What changed in this filing

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Item 1A. Risk Factors

2023-03-16 compared with 2022-03-18 · 156 added, 162 removed, 320 unchanged (50% of the section changed)

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Further, to the extent that any of the information in this Report constitutes forward-looking statements, the risk factors below also are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf.

Risks Related to the Ongoing COVID-19 Pandemic

The COVID-19 pandemic could adversely affect our business, financial condition, and results of operations, and the ultimate impact will depend on future developments which are uncertain and cannot be predicted.

The COVID-19 pandemic is creating extensive disruptions to the global economy and to the lives of individuals throughout the world.

Governments, businesses, and the public are taking unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including quarantines, travel bans, fiscal stimulus, and legislation designed to deliver monetary aid and other relief.

The pandemic and related efforts to contain it have disrupted global economic activity, adversely affected the functioning of financial markets, prompted decreases in interest rates in 2020, increased economic and market uncertainty, and disrupted trade and supply chains.

If these implications continue or result in sustained economic stress, many of the risk factors identified in this Report could be exacerbated and such effects could have a material adverse effect on us related to credit, collateral, interest rate risk, profitability, and operations as described in the following sections.

• Credit and Collateral Risk .

The spread of COVID-19 has caused, and may continue to cause, business shutdowns, limitations on commercial activity and financial transactions, labor shortages, supply chain interruptions, heightened inflationary pressures, increased unemployment and commercial property vacancy rates, reduced profitability and ability of property owners to make mortgage payments, and overall economic and financial market instability.

All of these factors could cause our customers to be unable to make scheduled loan payments.

If the effects of COVID-19 result in widespread and sustained repayment shortfalls on loans in our portfolio, we could incur significant delinquencies, foreclosures, and credit losses, particularly if the available collateral is insufficient to cover our exposure.

The effects of COVID-19 on economic activity could negatively affect collateral values and our ability to liquidate such collateral.

Further, in the event of delinquencies, regulatory changes and policies designed to protect borrowers may slow or prevent us from making business decisions or delay certain remedial actions, such as foreclosure.

All of these factors could cause the level of our nonperforming loans, charge-offs, and delinquencies to increase, potentially requiring significant future provisions for credit losses.

• Interest Rate Risk .

Our net interest income, lending activities, deposits, and profitability could be negatively affected by volatility in interest rates and other factors resulting from uncertainties stemming from COVID-19.

In March 2020, the Federal Reserve lowered the target federal funds rate to 0.25%, citing concerns about the impact of COVID-19 on markets and stress in the energy sector.

This low interest rate environment has and could continue to negatively impact our net interest income and net income.

Higher income volatility from changes in interest rates and spreads to benchmark indices could also cause decreases in current fair market values of our assets.

Fluctuations in interest rates may impact both the level of income and expense recorded on some of our assets and liabilities and the market value of applicable interest-earning assets and interest-bearing liabilities, which could, in turn, negatively affect our net income.

• Profitability Risk .

Our profitability has been and could continue to be negatively affected by changes in interest rates as well as other aspects of the COVID-19 pandemic.

• Operational Risk .

While COVID-19 precautions in terms of physical separation have been reduced, if it becomes necessary to resume all or some of the precautions implemented earlier in the pandemic, our ability to meet customers’ expectations could be limited and have a material adverse effect on our operations.

Moreover, we rely on many third parties in our business operations, including appraisers of real property collateral;

title companies;

vendors that supply essential services such as loan servicers, providers of financial information, systems, analytical tools, and electronic payment and settlement systems;

and local, state, and federal government agencies, offices, and courthouses.

In responding to the pandemic, many of these entities limited, and may again limit, the availability of and access to their services.

Because there have been no recent global pandemics of comparable global impact, we do not yet know the full extent of COVID-19’s effects on our business, operations, or the global economy as a whole.

Any future development will be highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the effectiveness of our social-distancing accommodation arrangements, third party providers’ ability to support our operations, and any actions taken by governmental authorities and other third parties in response to the pandemic.

As a participating lender in the PPP, we are subject to risks related to the SBA program and related PPP loans.

The CARES Act in March of 2020 and the Economic Aid Act in December of 2020 included a significant 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 that enrolled in the program, subject to numerous limitations and eligibility criteria.

We participated as a lender in the PPP.

The PPP became available on April 3, 2020.

Due to how quickly each act was passed, there was and continues to be a significant amount of ambiguity and changes in the laws, rules, and guidance regarding requirements for eligibility, underwriting, origination, funding, and forgiveness of PPP loans.

Ambiguity, changes, and the speed that was necessary to implement the program expose us to regulatory and legal risks relating to noncompliance with the PPP.

PPP loans are also subject to regulatory requirements that require forbearance of loan payments for a specified time and limit our ability to pursue all available remedies in the event of a loan default.

If a borrower under a PPP loan fails to qualify for loan forgiveness, our risk is heightened because we hold these loans at unfavorable interest rates.

We also have credit risk on PPP loans if the SBA determines that there is a deficiency in the manner the loan was originated, funded, or serviced by us, such as an issue with the eligibility of a borrower to receive a PPP loan.

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 the PPP loan was originated, funded, or serviced by us, the SBA may deny its guaranty, reduce the amount of the guaranty, or seek recovery from us of any loss related to the deficiency.

In addition, we have credit risk related to how forgiveness of PPP loans is handled and how the forgiveness amounts are determined.

Governmental agencies have, and may continue to change the rules, create new rules, have a very detailed review process, or require additional forms or paperwork that the borrower may not complete appropriately.

All of these items could negatively impact us.

Since the commencement of the PPP, numerous other banks have been subject to litigation regarding the process and procedures that those banks used in processing applications for the PPP.

We may be exposed to similar litigation from customers, non‑customers, and agents that approach us regarding PPP loans and regarding our procedures for processing applications, funding PPP loans, and coordinating the forgiveness of the loans.

