Item 1A. Risk Factors
ITEM 1A.
RISK FACTORS
Except as set for below, there are no material changes to the risk factors as previously discussed in Part I, Item 1A. of our 2023 Annual Report on Form 10-K.
Risks Related to the Merger
The Merger is subject to a number of conditions, including the receipt of waivers and/or approvals from governmental
authorities, that may delay the Merger or adversely impact the Company’s and Evans’s ability to complete the Merger.
The completion of the Merger is subject to the satisfaction or waiver of a number of conditions. Before the Merger may be completed, certain
approvals, waivers or consents must be obtained from federal governmental authorities, including the Federal Reserve Bank of New York and the OCC. Satisfying the requirements of these governmental authorities may delay the date of completion of
the Merger. In addition, these governmental authorities may include conditions on the completion of the Merger or require changes to the terms of the Merger. While it is currently anticipated that the Merger will be completed promptly following
the receipt of all required regulatory and shareholder approvals, there can be no assurance that the conditions to closing will be satisfied in a timely manner or at all, or that an effect, event, development or change will not transpire that
could delay or prevent these conditions from being satisfied or impose additional costs on or limit the revenues of the Company following the Merger, any of which might have a material adverse effect on the Company following the Merger. The
parties are not obligated to complete the Merger should any regulatory approval contain a condition, restriction or requirement that our Board of Directors reasonably determines in good faith would, individually or in the aggregate, materially
reduce the benefits of the Merger to such a degree that the Company would not have entered into the Merger Agreement had such condition, restriction or requirement been known at the date of the Merger Agreement.
The Company and Evans cannot provide any assurances with respect to the timing of the closing of the Merger, whether the Merger will be completed
at all or when Evans shareholders would receive the consideration for the Merger, if at all.
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The market price of the Company’s common stock may decline as a result of the Merger and the market price of the Company’s
common stock after the consummation of the Merger may be affected by factors different from those affecting the price of the Company’s common stock before the Merger.
The market price of the Company’s common stock may decline as a result of the Merger if the Company does not achieve the perceived benefits of the
Merger or the effect of the Merger on the Company’s financial results is not consistent with the expectations of financial or industry analysts.
In addition, the consummation of the Merger will result in the combination of two companies that currently operate as independent companies. The
business of the Company and the business of Evans differ. As a result, while the Company expects to benefit from certain synergies following the Merger, the Company may also encounter new risks and liabilities associated with these differences.
Following the Merger, shareholders of the Company and Evans will own interests in a combined company operating an expanded business and may not wish to continue to invest in the Company, or for other reasons may wish to dispose of some or all
of the Company’s common stock. If, following the effective time of the Merger, large amounts of the Company’s common stock are sold, the price of the Company’s common stock could decline.
Further, the results of operations of the Company and the market price of the Company’s common stock after the Merger may be affected by factors
different from those currently affecting the independent results of operations of each of the Company and Evans and the market price of the Company’s common stock. Accordingly, the Company’s historical market prices and financial results may
not be indicative of these matters for the Company after the Merger.
The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.
The Company and Evans can mutually agree to terminate the Merger Agreement at any time before the Merger has been completed, and either company can
terminate the Merger Agreement if:
●
any regulatory approval required for consummation of the Merger and the other transactions contemplated by the Merger Agreement has been
denied by final, nonappealable action of any regulatory authority, or an application for regulatory approval has been permanently withdrawn at the request of a governmental authority;
●
the required approval of the Merger Agreement by the Evans shareholders is not obtained;
●
the other party materially breaches any of its representations, warranties, covenants or other agreements set forth in the Merger
Agreement (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the Merger Agreement), which breach is not cured within 30 days of written notice of
the breach, or by its nature cannot be cured prior to the closing of the Merger, and such breach would entitle the non-breaching party not to consummate the Merger; or
●
the Merger is not consummated by September 15, 2025, unless the failure to consummate the Merger by such date is due to a material
breach of the Merger Agreement by the terminating party.
In addition, the Company may terminate the Merger Agreement if:
●
Evans materially breaches the non-solicitation provisions in the Merger Agreement; or
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the Evans Board of Directors:
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fails to recommend approval of the Merger Agreement, or withdraws, modifies or changes such recommendation in a manner adverse to the
Company’s interests;
●
recommends, proposes or publicly announces its intention to recommend or propose to engage in an acquisition transaction with any person
other than the Company or any of its subsidiaries; or
●
Evans fails to call, give notice of, convene and hold its special meeting.
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Failure to complete the merger could negatively impact the stock price of the Company and its future business and financial
results.
Completion of the Merger is subject to the satisfaction or waiver of a number of conditions, including approval by Evans shareholders of the
Merger. The Company cannot guarantee when or if these conditions will be satisfied or that the Merger will be successfully completed. The consummation of the Merger may be delayed, the Merger may be consummated on terms different than those
contemplated by the Merger Agreement, or the Merger may not be consummated at all. If the Merger is not completed, the ongoing business of the Company may be adversely affected, and the Company will be subject to several risks, including the
following:
●
the Company could incur substantial costs relating to the proposed Merger, such as legal, accounting, financial advisor,
filing, printing and mailing fees; and
●
the Company’s management’s and employees’ attention may be diverted from their day-to-day business and operational matters as
a result of efforts relating to the attempt to consummate the Merger.
In addition, if the Merger is not completed, the Company may experience negative reactions from the financial markets and from its customers
and employees. The Company also could be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against the Company to perform its obligations under the Merger Agreement. If the Merger is not
completed, the Company cannot assure its stockholders that the risks described above will not materialize and will not materially affect the Company’s business and financial results or the stock price of the Company.
The integration of the Company and Evans will present significant challenges and expenses that may result in the combined
business not operating as effectively as expected, or in the failure to achieve some or all of the anticipated benefits of the transaction.
The benefits and synergies expected to result from the proposed Merger will depend in part on whether the operations of Evans can be
integrated in a timely and efficient manner with those of the Company. The Company will face challenges and costs in consolidating its functions with those of Evans, and integrating the organizations, procedures and operations of the two
businesses. The integration of the Company and Evans will be complex and time-consuming, and the management of both companies will have to dedicate substantial time and resources to it. These efforts could divert management’s focus and
resources from serving existing customers or other strategic opportunities and from day-to-day operational matters during the integration process. Failure to successfully integrate the operations of the Company and Evans could result in the
failure to achieve some of the anticipated benefits from the transaction, including cost savings and other operating efficiencies, and the Company may not be able to capitalize on the existing relationships of Evans to the extent anticipated,
or it may take longer, or be more difficult or expensive than expected to achieve these goals. This could have an adverse effect on the business, results of operations, financial condition or prospects of the Company and/or the Bank after the
transaction.
Unanticipated costs relating to the merger could reduce the Company’s future earnings per share.
The Company BT has incurred substantial legal, accounting, financial advisory and other Merger-related costs, and management has devoted
considerable time and effort in connection with the Merger. If the Merger is not completed, the Company will bear certain fees and expenses associated with the Merger without realizing the benefits of the Merger. If the Merger is completed, the
Company expects to incur substantial expenses in connection with integrating the business, operations, network, systems, technologies, policies and procedures of the two companies. The fees and expenses may be significant and could have an
adverse impact on the Company’s results of operations.
The Company believes that it has reasonably estimated the likely costs of integrating the operations of the Company and Evans, and the
incremental costs of operating as a combined company. However, it is possible that unexpected transaction costs such as taxes, fees or professional expenses or unexpected future operating expenses such as increased personnel costs or increased
taxes, as well as other types of unanticipated adverse developments, could have a material adverse effect on the results of operations and financial condition of the combined company. If unexpected costs are incurred, the Merger could have a
dilutive effect on the Company’s earnings per share. In other words, if the Merger is completed, the earnings per share of the Company’s common stock could be less than anticipated or even less than if the Merger had not been completed.
Estimates as to the future value of the combined company are inherently uncertain.
Any estimates as to the future value of the combined company, including estimates regarding the earnings per share of the combined company, are
inherently uncertain. The future value of the combined company will depend upon, among other factors, the combined company’s ability to achieve projected revenue and earnings expectations and to realize the anticipated synergies, all of which
are subject to the risks and uncertainties described in these risk factors.
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Following the Merger, the Company may not continue to pay dividends at or above the rate currently paid.
Following the Merger, the Company’s stockholders may not receive dividends at the same rate that they did as stockholders of the Company prior to
the Merger for various reasons, including the following:
●
the Company may not have enough cash to pay such dividends due to changes in its cash requirements, capital spending plans, cash flow or
financial position;
●
decisions on whether, when and in what amounts to make any future dividends will remain at all times entirely at the discretion of the
Board of Directors, which reserves the right to change the Company’s dividend practices at any time and for any reason; and
●
the amount of dividends that the Company’s subsidiaries may distribute to the Company may be subject to restrictions imposed by state
law and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur.
The Company’s stockholders will have no contractual or other legal right to dividends that have not been declared by the Board of Directors.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)
Not applicable
(b)
Not applicable
(c)
None
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4.
MINE SAFETY DISCLOSURES
None
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