What changed in this filing

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Item 1A. Risk Factors

2023-02-13 compared with 2022-03-04 · 288 added, 297 removed, 732 unchanged (44% of the section changed)

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be materially adversely affected.

Related to Economic Conditions, Including as a Result of the COVID-19 Pandemic

The ongoing COVID-19 pandemic could have

an adverse impact on our financial performance and results of operations.

As the COVID-19 pandemic has evolved from its emergence

in early 2020, so has its impact.

Many states have re-instituted, or strongly encouraged, varying levels of quarantines and restrictions

on travel and in some cases have at times limited operations of certain businesses and taken other restrictive measures designed to help

slow the spread of COVID-19 and its variants.

Governments and businesses have also instituted vaccine mandates and testing requirements

for employees.

While vaccine availability and uptake has increased, the longer-term macro-economic effects on global supply chains, inflation,

labor shortages and wage increases continue to impact many industries, including the collateral underlying certain of our loans.

with the potential for new strains of COVID-19 to emerge, governments and businesses may re-impose aggressive measures to help slow its

spread in the future.

For this reason, among others, as the COVID-19 pandemic continues, the potential impacts are uncertain and difficult

Although financial markets have largely rebounded

from the significant declines that occurred earlier in the pandemic and global economic conditions showed signs of improvement during

the second half of 2020 and throughout 2021, many of the circumstances that arose or became more pronounced after the onset of the COVID-19

pandemic persist, which may subject us to a number of risks, including, without limitation, the following:

lower loan demand or an increased risk of loan delinquencies,

defaults, and foreclosures due to a number of factors, including continuing supply chain issues, decreased consumer and business confidence

and economic activity;

collateral for loans, especially real estate, may

decline in value, which may reduce our ability to liquidate such collateral and could cause loan losses to increase and impair our ability

over the long run to maintain our loan origination volume;

our allowance loan losses may have to be increased

if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

volatility in financial and capital markets, interest

rates, and exchange rates;

increased demands on capital and liquidity;

heightened cybersecurity, information security, and

operational risks as cybercriminals attempt to profit from the disruption resulting from the pandemic given increased online and remote

activity, including as a result of work-from-home arrangements;

disruptions to business operations experienced by

counterparties and service providers;

increased risk of business disruption from the loss

of employees due to their inability to work effectively because of illness, quarantines, government actions, failures in systems or technology

that disrupt work-from-home arrangements, or other effects of the COVID-19 pandemic, including the increase in employee resignations currently

taking place throughout the United States in connection with the COVID-19 pandemic, which is commonly referred to as the “great

resignation”; and

decreased demands for our products and services.

We have also experienced and may experience other

negative impacts to our business as a result of the pandemic that could exacerbate other risks discussed in this “Risk Factors”

The ongoing fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and

market conditions, and, as a result, presents material uncertainty and risk with respect to us.

Risks Related to Economic Conditions

Our business may be adversely affected by

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more geographically diversified, we are a regional bank that provides banking and financial services to customers primarily in Greenville,

Columbia and Charleston, South Carolina;

Columbia, Charleston, and Summerville, South Carolina;

Raleigh, Greensboro and Charlotte, North Carolina;

The economic conditions in these local

markets may be different from, and in some instances worse than, the economic conditions in the United States as a whole.

and Atlanta, Georgia.

conditions in these local markets may be different from, and in some instances worse than, the economic conditions in the United States

Some elements of the business environment that

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Unfavorable market conditions can result in a deterioration in the credit quality of our borrowers and the demand for our products and

services, an increase in the number of loan delinquencies, defaults, charge-offs, foreclosures, additional provisions for loan losses,

services, an increase in the number of loan delinquencies, defaults, charge-offs, foreclosures, additional provisions for credit losses,

adverse asset values of the collateral securing our loans and an overall material adverse effect on the quality of our loan portfolio.

Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity or investor or

business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation

business confidence; limitations on the availability or increases in the cost of credit and

capital; increases in inflation

or interest rates; high unemployment; natural disasters; epidemics and pandemics (such as COVID-19);

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these or other factors.

The impact of the COVID-19 pandemic is fluid and

continues to evolve and there is pervasive uncertainty surrounding the future economic conditions that will emerge in the months and years

following the onset of the pandemic.

Moreover, as economic conditions relating to the pandemic have improved over time, the Federal Reserve

has shifted its focus to limiting inflationary and other potentially adverse effects of the extensive pandemic-related government stimulus,

which signals the potential for a continued period of economic uncertainty even if the pandemic subsides.

In addition, there are continuing

concerns related to, among other things, the level of U.S.

government debt and fiscal actions that may be taken to address that debt,

a potential resurgence of economic and political tensions with China or an escalation of tensions between Russia and Ukraine, all of which

may have a destabilizing effect on financial markets and economic activity.

Economic pressure on consumers and overall economic uncertainty

may result in changes in consumer and business spending, borrowing and saving habits.

These economic conditions and/or other negative

developments in the domestic or international credit markets or economies may significantly affect the markets in which we do business,

the value of our loans and investments, and our ongoing operations, costs and profitability.

Declines in real estate values and sales

volumes and high unemployment or underemployment may also result in higher than expected loan delinquencies, increases in our levels of

nonperforming and classified assets and a decline in demand for our products and services.

These negative events may cause us to incur

losses and may adversely affect our capital, liquidity and financial condition.

As economic conditions relating to the COVID-19

pandemic have improved, the Federal Reserve has shifted its focus to limiting inflationary and other potentially adverse effects of the

extensive pandemic-related government stimulus, which signals the potential for a continued period of economic uncertainty even though

the pandemic has subsided.

In addition, there are continuing concerns related to, among other things, the level of U.S.

government debt

and fiscal actions that may be taken to address that debt, a potential resurgence of economic and political tensions with China and the

Russian invasion of Ukraine, all of which may have a destabilizing effect on financial markets and economic activity.

Economic pressure

on consumers and overall economic uncertainty may result in changes in consumer and business spending, borrowing and saving habits.

economic conditions and/or other negative developments in the domestic or international credit markets or economies may significantly

affect the markets in which we do business, the value of our loans and investments, and our ongoing operations, costs and profitability.

Declines in real estate values and sales volumes and high unemployment or underemployment may also result in higher than expected loan

delinquencies, increases in our levels of nonperforming and classified assets and a decline in demand for our products and services.

negative events may cause us to incur losses and may adversely affect our capital, liquidity and financial condition.

A significant portion of our loan portfolio

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may cause uninsured damage and other loss of value to real estate that secures these loans, may also negatively affect our financial condition.

Related to Lending Activities

Risks Related to Lending Activities

Our loan portfolio contains a number of real

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real estate loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase

in nonperforming loans, which could result in a net loss of earnings, an increase in the provision for loan losses and an increase in

in nonperforming loans, which could result in a net loss of earnings, an increase in the provision for credit losses and an increase in

loan charge-offs, all of which could have a material adverse effect on our financial condition and results of operations.

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An adverse development with respect to one lending relationship

can expose us to a significantly greater risk of loss compared with a single-family residential mortgage

loan because we typically have more than one loan

with such borrowers.

Additionally, these loans typically involve larger loan balances to single borrowers or groups of related borrowers

compared with single-family residential mortgage loans.

Therefore, the deterioration of one or a few of these loans could cause a significant

decline in the related asset quality.

A return of recessionary conditions due to the COVID-19 pandemic could result in a sharp increase

in loans charged-off and could require us to significantly increase our allowance for loan losses, which could have a material adverse

can expose us to a significantly greater risk of loss compared with a single-family residential mortgage loan because we typically have

more than one loan with such borrowers.

Additionally, these loans typically involve larger loan balances to single borrowers or groups

of related borrowers compared with single-family residential mortgage loans.

Therefore, the deterioration of one or a few of these loans

could cause a significant decline in the related asset quality.

A return of recessionary conditions could result in a sharp increase in

loans charged-off and could require us to significantly increase our allowance for credit losses, which could have a material adverse

impact on our business, financial condition, results of operations, and cash flows.

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including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more

of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased

of an institution’s

total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased

by 50% or more during the preceding 36 months.

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value of the underlying collateral is insufficient to fully secure these loans, we may suffer losses on these loans that exceed our allowance

for loan losses.

We may have higher loan losses than we have

allowed for in our allowance for loan losses.

for credit losses.

We may have higher credit losses than we

have allowed for in our allowance for credit losses.

Our actual loans losses could exceed our allowance

for loan losses and therefore our historic allowance for loan losses may not be adequate.

As of December 31, 2021, 49.0% of our loan portfolio

was secured by commercial real estate.

Repayment of such loans is generally considered more subject to market risk than residential mortgage

Industry experience shows that a portion of loans will become delinquent and a portion of loans will require partial or entire

Regardless of the underwriting criteria utilized, losses may be experienced as a result of various factors beyond our control,

including among other things, changes in market conditions affecting the value of loan collateral, the cash flows of our borrowers and

problems affecting borrower credit.

If we suffer loan losses that exceed our allowance for loans losses, our financial condition, liquidity

or results of operations could be materially and adversely affected.

for credit losses and therefore our historic allowance for credit losses may not be adequate.

As of December 31, 2022, 48.4% of our loan

portfolio was secured by commercial real estate.

Repayment of such loans is generally considered more subject to market risk than residential

mortgage loans.

Industry experience shows that a portion of loans will become delinquent and a portion of loans will require partial or

entire charge-off.

Regardless of the underwriting criteria utilized, losses may be experienced as a result of various factors beyond our

control, including among other things, changes in market conditions affecting the value of loan collateral, the cash flows of our borrowers

and problems affecting borrower credit.

If we suffer credit losses that exceed our allowance for credit losses, our financial condition,

liquidity or results of operations could be materially and adversely affected.

While the COVID-19 fiscal stimulus and relief programs

appear to have delayed any materially adverse financial impact to the Bank, once these stimulus programs have been fully exhausted, we

believe our credit metrics could worsen and loan losses could ultimately materialize.

Any potential loan losses will be contingent upon

a number of factors beyond our control, such as a slower return to pre-pandemic routines, which will be influenced by a number of factors

including increases in new COVID-19 cases, hospitalizations and deaths leading to additional government imposed restrictions;

to receive the vaccines along with concerns related to new strains of the virus;

supply chain issues remaining unresolved longer than

believe our credit metrics could worsen and credit losses could ultimately materialize.

Any potential credit losses will be contingent

upon a number of factors beyond our control, such as a slower return to pre-pandemic routines, which will be influenced by a number of

factors including increases in new COVID-19 cases, hospitalizations and deaths leading to additional government imposed restrictions;

refusals to receive the vaccines along with concerns related to new strains of the virus;

supply chain issues remaining unresolved longer

than anticipated;

unemployment increases while consumer confidence and spending falls;

and rising geopolitical tensions.

Our decisions regarding allowance for loan

Our decisions regarding allowance for credit

losses and credit risk may materially and adversely affect our business.

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The risk of nonpayment is affected by a number of factors, including:

the duration of the credit;

duration of the credit;

● credit risks of a particular client;

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We attempt to maintain an appropriate allowance

for loan losses to provide for probable losses in our loan portfolio.

We periodically determine the amount of the allowance based on consideration

of several factors, including but not limited to:

an ongoing review of the quality, mix, and size of

our overall loan portfolio;

for credit losses to provide for probable losses in our loan portfolio.

We periodically determine the amount of the allowance based on

consideration of several factors, including but not limited to:

● an ongoing review of the quality, mix, and size

of our overall loan portfolio;

● our historical loan loss experience;

● evaluation of economic conditions;

regular reviews of loan delinquencies and loan portfolio

ongoing review of financial information provided by

the amount and quality of collateral, including guarantees,

securing the loans.

● regular reviews of loan delinquencies and loan

portfolio quality;

● ongoing review of financial information provided

by borrowers;

● the amount and quality of collateral, including

guarantees, securing the loans.

The determination of the appropriate level of the

allowance for loan losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit

risks and future trends, all of which may undergo material changes.

A deterioration in economic conditions affecting borrowers, new information

regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require

an increase in the allowance for loan losses.

In addition, regulatory agencies periodically review our allowance for loan losses and may

require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different than

those of management.

In addition, if charge-offs in future periods exceed the allowance for loan losses, we will need additional provisions

to increase the allowance for loan losses.

Any increases in the allowance for loan losses will result in a decrease in net income and,

possibly, capital, and may have a material adverse effect on our financial condition and results of operations.

allowance for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current

credit risks and future trends, all of which may undergo material changes.

A deterioration in economic conditions affecting borrowers,

new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our

control, may require an increase in the allowance for credit losses.

In addition, regulatory agencies periodically review our allowance

for credit losses and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based

on judgments different than those of management.

In addition, if charge-offs in future periods exceed the allowance for credit losses,

we will need additional provisions to increase the allowance for credit losses.

Any increases in the allowance for credit losses will

result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our financial condition and results

of operations.

A percentage of the loans in our portfolio

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or state banking authorities if they believe the number of exceptions in our loan portfolio represents an unsafe banking practice.

Related to Capital and Liquidity

Risks Related to Capital and Liquidity

Liquidity needs could adversely affect our

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demands, particularly if we continue to grow and experience increasing loan demand.

We may be required

to slow or discontinue loan growth, capital expenditures

or other investments or liquidate assets should such sources not be adequate.

We may be required to slow or discontinue loan growth,

capital expenditures or other investments or liquidate assets should such sources not be adequate.

The Company is a stand-alone entity with its own

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additional funding, we may be unable to pay our debt or other obligations.

Accounting, Regulatory and Compliance Risks

Legal, Accounting, Regulatory and Compliance

We are subject to extensive regulation that

could restrict our activities, have an adverse impact on our operations, and impose financial requirements or limitations on the conduct

of our business.

has limited the conduct of our business, and could impose financial requirements, each of which could have an adverse impact on our operations.