If any such litigation is initiated against us, it may result in significant financial liability, significant litigation costs, or adversely affect our reputation.

Risks Related to Our Credit Activities

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As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment.

In addition, there are risks inherent in making any loan, including risks with respect to the period of time the loan may be repaid, risks relating to proper loan underwriting, risks resulting from changes in economic and industry conditions such as labor and material shortages and supply chain difficulties, and risks inherent in dealing with individual borrowers.

In addition, there are risks inherent in making any loan, including risks with respect to the period of time the loan may be repaid;

risks relating to proper loan underwriting;

risks resulting from changes in economic and industry conditions such as labor and material shortages, supply chain difficulties, and heightened inflationary pressures;

and risks inherent in dealing with individual borrowers.

The creditworthiness of a borrower is affected by many factors including local market conditions and general economic conditions.

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A failure to effectively measure and limit our credit risk could result in loan defaults, foreclosures, and additional charge-offs.

As a result, we may need to significantly increase our provision, which could adversely affect our net income.

A significant portion of our loan portfolio consists of real estate loans, which subjects us to potential impairment of the collateral securing the loan if the real estate economy experiences negative changes as well as costs and potential risks associated with the ownership of the real property if we are forced to foreclose.

The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the geographic area the real estate is located.

Real estate values in many Louisiana markets have experienced periods of

fluctuation over the last several years.

As a result, we may need to significantly increase our provision for loan losses, which could adversely affect our net income.

A significant portion of our loan portfolio consists of real estate loans, which subjects us to the potential impairment of the collateral securing the loan if the real estate market experiences negative changes and the costs and potential risks associated with the ownership of the real property if we are forced to foreclose.

Real estate values in many Louisiana markets have experienced periods of fluctuation over the last several years.

As of December 31, 2022, $1.50 billion, or 78.1%, of loans HFI were secured by real estate as the primary component of collateral.

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fluctuations in interest rates and the availability of loans to potential purchasers;

changes in tax laws and other governmental statutes;

regulations and policies;

changes in tax laws and other governmental statutes, regulations, and policies;

and acts of nature, such as hurricanes, flooding, and other natural disasters.

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Additionally, we may have to foreclose on the collateral property to protect our investment.

We may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate, including potential environmental liability due to contamination of a property either during ownership or after divesting of it.

As of December 31, 2021, we held $660,000 in OREO.

As of December 31, 2022, we held no OREO.

This amount could increase in the future, depending upon the level of our real estate foreclosures and our ability to efficiently divest of the foreclosed OREO.

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Our commercial real estate loan portfolio exposes us to risks that may be greater than the risks related to other types of loans.

Our loan portfolio includes non-owner occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans.

As of December 31, 2021, our construction and development loans, non-owner occupied commercial real estate loans, and non-real estate secured loans financing commercial real estate activities totaled $447.6 million, or 26.6%, of loans HFI.

These loans typically involve repayment dependent upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service.

Our loan portfolio includes owner occupied and non-owner occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans.

As of December 31, 2022, our owner occupied loans totaled $393.4 million, or 20.6% of loans HFI.

Also, as of December 31, 2022, our construction and development loans, non-owner occupied commercial real estate loans, and non-real estate secured loans financing commercial real estate activities totaled $560.4 million, or 29.2% of

The repayment of these loans is typically dependent upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service.

This projected income may be adversely affected by changes in the economy or local market conditions.

Commercial real estate loans expose us to greater credit risk than loans secured by residential real estate because there are fewer potential purchasers for the commercial real estate collateral, which can make liquidation more difficult.

Commercial real estate loans expose us to greater credit risk than loans secured by residential real estate, because there are fewer potential purchasers for the commercial real estate collateral, which can make liquidation more difficult in the event of default of the underlying loan.

Additionally, non-owner occupied commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers.

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Our business may be adversely affected by credit risk associated with residential property.

As of December 31, 2021, $474.4 million, or 28.2%, of our total loan portfolio was secured by first liens on one-to-four family residential loans.

As of December 31, 2022, $543.5 million, or 28.4%, of our total loan portfolio was secured by primary and secondary liens on one-to-four family residential loans.

One-to-four family residential loans are generally sensitive to regional and local economic conditions that significantly impact the borrowers’ ability to meet their loan payment obligations.

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A downturn in the housing market coupled with elevated unemployment rates may also result in a decline in demand for our products and services.

In addition, interest rate increases often result in larger payment requirements for our borrowers, which increases the potential for default and could result in a decrease in the demand for residential loans.

In addition, interest rate increases often result in larger payment requirements for our borrowers with variable rate loans, which increases the potential for default and could result in a decrease in the demand for residential loans.

At the same time, the marketability of the property securing a residential loan may be adversely affected by any reduced demand resulting from higher interest rates.

In a declining interest rate environment, there may be an increase in prepayments on residential loans as borrowers refinance their loans at lower rates.

A significant portion of our loan portfolio is comprised of commercial and industrial loans secured by receivables, inventory, equipment, or other commercial collateral, the deterioration in value of which could expose us to credit losses.

In a declining interest rate environment, there may be an increase in prepayments on residential loans as borrowers refinance their loans at lower rates, which may adversely affect our business and profitability.

A significant portion of our loan portfolio is comprised of commercial and industrial loans secured by receivables, inventory, equipment, or other commercial collateral, and the deterioration in the collateral’s value could expose us to credit losses.

As of December 31, 2022, approximately $310.1 million, or 16.2%, of loans HFI were commercial and industrial loans collateralized, in general, by general business assets including, among other things, accounts receivable, inventory, equipment, and available real estate, and most are backed by a personal guaranty of the borrower or principal.

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These types of collateral may decline in value more rapidly than we anticipate, exposing us to increased credit risk.

In addition, a portion of our customer base, including customers in the energy and real estate

business, may be exposed to volatile businesses or industries that are sensitive to commodity prices or market fluctuations, such as energy prices.

In addition, a portion of our customer base, including customers in the energy and real estate business, may be exposed to volatile businesses or industries that are sensitive to commodity prices or market fluctuations, such as energy prices.

Accordingly, negative changes in commodity prices, real estate values, or liquidity could impair the value of the collateral securing these loans.

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Our allowance for loan losses may prove to be insufficient to absorb losses inherent in our loan portfolio.

We establish our allowance for loan losses and maintain it at a level considered adequate by management to absorb probable loan losses based on our analysis of our loan portfolio, our historical loss experience, and conditions within our markets.

As of December 31, 2021, our allowance for loan losses totaled $19.2 million, which represents approximately 1.14% of loans HFI.

The allowance for loan losses represents our estimate of probable losses in our loan portfolio at each balance sheet date and is based upon relevant information available to us.

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Additions to the allowance for loan losses, which are charged to earnings through the provision for loan losses, are determined based on a variety of factors, including an analysis of our loan portfolio, historical loss experience, and an evaluation of current economic conditions in our market areas.

As of December 31, 2022, our allowance for loan losses totaled $20.6 million, which represents approximately 1.08% of loans HFI.

The actual amount of loan losses is affected by changes in economic, operating, and other conditions within our markets, as well as changes in the financial condition, cash flows, and operations of our borrowers.

All of these factors are beyond our control, and such losses may exceed our current estimates.

Additional loan losses will likely occur in the future and may occur at a rate greater than we have previously experienced or than we anticipate.

Additional loan losses will likely occur in the future and may occur at a rate greater than we have previously experienced or greater than we anticipate.

We may be required to make additional provisions for loan losses to further supplement our allowance for loan losses, due either to our management’s decision or as a regulatory requirement.

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Such regulatory agencies may require us to recognize future charge-offs.

Finally, the measure of our allowance for loan losses will be subject to new accounting standards.

FASB has adopted a new accounting standard that will be effective for us on January 1, 2023, due to our classification as an SEC registrant with smaller reporting company filing status.

This new standard, referred to as CECL, will require financial institutions to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for credit losses.

This will change the current method of providing allowances for loan losses that are probable, which could require us to increase our allowance for credit losses.

CECL will also greatly increase the types of data we would need to collect and review to determine the appropriate level of the allowance for credit losses.

The CECL model could create more volatility in the level of our allowance for credit losses after it becomes applicable to us.

Finally, the measure of our allowance for loan losses is subject to new accounting standards.

FASB adopted a new accounting standard that was effective for us on January 1, 2023.

This new standard, referred to as CECL, requires

financial institutions to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for credit losses.

This changes our historical method of providing allowances for loan losses that are probable, which could require us to increase our allowance for credit losses going forward.

CECL also greatly increases the types of data we need to collect and review to determine the appropriate level of the allowance for credit losses.

The CECL model could create more volatility in the level of our allowance for credit losses going forward.

For more information on our CECL adoption, see “Item 8.

Financial Statements and Supplementary Data - Note 1.

Significant Accounting Policies - Recent Accounting Pronouncements” in this Report.

As a participating lender in the PPP, we are subject to risks related to the SBA program and related PPP loans.

The CARES Act in March of 2020 and the Economic Aid Act in December of 2020 included a significant loan program administered through the SBA referred to as the PPP.

We participated as a lender in the PPP.

The PPP became available on April 3, 2020.

Due to how quickly each act was passed and implemented, there was a significant amount of ambiguity and changes in the laws, rules, and guidance regarding requirements for eligibility, underwriting, origination, funding, and forgiveness of PPP loans, which exposes us to regulatory and legal risks relating to past noncompliance with the PPP.

We also have post-forgiveness credit risk on PPP loans if the SBA determines that there is a deficiency in the manner the loan was originated, funded, or serviced by us, such as an issue with the eligibility of a borrower to receive a PPP loan.

In the event of a loss resulting from a determination by the SBA that there was a deficiency in the manner the PPP loan was originated, funded, or serviced by us, the SBA may seek to recover from us any loss related to the deficiency.

In addition, we have post-forgiveness credit risk related to how forgiveness of PPP loans was handled and how the forgiveness amounts were determined.

All of these items could negatively impact us.

Governmental agencies could audit our PPP borrowers, and any allegations of fraud resulting from such audit could expose us to liability and reputational risk.

Since the commencement of the PPP, numerous other banks have been subject to litigation regarding the process and procedures that those banks used in processing applications for the PPP.

We may be exposed to similar litigation from customers, non‑customers, and agents that approached us regarding PPP loans and litigation regarding our procedures for processing applications, funding PPP loans, and coordinating the forgiveness of the loans.

If any such litigation is initiated against us, it may result in significant financial liability, significant litigation costs, or adversely affect our reputation.

Appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, OREO, and repossessed personal property may not accurately describe the net value of the asset.

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If any of these valuations are inaccurate, our combined and consolidated financial statements may not reflect the correct value of our OREO or personal property, and our allowance for loan losses may not reflect accurate loan impairments.

The amount of our nonperforming and classified assets may increase significantly, resulting in additional losses, costs, and expenses.

As of December 31, 2021, we had NPAs of $979,000, or 0.03% of total assets.

The amount of our nonperforming assets may increase significantly, resulting in additional losses, costs, and expenses.

As of December 31, 2022, we had NPAs of $2.4 million, or 0.08% of assets.

NPAs adversely affect our net income in various ways.

We do not record interest income on OREO or on nonperforming loans, which adversely affects our income.

When we take collateral in foreclosures and similar proceedings, we are required to mark the related asset to market value of the collateral, which may ultimately result in a loss.

When we take collateral in foreclosures and similar proceedings, we are required to mark the related asset to the market value of the collateral, which may ultimately result in a loss.

An increase in the level of NPAs also increases our risk profile, which may cause our regulators to require additional amounts of capital.

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These effects may be particularly pronounced in a market of reduced real estate values and excess inventory.

The small to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans.

The small to medium-sized businesses that we lend to may have fewer resources to handle adverse business developments, which may impair their ability to repay loans.

A significant portion of our business development and marketing strategy is focused on small to medium-sized businesses.

Small to medium-sized businesses frequently have smaller market shares than their competition, may be

more vulnerable to economic downturns, inflation, and labor market and supply chain constraints;

Small to medium-sized businesses frequently have smaller market shares than their competition;

may be more vulnerable to economic downturns, inflation, and labor market and supply chain constraints;

may often need substantial additional capital to expand or compete;

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Any of these factors may impair a borrower’s ability to repay a loan.

In addition, the success of a small or medium-sized business often depends on the management skills, talents, and efforts of one individual or a small group of individuals.

In addition, the success of a small or medium-sized business

often depends on the management skills, talents, and efforts of one individual or a small group of individuals.

The death, disability, or resignation of one or more of these people could have an adverse impact on the business and its ability to repay loans.

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Any misrepresentation or incorrect or incomplete information, whether fraudulent or inadvertent, may not be detected prior to entering into the transaction.

In addition, one or more of our employees could cause a significant breakdown or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our loan documentation, operations, or systems.

Whether a misrepresentation is made by the applicant or another third party, we generally bear the risk of loss associated with the misrepresentation.

In addition, there could be a significant breakdown or failure in our systems or processes in compiling that information, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our loan documentation, operations, or systems.

Whether a misrepresentation is made by the applicant, an employee, or another third party, we generally bear the risk of loss associated with the misrepresentation.

We are often contractually required to indemnify counterparties for losses caused by a material misrepresentation, and a loan subject to a material misrepresentation is typically not marketable or, if sold, is subject to repurchase.

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Net interest income represents the difference between the interest income we earn on loans, investments, and other interest-earning assets, and the interest we pay on interest-bearing liabilities, such as deposits and borrowings.

When interest-earning assets mature or reprice more quickly, or to a greater degree than interest-bearing liabilities, falling interest rates could reduce net interest income.

In a rising interest rate environment, the value of our securities AFS portfolio generally declines.

As of December 31, 2022, our net unrealized loss in our securities AFS portfolio was $74.1 million due to the significant rise in interest rates during 2022.

When interest-earning assets mature or reprice more quickly, or to a greater degree than interest-bearing liabilities, rising interest rates could increase net interest income.

Similarly, when interest-bearing liabilities mature or reprice more quickly, or to a greater degree than interest-earning assets in a period, an increase in interest rates could reduce net interest income.

Our interest sensitivity profile was asset sensitive as of December 31, 2022, meaning that our assets have the opportunity to reprice at a faster pace than our liabilities.

Consequently, we estimate our net interest income would decrease in a falling interest rate environment and increase in a rising interest rate environment.

Consequently, we estimate our net interest income would increase in a rising interest rate environment and decrease in a falling interest rate environment.

However, rising interest rates could decrease loan originations by decreasing loan demand and creating depository pressures for us from customers withdrawing their deposits seeking higher returns.

This could result in decreasing our loan revenues, requiring us to borrow money to fund loans, or increasing the rate we pay on deposits, any of which could decrease our net interest income.

Interest rates are affected by many factors outside of our control, including governmental monetary policies, inflation, deflation, recessions, changes in unemployment, the money supply, international disorder, and instability in domestic and foreign financial markets.

Changes in the level of market interest rates affect our net yield on interest-earning assets, our cost of funds, and our loan origination volume.

A decrease in the general level of interest rates may, among other things, increase prepayments within the loan portfolio and on mortgage-backed securities within the securities portfolio, and increase competition for deposits.

An increase in the general level of interest rates may, among other things, reduce the demand for loans and decrease loan repayment rates.

An increase in the general level of interest rates may, among other things, reduce the demand for loans and decrease loan repayments.

Increases could also adversely affect the ability of borrowers of floating rate loans to meet their higher payment obligations, which could in turn lead to an increase in NPAs and charge-offs.

Natural disasters, acts of war or terrorism, the impact of pandemics, civil unrest, and other external events could result in a disruption of our operations and increases in loan losses.

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A deterioration in local economic conditions or in the residential or commercial real estate markets could have an adverse effect on the quality of our loan portfolio, the demand for our products and services, the ability of borrowers to timely repay loans, and the value of the collateral securing loans.

If the population, employment, or income growth in any of our markets is negative or slower than projected, income levels, deposits, and real estate development could be adversely impacted.

Additionally, our business could be adversely affected by the effects of war and international conflict, civil unrest, inflation, labor market constraints, or a widespread outbreak of disease pandemics, including the ongoing pandemic caused by COVID-19.

We are monitoring the conflict between Russia and Ukraine.

If the population, employment, or income growth in any of our markets is negative or slower than projected, income levels, deposits, and real estate development could be adversely impacted, which could adversely affect our business and

profitability.

Additionally, our business could be adversely affected by the effects of war and international conflict, civil unrest, inflation, labor market and supply chain constraints, or a widespread outbreak of pandemics.

Further, we are monitoring the ongoing conflict between Russia and Ukraine.

While we do not expect that the conflict will be directly material to us, associated effects of the geopolitical instability, such as the imposition of sanctions against Russia and Russia’s response to such sanctions (including retaliatory acts like cyber-attacks and sanctions against other countries), could adversely affect the global economy or domestic markets, including ours.

If the economies in our primary markets experience an overall decline as a result of these types of external events, demand for loans and our other products and services could be reduced.

In addition, the rate of delinquencies, foreclosures, bankruptcies, and losses on loan portfolios may increase substantially, as uninsured property losses or sustained job interruption or loss may materially impair borrowers’ ability to repay their loans.

Such external events could, therefore, result in decreased revenue and increased loan losses.

As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways.

Such external events could, therefore, result in decreased revenue and increased loan losses for us.

As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways, including demand for our products and services, inflation, and financial markets.

Our business and operations, which primarily consist of lending money to customers in the form of loans, borrowing money from customers in the form of deposits, and investing in securities, are sensitive to general business and economic conditions in the U.S.

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Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control.

Federal fiscal and monetary policymaking decisions could lead to changes in interest rates, inflation, or other economic impacts such as supply chain issues and labor market constraints.

The primary impact of inflation on our operations most likely will be reflected in increased operating costs.

Federal fiscal and monetary policymaking decisions could lead to changes in interest rates, inflation, or other economic impacts such as supply chain issues, labor market constraints, and recessions.

The primary impact of continued inflation on our operations is our ability to manage the impact of changes in interest rates, which could impact the demand for our products and services.

In addition, we could also experience increased operating costs related to providing our products and services as a result of continued inflation.

The medium and long-term fiscal outlook of the federal government and U.S.

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As of December 31, 2022, we had $392.2 million in unfunded credit commitments to our customers.

Actual borrowing needs of our customers may exceed our expectations, especially during a challenging economic environment when our customers may be more dependent on our credit commitments due to the lack of available credit elsewhere, the increasing costs of credit, or the limited availability of financings from alternative sources.

Actual borrowing needs of our customers may exceed our expectations, especially during a challenging economic environment when our customers may be more dependent on our credit commitments due to reduced income or the lack of available credit elsewhere, the increasing costs of credit, or the limited availability of financings from alternative sources.

This could adversely affect our liquidity, which could impair our ability to fund operations and meet obligations as they become due.

Volatility in oil prices and downturns in the energy industry, particularly in Louisiana, could lead to increased credit losses in our loan portfolio.

As of December 31, 2021, we had non-PPP energy loans of $19.8 million, or 1.2%, of non-PPP loans HFI (non-GAAP).

For further information on non-GAAP financial measures, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures.” We also may have indirect exposure to energy prices, as some of our non-energy customers’ businesses may be affected by volatility with the oil and gas industry and the impact of inflation on energy prices.

General uncertainty resulting from continued volatility could have other adverse impacts such as job losses in industries tied to energy, lower borrowing needs, higher transaction deposit balances, or a number of other effects that are difficult to isolate or quantify, particularly in states with significant dependence on the energy industry like Louisiana.

As of December 31, 2022, we had energy loans of $36.8 million, or 1.9%, of loans HFI.

We also may have indirect exposure to energy prices, as some of our non-energy customers’ businesses may be affected by volatility with the oil and gas industry and the impact of inflation on energy prices.

Risks Related to Our Operations

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We may not be successful in retaining our key employees.

If we unexpectedly lose the services of one or more of our key personnel, we would also lose the benefit of their skills, knowledge of our primary markets, and years of industry experience.

We may not be able to identify and hire qualified replacement personnel on terms acceptable to us, or at all, whether due to tightening labor conditions or otherwise.

Further, we may not be able to identify and hire qualified replacement personnel on terms acceptable to us, or at all, whether due to tightening labor conditions or otherwise.

If we unexpectedly lose the services of one or more of our key personnel and are unable to replace them, we would also lose the benefit of

their skills, knowledge of our primary markets, and years of industry experience, which could adversely affect our business and profitability.

We are subject to laws regarding the privacy, information security, and protection of personal information.

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From time to time, we are, or may be, involved in various legal matters arising in the ordinary course of business.

One or more unfavorable outcomes of these ordinary course claims or litigation against us could have a material adverse effect.

One or more unfavorable outcomes of these ordinary course claims or litigation against us could have a material adverse effect on our business.

In addition, regardless of their merits, scope, validity, or ultimate outcomes, such matters are costly, time-consuming, may result in protracted litigation or otherwise divert management’s attention, and may materially and adversely affect our reputation, even if resolved favorably.

We have a continuing need for technological change, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology.

We have a continuing need for technological improvements, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology.

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

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Therefore, we may have exposure for illegal, negligent, fraudulent, or other acts of these investment advisors and brokers.

Although we seek to limit this exposure through clear disclosure, ongoing oversight, and contractual provisions requiring indemnification, limitations of liability, insurance coverage, and other similar protections, those obligations may not always be enforceable, or our third-party service providers ultimately may not have sufficient financial strength to fully comply.

Climate related events and legislative and societal responses regarding climate change present risks to our business.

Climate change may intensify severe weather events such as hurricanes and rainstorms that recur in our market areas, which may adversely impact our locations and business and those of our customers and suppliers.

In addition, there has been an increased focus among businesses, consumers and investors regarding transitioning to renewable energy and a net zero economy.

If we fail to adequately anticipate and address these changing preferences, our business could be adversely impacted.

We are also subject to risks relating to potential new climate change-related legislation or regulations, which could increase our and our customers’ costs.

The risks associated with these matters are continuing to evolve rapidly and the ultimate impact on our business is difficult to predict with any certainty.

Risks Related to Our Competition and Services

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Also, many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures.

Credit unions have become more active in organic growth and growth through acquisitions, and their tax-exempt status may enable them to compete more effectively on rates.

Credit unions have become more active through organic growth and growth through acquisitions, and their tax-exempt status may enable them to compete more effectively on rates.

We expect competition to continue to intensify due to financial institution consolidation;

legislative, regulatory, and technological changes;

and the emergence of alternative sources for financial services, including fintech companies, which could cause us to lose some of our existing customers, and we may not be successful attracting new customers.

and the emergence of alternative sources for financial services, including fintech companies,

which could cause us to lose some of our existing customers, and we may not be successful attracting new customers.

Our failure to compete effectively in our primary markets could cause us to lose market share.

We may not be able to implement our expansion strategy, which may adversely affect our ability to maintain our historical earnings trends.

Our strategy is to expand market share in existing markets and engage in opportunistic new market de novo expansion, supplemented by strategic acquisitions of financial institutions with customer-oriented, compatible philosophies and in desirable geographic areas.

Our strategy is to expand market share in existing markets and engage in opportunistic new market de novo expansion, supplemented by strategic acquisitions of financial institutions in desirable geographic areas with customer-oriented, compatible philosophies.

De novo expansion carries with it certain potential risks, including possibly significant startup costs and anticipated initial operating losses;

an inability to gain regulatory approval;

an inability to secure the services of qualified senior management to operate the de novo banking center and successfully integrate and promote our corporate

an inability to secure the services of qualified senior management to operate the de novo banking centers and successfully integrate and promote our corporate culture;

poor market reception for de novo banking centers established in markets where we do not have a preexisting reputation;

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therefore, some dilution of our tangible book value and earnings per common share may occur in connection with any future acquisition.

Specifically, acquisitions could result in higher than expected deposit attrition, loss of key employees, or other consequences that could adversely affect our business.

Specifically, acquisitions could result in higher than expected deposit attrition, loss of key employees, significant fair value adjustments, or other consequences that could adversely affect our business.

Further, the carrying amount of any goodwill that we currently maintain or may acquire may be subject to impairment in future periods.

Also, as consolidation of the financial services industry continues, the number of appropriate targets may decrease and the price for potential acquisitions may increase, which could reduce our potential returns and reduce the attractiveness of these opportunities to us.

In addition, we cannot provide assurance that we will be able to successfully consolidate any business or assets we acquire with our existing business.

In addition, we cannot provide assurance that we will be able to successfully integrate any business or assets we acquire with our existing business.

The integration of acquired operations and assets may require substantial management time, effort, and resources and may divert management’s focus from other strategic opportunities and operational matters.

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External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the ultimate implementation.

Any new line of business, product, product enhancement, or service could also have a significant impact on the effectiveness of our system of internal controls.

Any new line of business, product, product enhancement, or service could also have a significant impact on the effectiveness of our system of internal controls and subject us to additional, unknown risks.

We may be adversely affected by the soundness of other financial institutions.

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Financial services companies are interrelated as a result of trading, clearing, counterparty, and other relationships.

We have exposure to different industries and counterparties, and through transactions with counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks, and other financial intermediaries.

We have exposure to different industries and counterparties and exposure through transactions with counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks, and other financial intermediaries.

In addition, we participate in loans originated by other institutions, and we participate in syndicated transactions (including shared national credits) in which other lenders serve as the lead bank.

As a result, defaults by, declines in the financial condition of, or even rumors or questions about one or more financial institutions, financial service companies, or the financial services industry generally, may lead to market-wide liquidity, asset quality, or other problems and could lead to losses or defaults by us or by other institutions.

As a result, defaults by, declines in the financial condition of, or even rumors or questions about one or more financial institutions, financial service companies, or the financial services industry generally, may lead to a decline in market-wide liquidity, asset quality problems, or other problems and could lead to losses or defaults by us or by other institutions.

Risks Related to Our Financial Stability

We may need to raise additional capital in the future, and if we fail to maintain sufficient capital, we may not be able to satisfy regulatory requirements or maintain adequate protection against financial stress.

We must satisfy ongoing regulatory capital requirements, and regulatory capital requirements could increase from current levels.

We may then need to raise additional capital to comply with these requirements or to provide us with sufficient capital resources and liquidity to meet our commitments and business needs, which could include the possibility of financing acquisitions.

Our ability to raise additional capital depends on a number of factors, including without limitation our financial condition and performance, conditions in the capital markets, economic conditions, investor perceptions regarding the banking industry, and governmental activities.

Many of these factors are beyond our control, and as such, there is no assurance we will be able to raise additional capital if needed or on terms acceptable to us.

If we fail to maintain capital sufficient to meet regulatory requirements, we may not be able to withstand periods of financial stress and we could be subject to enforcement actions or other regulatory consequences.

The fair value of our investment securities can fluctuate due to factors outside of our control.

The fair value of our investment securities can fluctuate due to factors outside of our control, which could have a material adverse effect on our business and profitability.

Factors beyond our control can significantly influence the fair value of securities in our investment portfolio, potentially resulting in adverse changes to the portfolio’s fair value.

These factors include, but are not limited to, rating agency actions related to the securities, defaults by the issuer or with respect to the underlying collateral, and changes in market interest rates and instability in the capital markets.

Any of these factors, among others, could cause OTTI and realized or unrealized losses in future periods and declines in other comprehensive income, which could have a material adverse effect on our business, financial condition, and results of operations.

Any of these factors, among others, could cause OTTI, realized or unrealized losses in future periods, and declines in AOCI, which could have a material adverse effect on our business, financial condition, results of operations, and capital requirements.

In addition, the process for determining whether impairment of a security is other-than-temporary often requires complex, subjective judgments about whether there has been a significant deterioration in the financial condition of the issuer, whether management has the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value, the future financial performance and liquidity of the issuer and any underlying collateral, and other relevant factors.

We may be adversely affected by the transition from LIBOR.

In July 2017, the United Kingdom Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

Subsequently, on March 5, 2021, it was announced that certain USD-LIBOR rates would cease to be published after June 30, 2023.

The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR.

As of December 31, 2021, 3.6% of loans HFI were indexed to LIBOR with a setting that expires June 30, 2023.

These loans contain either provisions for the designation of an alternate benchmark rate or “fallback” provisions providing for alternative rate calculations in the event LIBOR is unavailable.

However, the existing provisions and/or recent modifications to our documents to address the transition may not adequately address the actual changes to LIBOR or the financial impact of successor benchmark rates.

Even with provisions allowing for designation of alternative benchmarks or “fallback” provisions, changes to or the discontinuance of LIBOR could result in customer uncertainty and disputes arising as a consequence of the transition from LIBOR.

As a result, any failure or deficiency in making these judgments could have a material adverse effect on our business and profitability.

We may need to rely on financial markets to provide needed capital in the future, and if we fail to maintain sufficient capital, we may not be able to satisfy regulatory requirements or maintain adequate protection against financial stress.

We may need to raise additional capital, in the form of additional debt or equity, in the future to have sufficient capital resources and liquidity to satisfy our current or future regulatory capital requirements, meet our commitments, and fund our business needs and future growth.

Our ability to raise additional capital depends on a number of factors, including, without limitation, our financial condition and performance, conditions in the capital markets, economic conditions, investor perceptions regarding the banking industry, and governmental activities.

Many of these factors are beyond our control, and as such, there is no assurance we will be able to issue debt or equity securities if needed or on terms acceptable to us.

A lack of liquidity could impair our ability to fund operations.

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A decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses, or fulfill obligations such as meeting deposit withdrawal demands or repaying our borrowings.

We may be adversely affected by the transition from LIBOR.

In July 2017, the United Kingdom Financial Conduct Authority, the authority that regulates LIBOR, announced its intent to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

Subsequently, on March 5, 2021, it was announced that certain USD-LIBOR rates would cease to be published after June 30, 2023.

The Alternative Reference Rates Committee has proposed that the Secured Overnight Financing Rate is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR.

As of December 31, 2022, 2.1% of loans HFI were indexed to LIBOR with a setting that expires June 30, 2023.

These loans contain either provisions for the designation of an alternate benchmark rate or “fallback” provisions providing for alternative rate calculations in the event LIBOR is unavailable.

Even with provisions allowing for designation of alternative benchmarks or

“fallback” provisions, changes to or the discontinuance of LIBOR could result in customer uncertainty and disputes arising as a consequence of the transition from LIBOR.

Risks Related to the Regulation of Our Industry

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Rather, these laws and regulations are intended to protect consumers, customers, depositors, the FDIC Deposit Insurance Fund, and the overall financial stability of the U.S.

These laws and regulations, among other matters, prescribe minimum capital requirements,

impose limitations on the business activities in which we can engage, limit the dividends or distributions that Red River Bank can pay to us and that we can pay to our shareholders, impose certain specific accounting requirements on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than GAAP would require, require us to have an effective anti-money laundering program, and prohibit discriminatory lending practices and unfair, deceptive, or abusive acts.

These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage, limit the dividends or distributions that Red River Bank can pay to us and that we can pay to our shareholders, impose certain specific accounting requirements on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than GAAP would require, require us to have an effective anti-money laundering program, and prohibit discriminatory lending practices and unfair, deceptive, or abusive acts.

Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs.

Our failure to comply with these laws and regulations, even if the failure follows good faith efforts or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines, and other penalties, any of which could adversely affect our results of operations, capital base, and the price of our securities.

Further, any new laws, rules, and regulations could make compliance more difficult or expensive.

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Current and past economic conditions, particularly in the financial markets, have resulted in government regulatory agencies and political bodies placing increased focus and scrutiny on the financial services industry.

New proposals for legislation continue to be introduced in the U.S.

Congress that could substantially increase regulation of the financial services industry;

impose restrictions on the operations and general ability of firms within the industry to conduct business consistent with historical practices, including in the areas of compensation, interest rates, financial product offerings, and disclosures;

New proposals for legislation and regulation continue to be introduced in the U.S.

Congress and by regulatory agencies that could substantially increase regulation of the financial services industry;

and have an effect on collection and bankruptcy proceedings with respect to consumer residential real estate mortgages, among other things.

Certain aspects of current or proposed regulatory or legislative changes, if enacted or adopted, may impact the profitability of our business activities by requiring more oversight or changing certain of our business practices, including our ability to offer new products, obtain financing, attract deposits, make loans, and achieve satisfactory interest spreads.

They also may require us to invest significant management attention and resources to make necessary operational changes to comply.

They also may require us to invest significant management attention and resources to make necessary operational changes to comply, which could further impact the profitability of our business activities and increase our costs.

Future changes in tax laws may have an adverse effect on our income tax expense, deferred tax balances, and the amount of taxes payable, which could have an adverse effect on our business and profitability.

New activities and expansion require regulatory approvals, and failure to obtain them may restrict our growth.

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In addition, we may complement and expand our business by pursuing strategic acquisitions of financial institutions and other complementary businesses.

Generally, we must receive state and federal regulatory approval before we can acquire an FDIC-insured depository institution or related business.

Generally, we must receive state and federal regulatory approval before we can acquire an FDIC-insured depository institution or related business or open new de novo banking centers.

Such regulatory approvals may not be granted on terms that are acceptable to us, or at all.

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As part of the bank regulatory process, the FDIC, the OFI, and the Federal Reserve periodically conduct examinations of our business, including our compliance with laws and regulations.

If, as a result of an examination, a federal or state banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of our operations had become unsatisfactory, or that we or the Bank were in violation of any law or regulation, such agency may take a number of different remedial actions as it deems appropriate.

These actions include the power to stop any practices such agency found to be unsafe or unsound;

to require affirmative action to correct any conditions resulting from any violation or practice;

to issue an administrative order that can be judicially enforced;

to issue an administrative order that

can be judicially enforced;

to direct an increase in our capital;

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and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank’s deposit insurance and place it into receivership or conservatorship.

We are subject to capital requirements, which may result in lower returns on equity, require us to raise additional capital, limit growth opportunities, result in regulatory restrictions, or require us to commit capital resources to support the Bank.

Because the Bank does not intend to utilize the simplified CBLR framework, it remains subject to rules designed to implement the recommendations with respect to regulatory capital standards, commonly known as Basel III.

The rules establish a regulatory capital standard based on common equity Tier I, require the Bank to satisfy a minimum capital adequacy requirement, and impose a CCB.

We are subject to capital requirements, which may result in lower returns on equity, require us to raise additional capital, prevent us from accessing FHLB advances, limit growth opportunities, result in regulatory restrictions, or require us to commit capital resources to support the Bank.

Because we and the Bank do not intend to utilize the simplified CBLR framework, we both remain subject to rules designed to implement the recommendations with respect to regulatory capital standards, commonly known as Basel III.

The rules establish a regulatory capital standard based on common equity Tier I, require us and the Bank to satisfy a minimum capital adequacy requirement, and impose a CCB.

Failure to meet the CCB will result in certain limitations on dividends, stock repurchases, and discretionary bonus payments to executive officers.

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Even if we satisfy the objectives of our capital plan and meet minimum capital requirements, it is possible that our regulators may ask us to raise additional capital.

For example, banking organizations experiencing significant internal growth or making acquisitions are often expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets.

For example, banking organizations experiencing significant internal growth, making acquisitions, or experiencing financial difficulties are often expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets.

In addition, the Federal Reserve may require us to commit capital resources to support the Bank.

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Accordingly, we could be required to make a capital injection to the Bank if it experiences financial distress.

Such a capital injection may be required at a time when our resources are limited, and we may be required to borrow the funds or to raise additional equity capital to make the required capital injection.

Such a capital injection may be required at a time when our resources are limited, and we may be required to raise additional debt or equity capital to make the required capital injection.

Additionally, depending on our capital levels, the FHLB of Dallas may reduce or eliminate entirely our total borrowing availability with it.

This may come at a time when we have limited other funding options and could jeopardize our ability to originate loans, invest in securities, or meet other obligations such as repaying any potential borrowings or meeting deposit withdrawal demands, which could adversely impact our business or profitability.

Federal, state, and local consumer lending laws may restrict our ability to originate certain mortgage loans, increase our risk of liability with respect to such loans, increase the time and expense associated with the foreclosure process, or prevent us from foreclosing at all.

Certain federal, state, and local laws are intended to eliminate lending practices which are considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans, and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property.

Certain federal, state, and local laws are intended to eliminate lending practices that are considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans, and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property.

It is our policy not to make predatory loans, but these laws create the potential for liability with respect to our lending and loan investment activities.

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Any future additional assessments, increases, or required prepayments in FDIC insurance premiums could adversely impact our earnings.

We may be adversely affected by changes in U.S.

tax laws and regulations.

Future changes in tax laws may have an adverse effect on our income tax expense, deferred tax balances, and the amount of taxes payable.

Risks Related to an Investment in Our Common Stock

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An investment in our common stock is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency and is subject to price fluctuations and risk of loss.

There are many factors that may impact the market price and trading volume of our common stock.

There are many factors that may impact the

market price and trading volume of our common stock.

In particular, the realization of any of the risks described in this “Item 1A.

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Our ability to pay dividends may also be limited on account of any potential future outstanding indebtedness, as we generally would make payments on outstanding indebtedness before any dividends could be paid on our common stock.

Also, because our primary earning asset is our investment in the capital stock of the Bank, we may become dependent upon dividends from the Bank to pay our operating expenses, satisfy our obligations, and pay dividends on our common stock.

dividends on our common stock.

The Bank’s ability to pay dividends on its common stock will substantially depend upon its earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, and other factors deemed relevant by its board of directors.

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Business - Supervision and Regulation.”

Our stock repurchase program may not enhance long-term stockholder value, and stock repurchases, if any, could increase the volatility of the price of our common stock and diminish our cash reserves.

Since August 2020, we have maintained stock repurchase programs.

The repurchase programs authorize us to purchase up to a set amount of our outstanding shares of common stock between specific dates.

Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.

Repurchases pursuant to our stock repurchase programs could affect our stock price and increase its volatility.

The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.

Additionally, repurchases under our stock repurchase programs will diminish our cash reserves, which could impact our ability to pursue possible future strategic opportunities and acquisitions, support our operations, invest in securities, and pay dividends, and could result in lower overall returns on our cash balances.

Stock repurchases may not enhance shareholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock, and short-term stock price fluctuations could reduce the program’s effectiveness.

Repurchases may also be subject to a nondeductible excise tax under the Inflation Reduction Act of 2022 equal to 1.0% of the fair market value of the shares repurchased, subject to certain limitations.

Our corporate governance documents, and certain corporate and banking laws applicable to us, could make a takeover more difficult.

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These provisions may discourage potential acquisition proposals and could delay or prevent a change in control, including under circumstances in which our shareholders might otherwise receive a premium over the market price of our shares.

Securities analysts may not continue coverage on us.

Securities analysts may not continue coverage on us or may publish unfavorable reports, which could adversely impact the price of our common stock.

The trading market for our common stock depends, in part, on the research and reports that securities analysts publish about us and our business.

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If we are covered by securities analysts and are the subject of an unfavorable report, the price of our common stock may decline.

Our stock repurchase program may not enhance long-term stockholder value, and stock repurchases, if any, could increase the volatility of the price of our common stock and will diminish our cash reserves.

Since August 2020, we have maintained stock repurchase programs.

The repurchase programs authorize us to purchase up to a set amount of our outstanding shares of common stock between specific dates.

Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.

Repurchases pursuant to our stock repurchase program could affect our stock price and increase its volatility.

Additionally, repurchases under our stock repurchase program will diminish our cash reserves, which impacts our ability to pursue possible future strategic opportunities and acquisitions, support our operations, invest in securities, and pay dividends and could result in lower overall returns on our cash balances.

Risks Related to the Ongoing COVID-19 Pandemic

The COVID-19 pandemic could adversely affect our business, financial condition, and results of operations.

The COVID-19 pandemic and related mitigation efforts have disrupted global economic activity, adversely affected the functioning of financial markets, increased economic and market uncertainty, and disrupted trade and supply chains.

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