What changed in this filing

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Item 1A. Risk Factors

2026-02-27 compared with 2025-03-03 · 49 added, 15 removed, 259 unchanged (20% of the section changed)

123 unchanged sentences

As a result, we may assume different or greater lending risks than other banks.

We make various assumptions and judgments about the

collectibility

We make various assumptions and judgments about the collectability

of our loan portfolio and provide an allowance for credit losses based on several factors.

5 unchanged sentences

The unanticipated loss of our executive officers, or any of our other senior managers, could have an adverse effect on our growth and performance.

In addition, we continue to depend on our key commercial loan officers.

Several of our commercial loan officers are responsible, or share responsibility, for generating and managing a significant portion of our commercial loan portfolio.

In addition, we continue to depend on our key commercial bankers.

Several of our commercial bankers are responsible, or share responsibility, for generating and managing a significant portion of our commercial loan portfolio.

Our success can be attributed in large part to the relationships these officers as well as members of our management team have developed and are able to maintain with our customers as we continue to implement our community banking philosophy.

The loss of any of these commercial loan officers could adversely affect our loan portfolio and performance, and our ability to generate new loans.

The loss of any of these commercial bankers could adversely affect our loan portfolio and performance, and our ability to generate new loans.

Many of our key employees have signed agreements with us agreeing not to compete with us in one or more of our markets for specified time periods if they leave employment with us.

12 unchanged sentences

Lastly, like other financial institutions, we also run a reputational risk of financing businesses that are responsible for significant green-house gas emissions or are related to carbon-based energy sources.

While our risk management framework monitors various types of risks and applies risk mitigation techniques including for environmental risks, and while we have been conscious of our own carbon footprint and have established a Sustainability Committee, introduction of new climate-related legislation and related compliance costs as well as the unpredictable effects of climate change on us or our customers could have a negative impact on our business, financial condition and results of operations, even if temporary in nature.

While our risk management framework monitors various types of risks and applies risk mitigation techniques including for environmental risks, and while we have been conscious of our own carbon footprint and have established a Enterprise Excellence Committee, introduction of new climate-related legislation and related compliance costs as well as the unpredictable effects of climate change on us or our customers could have a negative impact on our business, financial condition and results of operations, even if temporary in nature.

Failure to meet the rapidly changing ESG expectations or standards, or achieve our ESG goals, could adversely affect our business, results of operations, financial condition or stock price.

4 unchanged sentences

and corporate governance and oversight.

Given our commitment to ESG, we actively manage these issues and have established and publicly announced certain goals, commitments and targets which we may refine or even expand further in the future.

These goals, commitments and targets reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.

Given our commitment to ESG, we annually publish an Enterprise Excellence Report, which reports on certain goals, commitments and achievements related to ESG, and more broadly to enterprise excellence.

Our ESG program and our Enterprise Excellent Report are continually evolving and may change in focus, content or scope in the future.

Any goals, commitments or targets that we publish reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.

Evolving stakeholder expectations and our efforts and ability to manage these issues, provide updates on them and accomplish our goals, commitments and targets present numerous operational, regulatory, reputational, financial, legal and other risks, any of which may be outside of our control or could have a material adverse impact on our business, including on our reputation and stock price.

Further, there is uncertainty around the accounting standards and climate-related disclosures associated with emerging laws and reporting requirements and the related costs to comply with the emerging regulations.

Changes in SOFR could adversely affect the amount of interest that accrues on SOFR-linked instruments.

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We continually encounter technological change, and we may have fewer resources than our competitors to continue to invest in technological improvements.

The banking industry is undergoing technological changes with frequent introductions of new technology-driven products and services, such as those related to artificial intelligence, automation and algorithms.

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

The banking industry is undergoing technological changes with frequent introductions of new technology-driven products and services.

We are subject to intense competition from both other financial institutions and from non-bank entities, including FinTech companies.

Technology has lowered the barriers to entry, with customers having a growing variety of traditional and nontraditional alternatives, such as crowdfunding, digital wallets, cryptocurrencies, and money transfer services.

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

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Preserving and enhancing our reputation also depends on maintaining systems and procedures that address known risks and regulatory requirements, as well as our ability to identify and mitigate additional risks that arise due to changes in our businesses and the marketplaces in which we operate, the regulatory environment and client expectations.

If any of these developments has a material effect on our reputation, our business will suffer.

If any of these developments have a material effect on our reputation, our business will suffer.

Our business is subject to operational risks.

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Failure to observe such guidance may result in supervisory identification of unsafe or unsound practices or other deficiencies in risk management or other areas that do not constitute violations of law or regulation.

Risks Related to the Acquisition of Eastern Michigan Financial Corporation

We may not be able to successfully integrate the business of Eastern Michigan Financial Corporation

The success of the acquisition of Eastern Michigan Financial Corporation completed on December 31, 2025 depends, in part, on our ability to successfully integrate the operations, systems, and personnel of the acquired business with our own.

The integration process may involve operational complexities, potential customer confusion or dissatisfaction, technology and system modifications, and the risk of service interruptions.

