fines or penalties, curtailment of expansion opportunities, enforcement actions, intervention or sanctions by regulators and costly litigation or expensive additional controls and systems.

Failure or the inability to comply with the USA PATRIOT Act and Bank Secrecy Act statutes and regulations could result in fines or penalties, curtailment of expansion opportunities, enforcement actions, intervention or sanctions by regulators and costly litigation or expensive additional controls and systems.

During the last few years, several banking institutions have received large fines for non-compliance with these laws and regulations.

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Government imposed and will continue to expand laws and regulations relating to residential and consumer lending activities that create significant new compliance burdens and financial risks.

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.

Regulations Relating to Privacy, Cybersecurity, 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.

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.

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(ii) requires that we provide certain disclosures to clients about our information collection, sharing and security practices and afford clients the right to “opt out” of any information sharing by us with non-affiliated third parties (with certain exceptions);

and (iii) requires that we develop, implement and maintain a written comprehensive information security program containing safeguards that are appropriate based on our size and complexity, the nature and scope of our activities and the sensitivity of client information we process, as well as plans for responding to data security breaches.

and (iii) requires that we

develop, implement and maintain a written comprehensive information security program containing safeguards that are appropriate based on our size and complexity, the nature and scope of our activities and the sensitivity of client information we process, as well as plans for responding to data security breaches.

Many state and federal banking regulators, states and foreign countries have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notifications in certain circumstances in the event of a security breach.

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Our failure to comply with any such 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.

The Company is subject to a number of federal and state laws and regulations requiring notifications and disclosures regarding certain cybersecurity incidents, which could be triggered as a result of incidents discussed above.

In addition, the Company must consider and address cybersecurity considerations as part of its risk management processes.

Cybersecurity for additional information.

We are Subject to Numerous Laws Designed to Protect Consumers, Including the Community Reinvestment Act and Fair Lending Laws, and Failure to Comply with These Laws Could Lead to a Wide Variety of Sanctions.

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Furthermore, we have access to large amounts of confidential financial information and control substantial financial assets, including those belonging to our customers, to whom we offer remote access, and we regularly transfer substantial financial assets by electronic means.

Our operations are dependent upon our ability to protect our computer equipment against damage from physical theft, fire, power loss, telecommunications failure or a similar catastrophic event, as well as from security breaches, denial of service attacks, viruses, worms and other disruptive problems caused by hackers.

Our operations are dependent upon our ability to protect our computer equipment against damage from physical theft, fire, power loss, telecommunications failure or a similar catastrophic event,

as well as from security breaches, denial of service attacks, viruses, worms and other disruptive problems caused by hackers.

Any failure, interruption or breach in security of our systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.

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and reputational damage adversely affecting customer or investor confidence.

We Continually Encounter Technological Change, and We Cannot Predict How Changes in Technology Will Affect Our Business.

We Continually Encounter Technological Change, and We Cannot Predict How Changes in Technology May Affect Our Business.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology driven by products and services, which include developments in:

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Risks Related to Our Common Stock

The Price of Our Common Stock Could Fluctuate Significantly, and This Could Make it Difficult for You to Resell Shares of Our Common Stock at Times or at Prices You Find Attractive .

The Price of Our Common Stock Could Fluctuate Significantly, Which Could Make it Difficult for You to Resell Shares of Our Common Stock at Times or at Prices You Find Attractive .

The stock market and, in particular, the market for financial institution stocks, has experienced significant volatility during the recent changes in economic and industry conditions.

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

What changed 10-K

Item 1A. Risk Factors