What changed in this filing

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Item 1A. Risk Factors

2021-05-17 compared with 2021-02-16 · 9 added, 99 removed, 0 unchanged (100% of the section changed)

information below updates, and should be read in conjunction with, the risk factors disclosed in Part I, “Item 1A-

Risk Factors”

in the Form 10-K for the year ended June 30, 2020 that we filed with the Securities and Exchange Commission

on September 30, 2020.

These risk factors could materially affect our business, financial condition or future results.

described are not the only risks that we face.

Additional risks and uncertainties not currently known to us or that we currently

deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

as presented below, there have been no material changes in the risk factors as discussed in our Form 10-K.

recent global coronavirus (COVID-19) pandemic has led to periods of significant volatility in financial, commodities and other

markets and could harm our business and results of operations.

December 2019, a novel strain of coronavirus (COVID-19) was first reported in Wuhan, Hubei Province, China.

Since then, COVID-19

infections have spread to additional countries including the United States.

In March 2020, the World Health Organization declared

COVID-19 to be a pandemic.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of

the coronavirus pandemic on our business, and there is no guarantee that our efforts to address or mitigate the adverse impacts

of the coronavirus will be effective.

The impact to date has included periods of significant volatility in financial, commodities

and other markets.

This volatility, if it continues, could have an adverse impact on our customers and on our business, financial

condition and results of operations as well as our growth strategy.

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

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

economy at large, and has resulted and

may continue to result in disruptions to our customers’

businesses, and a decrease in consumer confidence and business generally.

In addition, recent actions by US federal, state and local governments to address the pandemic, including travel bans, stay-at-home

orders and school, business and entertainment venue closures, may have a significant adverse effect on our customers and the markets

in which we conduct our business.

The extent of impacts resulting from the coronavirus pandemic and other events beyond our control

will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge

concerning the severity of the coronavirus pandemic and actions taken to contain the coronavirus or its impact, among others.

to our customers could result in increased risk of delinquencies, defaults, and foreclosures and losses on our loans.

The escalation

of the pandemic may also negatively impact regional economic conditions for a period of time, resulting in declines in local loan

demand, liquidity of loan guarantors, loan collateral (particularly in real estate), loan originations and deposit availability.

If the global response to contain COVID-19 escalates or is unsuccessful, we could experience a material adverse effect on our

business, financial condition, results of operations and cash flows.

spread of the COVID-19 outbreak and the governmental responses may disrupt banking and other financial activity in the areas in

which we operate and could potentially create widespread business continuity issues for us.

outbreak of COVID-19 and the US federal, state and local governmental responses may result in a disruption in the services we

We rely on our third-party vendors to conduct business and to process, record, and monitor transactions.

If any of these

vendors are unable to continue to provide us with these services or experience interruptions in their ability to provide us with

these services, it could negatively impact our ability to serve our customers.

Furthermore, the coronavirus pandemic could negatively

impact the ability of our employees and customers to engage in banking and other financial transactions in the geographic areas

in which we operate and could create widespread business continuity issues for us.

We also could be adversely affected if key

personnel or a significant number of employees were to become unavailable due to infection, quarantine or other effects and restrictions

of a COVID-19 outbreak in our market areas.

Although we have business continuity plans and other safeguards in place, there is

no assurance that such plans and safeguards will be effective.

If we are unable to promptly recover from such business disruptions,

our business, financial condition and results of operations would be adversely affected.

We also may incur additional costs to

remedy damages caused by such disruptions, which could adversely affect our financial condition and results of operations.

We have granted payment deferrals to

borrowers that have experienced financial hardship due to COVID-19, and if those borrowers are unable to resume making payments

we will experience an increase in non-accrual loans, which could adversely affect our earnings and financial condition.

In keeping with regulatory guidance to

work with borrowers during this unprecedented situation and as outlined in the CARES Act, we offered payment deferral programs

for our business and individual customers who are adversely affected by the pandemic.

Depending on the demonstrated need of the

client, we deferred either the full loan payment or the principal component of the loan payment for three months.

Through December

31, 2020, we had granted accommodations with respect to loans with a total value of approximately $18.4 million, which represented

6.2% of gross portfolio loans, and as of December 31, 2020, $1.2 million loans remained subject to a payment accommodation, which

represented 0.4% of gross portfolio loans.

Upon the expiration of the deferral period, borrowers are required to resume making

previously scheduled loan payments.

While interest and fees will still accrue to income, should eventual credit losses on these

deferred payments emerge or if a loan is placed on nonaccrual status, interest income and fees accrued would need to be reversed.

While management continues to consider the potential impact of COVID-19 on asset quality, to date, no adjustment to the allowance

for credit losses has been made to address the potential impact of COVID-19 on our loan portfolio.

An increase in non-performing

loans and charge-offs would cause us to increase our allowance for credit losses.

Any increase in the allowance for loan losses,

or expenses incurred to determine the appropriate level of the allowance for loan losses, may have a material adverse effect on

the Company’s financial condition and results of operations.

Customary means to collect non-performing

assets may be prohibited or impractical during the COVID-19 pandemic, and there is a risk that collateral securing a non-performing

asset may deteriorate if we choose not to, or are unable to, foreclose on collateral on a timely basis.

Due to temporary closure of courts and

other government actions, there have been some slight delays in the ability to take certain actions with respect to delinquent

borrowers that we would otherwise take in the ordinary course, such as customary collection and foreclosure procedures.

there has been no material impact on the Banks’

ability to collect, but if such delays recur and if the real estate market

deteriorates, such delays may delay timely collection of loans.

We may experience losses, additional

expense and reputational harm arising out of our origination of PPP loans.

We originated $1.5 million of PPP loans

to 45 borrowers.

We may incur losses on some of our PPP loans if the loans are not forgiven, the borrowers default and the SBA

does not honor its guarantee due to an error made by us in making the loan, the ineligibility of the borrower or otherwise.

addition, we may experience reputational harm arising out of our origination of PPP loans as a result of reports of borrower fraud

and government administration of the loan forgiveness process.

There have been no material changes in the risk

factors disclosed in Part I, “Item 1A- Risk Factors”

of our Annual Report on Form 10-K for the fiscal year ended

June 30, 2020, as updated by the disclosure in Part II, Item 1A-Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended

December 31, 2021, which risk factors could materially affect our business, financial condition or future results.

The risks described

therein are not the only risks that we face.

Additional risks and uncertainties not currently known to us or that we currently deem to

be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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-Q

Item 1A. Risk Factors