We operate in a highly regulated industry and are

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Also, as a member of the Federal

Home Loan Bank, the Bank must comply with applicable regulations of the Federal Housing Finance Board and the Federal Home Loan Bank.

Home Loan Bank,

the Bank must comply with applicable regulations of the Federal Housing Finance Board and the Federal Home Loan Bank.

Regulation by these agencies is intended primarily for the protection of our depositors and the deposit insurance fund and not for the

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The Department of Justice, CFPB and other federal and state agencies are responsible for enforcing these laws and regulations.

by these regulators of noncompliance with these laws could result in a downgrade in our “satisfactory” rating as well as wide

variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions

on expansion activity, including on opening branches in new markets or merger and acquisition activity.

As a result of these limitations

and conditions, we may be unable or may fail to pursue, evaluate or complete transactions that might have been strategically or competitively

Such a downgrade could also impact the Bank’s relationships with certain states, counties, municipalities or other

public agencies to the extent applicable law, regulation or policy limits, restricts or influences whether such entity may do business

with a bank that has a below “satisfactory” rating and, in general, could negatively affect our reputation, business, financial

condition and results of operations.

Private parties may also have the ability to challenge

an institution’s performance under fair lending laws in private class action litigation.

A successful challenge to our performance

under the fair lending laws and regulations could adversely impact our “satisfactory” rating under the Community Reinvestment

by these regulators of noncompliance with these laws could result in a wide variety of sanctions, including the required payment of damages

and civil money penalties, injunctive relief, and imposition of restrictions on expansion activity.

Private parties may also have the

ability to challenge an institution’s performance under fair lending laws in private class action litigation, which if successful could

adversely impact our rating under the CRA.

As of our most recent examination report, the Bank

received a “Needs to Improve” CRA rating, which results in restrictions on certain expansionary activities, including certain

mergers and acquisitions and the establishment and relocation of bank branches.

This rating will also result in a loss of expedited processing

of applications to undertake certain activities, and requires the Bank to receive prior regulatory approval for certain activities, including

to issue or prepay certain subordinated debt obligations, and open or relocate bank branches.

A “Needs to Improve” rating

could have an impact on our relationships with certain states, counties, municipalities or other public agencies to the extent applicable

law, regulation or policy limits, restricts or influences whether such entity may do business with a company that has a below “Satisfactory”

rating and, in general, could negatively affect our reputation, business, financial condition and results of operations.

These restrictions,

among others, will remain in place at least until the Bank’s next CRA rating is publicly released by the FDIC.

The FDIC may take

additional enforcement action, including a possible informal or formal enforcement action and/or civil monetary penalties.

of these limitations and conditions, we may be unable or may fail to pursue, evaluate or complete transactions that might have been strategically

or competitively significant.

We face risks related to the adoption of

future legislation and potential changes in federal regulatory agency leadership, policies, and priorities.

With a new Congress taking office in 2021, Democrats

have retained control of the U.S.

House of Representatives, and have gained control of the U.S.

Senate, albeit with a majority found only

in the tie-breaking vote of Vice President Harris.

However slim the majorities, though, the net result was a unified Democratic control

of the White House and both chambers of Congress, and consequently Democrats are able to set the agenda both legislatively, in the Administration,

and in the regulatory agencies that have rulemaking and supervisory authority over the financial services industry generally and the Company

and the Bank specifically.

Congressional committees with jurisdiction over the banking sector have pursued oversight and legislative initiatives

in a variety of areas, including addressing climate-related risks, promoting diversity and equality within the banking industry and addressing

other Environmental, Social, and Governance matters, improving competition in the banking sector and enhancing oversight of bank mergers

and acquisitions,

establishing a regulatory framework for digital

assets and markets, and oversight of the COVID-19 pandemic response and economic recovery.

The prospects for the enactment of major banking

reform legislation are unclear at this time.

With the new Congress taking office in 2023, Republicans

gained control of the U.S.

House of Representatives, while Democrats retained control of the U.S.

However slim the majorities,

though, the net result was a split Congress, which in the past leads to less sweeping policy changes.

However, Congressional committees

with jurisdiction over the banking sector have pursued oversight and legislative initiatives in a variety of areas, including addressing

climate-related risks, promoting diversity and equality within the banking industry and addressing other Environmental, Social, and Governance

matters, improving competition in the banking sector and enhancing oversight of bank mergers and acquisitions, establishing a regulatory

framework for digital assets and markets, and oversight of the COVID-19 pandemic response and economic recovery.

The prospects for the

enactment of major banking reform legislation remain unclear at this time.

Moreover, the turnover of the presidential administration

resulted in certain changes in the leadership and senior staffs of the federal banking agencies, the CFPB, CFTC, SEC, and the Treasury

Department, with certain significant leadership positions yet to be filled, including the Comptroller of the Currency, the Chair of the

FDIC and three vacancies among the Governors of the Federal Reserve Board, including the Vice Chair for Supervision.

Department, with certain significant leadership positions yet to be filled, including the Comptroller of the Currency.

These changes have

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business strategies.

It is our policy not to make predatory loans and to determine borrowers’ ability to repay, but the law and

related rules create the potential for increased liability with respect to our lending and loan investment activities.

They increase our

cost of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or

the points and fees on loans that we do make.

It is our policy not to make predatory loans and to determine borrowers’ ability to repay, but the law and related

rules create the potential for increased liability with respect to our lending and loan investment activities.

They increase our cost

of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the

points and fees on loans that we do make.

The Federal Reserve may require us to commit

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Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority

over the claims of the holding company’s

general unsecured creditors, including the holders of its note obligations.

Thus, any borrowing that must be done by the holding company

in order to make the required capital injection becomes more difficult and expensive and will adversely impact the holding company’s

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

A new accounting standard

will result in a significant change in how we recognize credit losses and may have a material impact on our financial condition or results

of operations.

of payment over the claims of the holding company’s general unsecured creditors, including the holders of its note obligations.

any borrowing that must be done by the holding company in order to make the required capital injection becomes more difficult and expensive

and will adversely impact the holding company’s cash flows, financial condition, results of operations and prospects.

The CECL accounting

standard resulted in a significant change in how we recognize credit losses and may continue to have a material impact on our financial

condition or results of operations.

In June 2016, the Financial

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credit losses with an “expected loss” model referred to as the Current Expected Credit Loss (“CECL”) model.

the CECL model, we will be required to present certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt

the new CECL standard became effective on January 1, 2023 and for interim periods within that year, we early adopted CECL as of January

Under the CECL model,

we are required to present certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt

securities, at the net amount expected to be collected.

The measurement of expected credit losses is to be based on information about

past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability

of the reported amount.

This measurement will take place at the time the financial asset is first added to the balance sheet and periodically

This differs significantly from the “incurred loss” model required under current generally accepted accounting

principles (“GAAP”), which delays recognition until it is probable a loss has been incurred.

Accordingly, we expect that the

adoption of the CECL model will materially affect how we determine our allowance for loan losses and could require us to significantly

increase our allowance.

Moreover, the CECL model may create more volatility in the level of our allowance for loan losses.

If we are required

to materially increase our level of allowance for loan losses for any reason, such increase could adversely affect our business, financial

condition and results of operations.

While the new CECL standard

will become effective on January 1, 2023 and for interim periods within that year, we anticipate adopting CECL as of January 1, 2022.

We are currently evaluating the impact the CECL model will have on our financial statements and expect to recognize a one-time cumulative-effect

adjustment to our allowance for loan losses and reserve for unfunded commitments upon adoption of the standard.

We anticipate adopting

the CECL model as of January 1, 2022, at which time we currently estimate there will be a combined charge to retained earnings of between

$3.5 million to $7.0 million.

Related to Our Operations

The measurement of

expected credit losses is based on information about past events,

including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported

This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter.

This differs significantly from the “incurred loss” model required under current generally accepted accounting principles

(“GAAP”), which delays recognition until it is probable a loss has been incurred.

Accordingly, the adoption of the CECL model

materially affected how we determine our allowance for credit losses and required us to increase our allowance.

Moreover, the CECL model

may create more volatility in the level of our allowance for credit losses.

If we are required to materially increase our level of allowance

for credit losses for any reason, such increase could adversely affect our business, financial condition and results of operations.

Risks Related to Our Operations

Competition with other financial institutions

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in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy

customer demands, as

well as to create additional efficiencies in our

Many of our competitors have substantially greater resources to invest in technological improvements.

We may not be able to

effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.

Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact

on our business and, in turn, our financial condition and results of operations.

customer demands, as well as to create additional efficiencies in our operations.

Many of our competitors have substantially greater resources

to invest in technological improvements.

We may not be able to effectively implement new technology-driven products and services or be

successful in marketing these products and services to our customers.

Failure to successfully keep pace with technological change affecting

the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results

of operations.

Our profitability is dependent on our banking

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rate and other interest rates, changes in economic conditions in general, and other factors.

Related to Our Industry

Risks Related to Our Industry

We are subject to interest rate risk, which

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may be an increase in prepayments on loans as borrowers refinance their loans at lower rates.

Interest rate increases often result in

larger payment requirements for our floating interest rate borrowers, which increases the potential for default.

At the same time, the

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

increase (or decrease) in interest rates may also require us to increase (or decrease) the interest rates that we pay on our deposits.

In a rising interest rate environment, the

interest rate increases often result in larger payment requirements for our floating interest rate borrowers, which increases the potential

At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting

from higher interest rates.

An increase (or decrease) in interest rates also requires us to increase (or decrease) the interest rates

that we pay on our deposits.

Changes in interest rates also can affect the value of loans, securities and other assets.

An increase in interest rates that adversely

affects the ability of borrowers to pay the principal or interest on loans may lead to increases in nonperforming assets, charge-offs

and delinquencies, further increases to the allowance for loan losses, and a reduction of income recognized, among others, which could

have a material adverse effect on our results of operations and cash flows.

Further, when we place a loan on non-accrual status, we reverse

any accrued but unpaid interest receivable, which decreases interest income.

At the same time, we continue to have a cost to fund the

loan, which is reflected as interest expense, without any interest income to offset the associated funding expense.

Thus, an increase

in the amount of nonperforming assets could have a material adverse impact on our net interest income.

In response to the COVID-19 pandemic,

the FOMC cut short-term interest rates to a record low range of 0% to 0.25% in 2020, although, in mid-December 2021, the Federal Reserve

indicated that three 25 basis point rate hikes were expected in 2022.

If short-term interest rates were to continue at their historically

low levels for a prolonged period and assuming longer-term interest rates fall further, we could experience net interest margin compression

as our interest-earning assets would continue to reprice downward while our interest-bearing liability rates could fail to decline in

tandem, which would have an adverse effect on our net interest income.

An increase in

interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to increases in nonperforming

assets, charge-offs and delinquencies, further increases to the allowance for credit losses, and a reduction of income recognized, among

others, which could have a material adverse effect on our results of operations and cash flows.

Further, when we place a loan on non-accrual

status, we reverse any accrued but unpaid interest receivable, which decreases interest income.

At the same time, we continue to have

a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense.

Thus, an increase in the amount of nonperforming assets could have a material adverse impact on our net interest income.

In March 2020, in response to the COVID-19 pandemic,

the Federal Reserve reduced the target Federal Funds rate to between zero and 0.25%;

however, due in part to rising inflation, throughout

2022 the target Federal Funds rate increased to between 4.25% and 4.50%.

Rapid changes in interest rates make it difficult for us to balance

our loan and deposit portfolios, which may adversely affect our results of operations by, for example, reducing asset yields or spreads,

creating operating and system issues, or having other adverse impacts on our business.

When short-term interest rates are low for a prolonged

period and assuming longer-term interest rates fall further, we could experience net interest margin compression as our interest-earning

assets would continue to reprice downward while our interest-bearing liability rates could fail to decline in tandem, which would have

an adverse effect on our net interest income and could have an adverse effect on our business, financial condition and results of operations.

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.

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.

In addition, our mortgage operations provide a

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to programs currently offered by Fannie Mae, Ginnie Mae or Freddie Mac.

In a rising or higher interest rate environment, our originations

of mortgage loans may decrease, resulting in fewer loans that are available to be sold to investors, which would decrease mortgage revenues

In this rising or higher interest rate environment, our originations

of mortgage loans have decreased, resulting in fewer loans that are available to be sold to investors, which has decreased mortgage revenues

in noninterest income.

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activities, such as salaries and employee benefits, other loan expense, and other costs.

During periods of

reduced loan demand, our results of operations

may be adversely affected to the extent that we are unable to reduce expenses commensurate with the decline in loan originations.

During periods of reduced loan demand, our results

of operations may be adversely affected to the extent that we are unable to reduce expenses commensurate with the decline in loan originations.

Inflationary pressures and rising prices

may affect our results of operations and financial condition.

Inflation has continued rising in 2022 at levels

not seen for over 40 years.

Inflationary pressures are currently expected to remain elevated throughout 2023.

Inflation could lead to

increased costs to our customers, making it more difficult for them to repay their loans or other obligations increasing our credit risk.

Sustained higher interest rates by the Federal Reserve may be needed to tame persistent inflationary price pressures, which could push

down asset prices and weaken economic activity.

A deterioration in economic conditions in the United States and our markets could result

in an increase

in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products

and services, all of which, in turn, would adversely affect our business, financial condition and results of operations.

The phase-out of LIBOR could negatively impact

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banks to submit to LIBOR.

The federal banking agencies previously determined that banks must cease entering into any new contract that

use LIBOR as a reference rate by no later than December 31, 2021.

The federal banking agencies previously determined that banks should have ceased entering into any new contract

that use LIBOR as a reference rate by December 31, 2021.

The discontinuation of LIBOR, changes in LIBOR,

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lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.

Related to Our Strategic Plans

Our reliance on brokered deposits could adversely

affect our liquidity and operating results.

Among other sources of funds, in 2022, we relied

on brokered deposits to provide funds with which to make loans and provide other liquidity needed.

Brokered deposits were $236.2 million,

representing 7.5% of our total deposits at December 31, 2022.

Generally, these deposits may not be as stable as other types of deposits.

In the future, these depositors may not replace their deposits with us as they mature, or we may have to pay a higher rate of interest

to keep those deposits or to replace them with other deposits or sources of funds.

Not being able to maintain or replace these deposits

as they mature could affect our liquidity.

Paying higher deposit rates to maintain or replace these types of deposits could adversely

affect our net interest margin and operating results.

Risks Related to Our Strategic Plans

We are dependent on key individuals and the

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Arthur Seaver, Jr., our chief executive officer,

and Michael D.

Dowling, our chief financial officer and chief operating officer, both have extensive and long-standing ties within our

primary market area and substantial experience with our operations, and each has contributed significantly to our growth.

If we lose the

services of any of these individuals, they would be difficult to replace and our business and development could be materially and adversely

and Calvin C.

Hurst, our president, each have extensive and long-standing ties within our primary market area and substantial experience

with our operations, and each has contributed significantly to our growth.

If we lose the services of any of these individuals, they would

be difficult to replace and our business and development could be materially and adversely affected.

We may not be successful in retaining

key personnel, and the unexpected loss of services of one or more of our key personnel could have a material adverse effect on our business

because of their skill, knowledge of our primary markets, years of industry experience and the difficulty of promptly finding qualified

replacement personnel.

In particular, Michael D.

Dowling, our chief financial officer and chief operating officer, resigned effective

February 15, 2023.

Leadership transitions can be inherently difficult to manage, and an inadequate transition to a permanent successor

may cause disruptions to our business due to, among other things, diverting management’s attention or causing a deterioration in

Our success also depends, in part, on our continued

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to execute our business strategy may be lengthy.

In 2021, there has been a dramatic increase in workers leaving their positions throughout

our industry and other industries that is being referred to as the “great resignation,” and the market to build, retain and

replace talent has become even more highly competitive.

We may not be successful in retaining key personnel, and the unexpected loss of

services of one or more of our key personnel could have a material adverse effect on our business because of their skill, knowledge of

our primary markets, years of industry experience and the difficulty of promptly finding qualified replacement personnel.

If the services

of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms

acceptable to the Company, or at all, which could have a material adverse effect on our business, results of operation, financial condition,

and future prospects.

In 2021, there was a dramatic increase in workers leaving their positions throughout

our industry and other industries that was referred to as the “great resignation,” and the market to build, retain and replace

talent has become even more highly competitive.

If the services of any of our other key personnel

should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to the Company,

or at all, which could have a material adverse effect on our business, results of operation, financial condition, and future prospects.

The departure of any of our other personnel could also have a material adverse impact on our business, results of operations and growth

The success of our growth strategy depends

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institutions.

Our merger and acquisition activities could be material and could require us to use a substantial amount of common stock,

Any merger and acquisition activities could be material and could require us to use a substantial amount of common stock,

cash, other liquid assets, and/or incur debt.

Moreover, these types of expansions involve various risks, including:

the time and costs of evaluating new markets, hiring

or retaining experienced local management, and opening new offices and the time lags between these activities and the generation of sufficient

assets and deposits to support the costs of the expansion;

● the time and costs of evaluating new markets,

hiring or retaining experienced local management, and opening new offices and the time lags between these activities and the generation

of sufficient assets and deposits to support the costs of the expansion;

● the incurrence and possible impairment of goodwill

associated with an acquisition and possible adverse effects on our results of operations;

the potential inaccuracy of the estimates and judgments

used to evaluate credit, operations, management, and market risks with respect to a target institution;

incurring the time and expense associated with identifying

and evaluating potential merger or acquisition targets and other expansion opportunities and negotiating potential transactions, resulting

in management’s attention being diverted from the operation of our existing business;

the possibility that the expected benefits of a transaction

may not materialize in the timeframe expected or at all, or may be costlier to achieve;

● the potential inaccuracy of the estimates and

judgments used to evaluate credit, operations, management, and market risks with respect to a target institution;

● incurring the time and expense associated with

identifying and evaluating potential merger or acquisition targets and other expansion opportunities and negotiating potential transactions,

resulting in management’s attention being diverted from the operation of our existing business;

● the possibility that the expected benefits of

a transaction may not materialize in the timeframe expected or at all, or may be costlier to achieve;

● the risk that we may be unsuccessful in attracting

and retaining deposits and originating high quality loans in new markets;

difficulty or unanticipated expense associated with

converting the operating systems of an acquired or merged company into ours;

● difficulty or unanticipated expense associated

with converting the operating systems of an acquired or merged company into ours;

● delay in completing a merger, acquisition or other

expansion activities due to litigation, closing conditions or the regulatory approval process;

the risk of loss of key employees and clients of the

Company or the acquired or merged company.

● the risk of loss of key employees and clients

of the Company or the acquired or merged company.

There is no assurance that existing branches or

future branches will maintain or achieve deposit levels, loan balances or other operating results necessary to avoid losses or produce

Our growth may entail an increase in overhead expenses as we add new branches and staff.

There are considerable costs involved

in opening branches, and new branches generally do not generate sufficient revenues to offset their costs until they have been in operation

for at least a year or more.

Accordingly, any new branches we establish can be expected to negatively impact our earnings for some period

of time until they reach certain economies of scale.

Our historical results may not be indicative of future results or results that may

be achieved, particularly if we continue to expand.

future branches, if any, will maintain or achieve deposit levels, loan balances or other operating results necessary to avoid losses or

produce profits.

Our growth may entail an increase in overhead expenses if we add new branches and staff.

There are considerable costs

involved in opening branches, and new branches generally do not generate sufficient revenues to offset their costs until they have been

in operation for at least a year or more.

Accordingly, any new branches established can be expected to negatively impact earnings for

some period of time until they reach certain economies of scale.

Our historical results may not be indicative of future results or results

that may be achieved, particularly if we continue to expand.

Failure to successfully address these and other

issues related to our expansion could have a material adverse effect on our business, financial condition and results of operations, including

issues related to any expansion could have a material adverse effect on our business, financial condition and results of operations, including

short-term and long-term liquidity, and could adversely affect our ability to successfully implement our business strategy.

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effect on our business and, in turn, our financial condition and results of operations.

Related to Our Common Stock

Risks Related to Our Common Stock

Our ability to pay cash dividends is limited,

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Our governing documents:

authorize a class of preferred stock that may be issued

in series with terms, including voting rights, established by the board of directors without shareholder approval;

● authorize a class of preferred stock that may

be issued in series with terms, including voting rights, established by the board of directors without shareholder approval;

● authorize 10,000,000 shares of common stock and

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preventing a change in a majority of the board at any annual meeting;

require advance notice of proposed nominations for

election to the board of directors and business to be conducted at a shareholder meeting;

● require advance notice of proposed nominations

for election to the board of directors and business to be conducted at a shareholder meeting;

● grant the board of directors the discretion, when

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of the Company are located, to the extent permitted by South Carolina law;

provide that the number of directors shall be fixed

from time to time by resolution adopted by a majority of the directors then in office, but may not consist of fewer than five nor more

than 25 members;

provide that no individual who is or becomes a “business

competitor” or who is or becomes affiliated with, employed by, or a representative of any individual, corporation, or other entity

which the board of directors, after having such matter formally brought to its attention, determines to be in competition with us or any

of our subsidiaries (any such individual, corporation, or other entity being a “business competitor”) shall be eligible to

serve as a director if the board of directors determines that it would not be in our best interests for such individual to serve as a

director (any financial institution having branches or affiliates within Greenville County, South Carolina is presumed to be a business

competitor unless the board of directors determines otherwise).

● provide that the number of directors shall be

fixed from time to time by resolution adopted by a majority of the directors then in office, but may not consist of fewer than five nor

more than 25 members;

● provide that no individual who is or becomes a

“business competitor” or who is or becomes affiliated with, employed by, or a representative of any individual, corporation,

or other entity which the board of directors, after having such matter formally brought to its attention, determines to be in competition

with us or any of our subsidiaries (any such individual, corporation, or other entity being a “business competitor”) shall be

eligible to serve as a director if the board of directors determines that it would not be in our best interests for such individual to

serve as a director (any financial institution having branches or affiliates within Greenville County, South Carolina is presumed to be

a business competitor unless the board of directors determines otherwise).

In addition, the South Carolina business combinations

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board of directors before the 10% shareholder’s share acquisition date.

This statute further provides that at no time (even after

the two-year period subsequent to such share acquisition date) may the 10% shareholder engage in a business combination with the relevant

This statute further provides that at no time (even after the

two-year period subsequent to such share acquisition date) may the 10% shareholder engage in a business combination with the relevant

corporation unless certain approvals of the board of directors or disinterested shareholders are obtained or unless the consideration

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Finally, the Change in Bank Control Act and the

Bank Holding Company Act generally require filings and approvals prior to certain transactions that would result in a party acquiring

control of the Company or the Bank.

BHCA generally require filings and approvals prior to certain transactions that would result in a party acquiring control of the Company

Our common stock is not an insured deposit

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of loss if the value or market price of our common stock is adversely affected.

General Risk Factors

We may be subject to claims and litigation

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

What changed 10-K

Item 1A. Risk Factors