There is no assurance that the integration process, including the core processor transition, alignment of debit card programs, and alignment of employee benefit programs, will proceed as planned or that we will achieve the anticipated benefits and synergies of the acquisition.

Unanticipated issues, delays, or costs may arise, and we may encounter obstacles that could prevent us from realizing the expected advantages of the transaction.

If we are unable to effectively integrate the acquired business, our business, financial condition, and results of operations could be materially and adversely affected.

The integration of the acquired operations will require significant time and attention from our management team

The process of integrating Eastern Michigan Financial Corporation and its subsidiaries involves significant efforts and resources from our management and employees.

These integration activities include aligning systems, procedures, and personnel, as well as harmonizing corporate cultures and business practices.

As a result, our management team and staff may be required to devote substantial time and attention to integration matters, which could detract from their ability to focus on the day-to-day management and operation of our business.

This diversion of resources and attention may result in missed business opportunities, reduced productivity, or delays in responding to market developments and customer needs.

In addition, integration efforts may create uncertainty or dissatisfaction among customers, employees, or other stakeholders, which could negatively impact our relationships and retention rates.

If the integration process is not managed effectively, or if unforeseen challenges arise, our business, financial condition, and results of operations could be materially and adversely affected.

We may not be able to realize all of the benefits of the acquisition

We may not realize the anticipated benefits of the acquisition, including potential synergies, cost savings, growth opportunities, or enhanced competitive position.

The failure to achieve these benefits could adversely affect our business, financial condition, and results of operations.

We have incurred indebtedness in connection with the acquisition

We entered into a credit agreement with U.S.

Bank National Association for a $30 million term loan to fund a portion of the purchase price and related expenses of the acquisition.

This senior indebtedness requires us to dedicate a portion of our cash flows to debt service payments, which reduces the funds available for other operational needs, capital expenditures, and strategic opportunities.

This increased debt level also makes us more vulnerable to adverse changes in general economic, industry, or competitive conditions, and exposes us to the risk of rising interest rates since the indebtedness bears variable interest.

Furthermore, our indebtedness may limit our flexibility in responding to changes in our business environment and could place us at a competitive disadvantage compared to other companies with less debt.

It may also restrict our ability to obtain additional financing on favorable terms, or at all, should the need arise.

Our ability to meet our debt obligations will depend on our future performance, which is subject to a range of factors, including general economic, regulatory, and competitive conditions, many of which are beyond our control.

If we are unable to generate sufficient cash flow to service our debt or to refinance our indebtedness as it matures, our business, financial condition, and results of operations could be materially and adversely affected.

We are in the process of converting our core processing system

We have initiated the transfer of our core processing system to Jack Henry & Associates, the core processor used by Eastern Michigan Financial Corporation and Eastern Michigan Bank.

This conversion is a complex and resource-intensive project that is not expected to be completed until the first quarter of 2027.

During this period, we may encounter operational challenges, including potential disruptions to daily banking activities, data migration errors, or delays in integrating systems and processes.

There is also a risk of temporary interruptions in customer service or inadvertent disclosure of sensitive customer information as a result of the system conversion.

Any such disruptions or errors could negatively impact customer relationships, cause reputational harm, and result in additional costs.

Moreover, the successful completion of the conversion depends on the effective coordination of our personnel, vendors, and third-party service providers.

Failure to complete the core processing system conversion in a timely and efficient manner, or to realize the anticipated benefits of the new system, could adversely affect our business, financial condition, and results of operations.

Regulatory Risks

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The implementation, amendment or repeal of federal financial services laws or regulations may limit our business opportunities, impose additional costs on us, impact our revenues or the value of our assets, or otherwise adversely affect our business, financial condition or results of operations.

Minimum capital requirements may adversely affect our ability (and that of our bank) to pay cash dividends, reduce our profitability, or otherwise adversely affect our business, financial condition or results of operations.

Minimum capital requirements may adversely affect our ability (and that of our banks) to pay cash dividends, reduce our profitability, or otherwise adversely affect our business, financial condition or results of operations.

We are subject to extensive capital regulations imposed by federal and state banking regulations.

These regulations, among other things, establish minimum requirements to qualify as a “well-capitalized” institution.

If our bank were to fail to maintain its status of “well-capitalized” under the applicable regulatory capital regulations, we may lose our status as a financial holding company and be subjected to a consent agreement requiring us to bring our bank back to a “well-capitalized” status.

If our banks were to fail to maintain their status of “well-capitalized” under the applicable regulatory capital regulations, we may lose our status as a financial holding company and be subjected to a consent agreement requiring us to bring our banks back to a “well-capitalized” status.

Such an agreement may impose restrictions on our activities.

If we were to fail to enter into such an agreement, or fail to comply with the terms of such agreement, the Federal Reserve may impose more severe restrictions on our activities, including requiring us to cease and desist activities permitted under the Bank Holding Company Act of 1956.

If we were to fail to enter into such an agreement or fail to comply with the terms of such agreement, the Federal Reserve Board may impose more severe restrictions on our activities, including requiring us to cease and desist activities permitted under the Bank Holding Company Act.

The regulatory environment is constantly evolving, with requirements frequently being introduced or amended.

36 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors