What changed in this filing

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Item 1A. Risk Factors

2024-03-05 compared with 2023-02-13 · 619 added, 616 removed, 404 unchanged (75% of the section changed)

Risk Factors.

The following risk factors and other information

included in this Annual Report on Form 10-K should be carefully considered.

The risks and uncertainties described below are not the only

ones we face.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may adversely impact

our business operations.

If any of the following risks occur, our business, financial condition, operating results, and cash flows could

be materially adversely affected.

The following risk factors and other information included

in this Annual Report on Form 10-K should be carefully considered.

The risks and uncertainties described below are not the only ones we

Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may adversely impact our

business operations.

If any of the following risks occur, our business, financial condition, operating results, and cash flows could be

materially adversely affected.

Risks Related to Economic Conditions

Our business may be adversely affected by

conditions in the financial markets and economic conditions generally.

Our business may be adversely affected by conditions

in the financial markets and economic conditions generally.

Our financial performance generally, and in particular

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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

affect our financial performance include short-term and long-term interest rates, the prevailing yield curve, inflation and price levels,

monetary and trade policy, unemployment and the strength of the domestic economy and the local economy in the markets in which we operate.

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 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

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

or a combination of

these or other factors.

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.

Some elements of the business environment that affect

our financial performance include short-term and long-term interest rates, the prevailing yield curve, inflation and price levels, monetary

and trade policy, unemployment and the strength of the domestic economy and the local economy in the markets in which we operate.

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 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 or interest rates; high

unemployment; natural disasters; epidemics and pandemics (such as COVID-19);

or a combination of these or other factors.

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

government debt and fiscal

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

of Ukraine, and the Middle East conflict, all of which may have a destabilizing effect on financial markets and economic activity.

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.

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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

is secured by real estate, and events that negatively affect the real estate market could hurt our business.

As of December 31, 2022, approximately 85% of our

loans had real estate as a primary or secondary component of collateral.

The real estate collateral in each case provides an alternate

source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended.

A significant portion of our loan portfolio is

secured by real estate, and events that negatively affect the real estate market could hurt our business.

As of December 31, 2023, approximately 85% of our loans

had real estate as a primary or secondary component of collateral.

The real estate collateral in each case provides an alternate source

of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended.

of the real estate market in our primary market areas could result in an increase in the number of borrowers who default on their loans

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estate loans with relatively large balances.

Because our loan portfolio contains a number of

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 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.

Commercial real estate loans increase our

exposure to credit risk.

At December 31, 2022, 48.4% of our loan portfolio

was secured by commercial real estate.

Loans secured by commercial real estate are generally viewed as having more risk of default than

loans secured by residential real estate or consumer loans because repayment of the loans often depends on the successful operation of

the property, the income stream of the borrowers, the accuracy of the estimate of the property’s value at completion of construction,

and the estimated cost of construction.

Such loans are generally more risky than loans secured by residential real estate or consumer

loans because those loans are typically not secured by real estate collateral.

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 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.

Imposition of limits by the bank regulators

on commercial and multi-family real estate lending activities could curtail our growth and adversely affect our earnings.

In 2006, the FDIC, the Federal Reserve and the

OCC issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the

“CRE Guidance”).

Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial

real estate lending exposure could receive increased supervisory scrutiny where total non-owner occupied commercial real estate loans,

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

by 50% or more during the preceding 36 months.

Our level of commercial real estate and multi-family loans represents 261.7% of the Bank’s

total risk-based capital at December 31, 2022.

Because our loan portfolio contains a number of 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 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.

Commercial real estate loans increase our exposure

to credit risk.

At December 31, 2023, 47.9% of our loan portfolio was

secured by commercial real estate.

Loans secured by commercial real estate are generally viewed as having more risk of default than loans

secured by residential real estate or consumer loans because repayment of the loans often depends on the successful operation of the property,

the income stream of the borrowers, the accuracy of the estimate of the property’s value at completion of construction, and the

estimated cost of construction.

Such loans are generally riskier than loans secured by residential real estate or consumer loans because

those loans are typically not secured by real estate collateral.

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 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.

Imposition of limits by the bank regulators on

commercial and multi-family real estate lending activities could curtail our growth and adversely affect our earnings.

In 2006, the FDIC, the Federal Reserve and the OCC

issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE

Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real

estate lending exposure could receive increased supervisory scrutiny where total non-owner occupied commercial real estate loans, 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 by 50% or more during

the preceding 36 months.

Our level of commercial real estate and multi-family loans represents 271.4% of the Bank’s total risk-based

capital at December 31, 2023.

In December 2015, the regulatory agencies released

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the amount of commercial real estate loans we can hold in our portfolio, for reasons noted above or otherwise, our earnings would be adversely

Repayment of our commercial business loans

is often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate

At December 31, 2022, commercial business loans

comprised 14.3% of our total loan portfolio.

Our commercial business loans are originated primarily based on the identified cash flow

and general liquidity of the borrower and secondarily on the underlying collateral provided by the borrower and/or repayment capacity

of any guarantor.

Repayment of our commercial business loans is

often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in

At December 31, 2023, commercial business loans comprised

13.9% of our total loan portfolio.

Our commercial business loans are originated primarily based on the identified cash flow and general

liquidity of the borrower and secondarily on the underlying collateral provided by the borrower and/or repayment capacity of any guarantor.

The borrower’s cash flow may be unpredictable, and collateral securing these loans may fluctuate in value.

commercial business loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation

of collateral in the event of default is often an insufficient source of repayment because accounts receivable may be uncollectible and

inventories may be obsolete or of limited use.

In addition, business assets may depreciate over time, may be difficult to appraise, and

may fluctuate in value based on the success of the business.

Accordingly, the repayment of commercial business loans depends primarily

on the cash flow and credit worthiness of the borrower and secondarily on the underlying collateral value provided by the borrower and

liquidity of the guarantor.

If these borrowers do not have sufficient cash flows or resources to pay these loans as they come due or the

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

for credit losses.

We may have higher credit losses than we

have allowed for in our allowance for credit losses.

Although commercial business

loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in

the event of default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories may

be obsolete or of limited use.

In addition, business assets may depreciate over time, may be difficult to appraise, and may fluctuate

in value based on the success of the business.

Accordingly, the repayment of commercial business loans depends primarily on the cash flow

and credit worthiness of the borrower and secondarily on the underlying collateral value provided by the borrower and liquidity of the

If these borrowers do not have sufficient cash flows or resources to pay these loans as they come due or the value of the underlying

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

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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 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.

Industry experience shows that a portion of loans will

become delinquent and a portion of loans will require partial or entire charge-

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

Our decisions regarding allowance for credit

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

Making loans and other extensions of credit is

an essential element of our business.

Although we seek to mitigate risks inherent in lending by adhering to specific underwriting practices,

our loans and other extensions of credit may not be repaid.

Making loans and other extensions of credit is an essential

element of our business.

Although we seek to mitigate risks inherent in lending by adhering to specific underwriting practices, our loans

and other extensions of credit may not be repaid.

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

duration of the credit;

the duration of the credit;

credit risks of a particular client;

changes in economic and industry conditions;

● in the case of a collateralized loan, risks resulting

from uncertainties about the future value of the collateral.

We attempt to maintain an appropriate allowance

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;

in the case of a collateralized loan, risks resulting from uncertainties about the future value of the collateral.

We attempt to maintain an appropriate allowance 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 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 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

currently include exceptions to our loan policies and supervisory guidelines.

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 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 currently

include exceptions to our loan policies and supervisory guidelines.

All of the loans that we make are subject to written

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Risks Related to Capital and Liquidity

Liquidity needs could adversely affect our

financial condition and results of operations.

Liquidity needs could adversely affect our financial

condition and results of operations.

Dividends from the Bank provide the primary source

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and international instability.

Additionally, deposit levels may be affected by

a number of factors, including rates paid by competitors, general interest rate levels, regulatory capital requirements, returns available

to clients on alternative investments and general economic conditions.

Accordingly, we may be required from time to time to rely on secondary

sources of liquidity to meet withdrawal demands or otherwise fund operations.

Such sources include proceeds from FHLB advances, sales

of investment securities and loans, and federal funds lines of credit from correspondent banks, as well as out-of-market time deposits.

While we believe that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity

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.

The Company is a stand-alone entity with its own

liquidity needs to service its debt or other obligations.

Other than dividends from the Bank, the Company does not have additional means

of generating liquidity without obtaining additional debt or equity funding.

If we are unable to receive dividends from the Bank or obtain

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

Additionally, deposit levels may be affected by a number

of factors, including rates paid by competitors, general interest rate levels, regulatory capital requirements, returns available to clients

on alternative investments and general economic

Accordingly, we may be required from time to time to rely on secondary sources

of liquidity to meet withdrawal demands or otherwise fund operations.

Such sources include proceeds from FHLB advances, sales of investment

securities and loans, and federal funds lines of credit from correspondent banks, as well as out-of-market time deposits.

While we believe

that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity 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.

The Company is a stand-alone entity with its own liquidity

needs to service its debt or other obligations.

Other than dividends from the Bank, the Company does not have additional means of generating

liquidity without obtaining additional debt or equity funding.

If we are unable to receive dividends from the Bank or obtain additional

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

Legal, Accounting, Regulatory and Compliance

We are subject to extensive regulation that

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

subject to examination, supervision, and comprehensive regulation by various regulatory agencies.

We are subject to regulation by the

Federal Reserve.

The Bank is subject to extensive regulation, supervision, and examination by our primary federal regulator, the FDIC,

the regulating authority that insures client deposits, and by our primary state regulator, the S.C.

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.

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

benefit of our shareholders.

The Bank’s activities are also regulated under consumer protection laws applicable to our lending,

deposit, and other activities.

We are subject to extensive regulation that 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 subject

to examination, supervision, and comprehensive regulation by various regulatory agencies.

We are subject to regulation by the Federal

The Bank is subject to extensive regulation, supervision, and examination by our primary federal regulator, the FDIC, the regulating

authority that insures client deposits, and by our primary state regulator, the S.C.

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.

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

our shareholders.

The Bank’s activities are also regulated under consumer protection laws applicable to our lending, deposit, and

other activities.

A sufficient claim against us under these laws could have a material adverse effect on our results of operations.

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While we have policies and procedures designed to prevent any such violations, such violations may occur despite our best efforts.

We are subject to federal and state fair

lending laws, and failure to comply with these laws could lead to material penalties.

We are subject to federal and state fair lending

laws, and failure to comply with these laws could lead to material penalties.

Federal and state fair lending laws and regulations,

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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 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.

These changes have

impacted the rulemaking, supervision, examination and enforcement priorities and policies of the agencies and likely will continue to

do so over the next several years.

The potential impact of any changes in agency personnel, policies and priorities on the financial services

sector, including the Company and the Bank, cannot be predicted at this time.

Regulations and laws may be modified at any time, and new

legislation may be enacted that will affect us.

Any future changes in federal and state laws and regulations, as well as the interpretation

and implementation of such laws and regulations, could affect us in substantial and unpredictable ways, including those listed above or

other ways that could have a material adverse effect on our business, financial condition or results of operations.

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.

In 2023, Republicans gained control of the U.S.

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 pandemic responses and economic recovery.

The prospects for the enactment of major banking reform legislation

remain unclear at this time.

Moreover, turnover of the presidential administration

in 2020 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 permanently filled, including the Comptroller of the Currency.

These changes have impacted the rulemaking, supervision, examination and enforcement priorities and policies of the agencies and likely

will continue to do so over the next several years.

The potential impact of the 2024 election on additional changes in agency personnel,

policies and priorities on the financial services sector, including the Company and the Bank, cannot be predicted at this time.

and laws may be modified at any time, and new legislation may be enacted that will affect us.

Any future changes in federal and state

laws and regulations, as well as the interpretation and implementation of such laws and regulations, could affect us in substantial and

unpredictable ways, including those listed above or other ways that could have a material adverse effect on our business, financial condition

or results of operations.

We face a risk of noncompliance and enforcement

action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

The federal Bank Secrecy Act, the USA Patriot Act

and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering

The federal Bank Secrecy Act, the USA Patriot Act and

other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering

programs and file suspicious activity and currency transaction reports as appropriate.

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serious reputational consequences for us.

Federal, state and local consumer lending

laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could

increase our cost of doing business.

Federal, state and local laws have been adopted

that are intended to eliminate certain lending practices considered “predatory.” These laws prohibit practices such as steering

Federal, state and local consumer lending laws

may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase

our cost of doing business.

Federal, state and local laws have been adopted that

are intended to eliminate certain lending practices 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

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to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank.

Under the “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections

into a troubled subsidiary bank and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit

resources to such a subsidiary bank.

In addition, the Dodd-Frank Act directs the federal bank regulators to require that all companies

that directly or indirectly control an insured depository institution serve as a source of strength for the institution.

Under these requirements,

in the future, we could be required to provide financial assistance to the Bank if the Bank experiences financial distress.

A capital injection may be required at times when

we do not have the resources to provide it, and therefore we may be required to borrow the funds.

Under the “source of strength” doctrine, the Federal Reserve may require a bank holding company

to make capital injections into a troubled subsidiary bank and may charge the bank holding company with engaging in unsafe and unsound

practices for failure to commit resources to such a subsidiary bank.

In addition, the Dodd-Frank Act directs the federal bank regulators

to require that all companies that directly or indirectly control an insured depository institution serve as a source of strength for

the institution.

requirements, in the future, we could be required to provide financial assistance to the Bank if the Bank

experiences financial distress.

A capital injection may be required at times when we

do not have the resources to provide it, and therefore we may be required to borrow the funds.

In the event of a bank holding company’s

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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.

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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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

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 based on information about past events,

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

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or results of operations.

The banking and financial services industry is

very competitive and includes services offered from other banks, savings and loan associations, credit unions, mortgage companies, other

lenders, and institutions offering uninsured investment alternatives.

Legal and regulatory developments have made it easier for new and

sometimes unregulated competitors to compete with us.

The financial services industry has and is experiencing an ongoing trend towards

consolidation in which fewer large national and regional banks and other financial institutions are replacing many smaller and more local

These larger banks and other financial institutions hold a large accumulation of assets and have significantly greater resources

and a wider geographic presence or greater accessibility.

In some instances, these larger entities operate without the traditional brick

and mortar facilities that restrict geographic presence.

The banking and financial services industry is very

competitive and includes services offered from other banks, savings and loan associations, credit unions, mortgage companies, other lenders,

and institutions offering uninsured investment alternatives.

Legal and regulatory developments have made it easier for new and sometimes

unregulated competitors to compete with us.

The financial services industry has and is experiencing an ongoing trend towards consolidation

in which fewer large national and regional banks and other financial institutions are replacing many smaller and more local banks.

larger banks and other financial institutions hold a large accumulation of assets and have significantly greater resources and a wider

geographic presence or greater accessibility.

In some instances, these larger entities operate without the traditional brick and mortar

facilities that restrict geographic presence.

Some competitors have more aggressive marketing campaigns and better brand recognition,

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for lending operations which could increase our cost of funds.

The financial services industry could become even

more competitive as a result of legislative, regulatory and technological changes and continued consolidation.

Banks, securities firms

and insurance companies can merge as part of a financial holding company, which can offer virtually any type of financial service, including

banking, securities underwriting, insurance (both agency and underwriting) and merchant banking.

Technological developments have allowed

competitors, including some non-depository institutions, to compete more effectively in local markets and have expanded the range of financial

products, services and capital available to our target clients.

If we are unable to implement, maintain and use such technologies effectively,

we may not be able to offer products or achieve cost-efficiencies necessary to compete in the industry.

In addition, some of these competitors

have fewer regulatory constraints and lower cost structures.

The financial services industry could become even more

competitive as a result of legislative, regulatory and technological changes and continued consolidation.

Banks, securities firms and

insurance companies can merge as part of a financial holding company, which can offer virtually any type of financial service, including

banking, securities underwriting, insurance (both agency and underwriting)

and merchant banking.

Technological developments have allowed competitors, including some non-depository institutions, to compete more

effectively in local markets and have expanded the range of financial products, services and capital available to our target clients.

If we are unable to implement, maintain and use such technologies effectively, we may not be able to offer products or achieve cost-efficiencies

necessary to compete in the industry.

In addition, some of these competitors have fewer regulatory constraints and lower cost structures.

We are subject to environmental risks that could

result in losses.

In the course of business, the Bank may acquire,

through foreclosure, or deed in lieu of foreclosure, properties securing loans it has originated or purchased which are in default.

In the course of business, the Bank may acquire, through

foreclosure, or deed in lieu of foreclosure, properties securing loans it has originated or purchased which are in default.

in commercial real estate lending, there is a risk that hazardous substances could be discovered on these properties.

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our business, results of operations and financial condition.

In addition, we are subject to the growing risk

of climate change.

In addition, we are subject to the growing risk of

climate change.

Among the risks associated with climate change are more frequent severe weather events.

Severe weather events such

as hurricanes, tropical storms, tornados, winter storms, freezes, flooding and other large-scale weather catastrophes in our markets subject

Severe weather events such as

hurricanes, tropical storms, tornados, winter storms, freezes, flooding and other large-scale weather catastrophes in our markets subject

us to significant risks and more frequent severe weather events magnify those risks.

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could have a material adverse effect on our business, financial condition and results of operation.

We rely on other companies to provide key

components of our business infrastructure.

We rely on other companies to provide key components

of our business infrastructure.

Third parties provide key components of our business

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of other financial institutions.

Financial services institutions are interrelated

as a result of trading, clearing, counterparty, or other relationships.

Financial services institutions are interrelated as

a result of trading, clearing, counterparty, or other relationships.

We have exposure to many different industries and counterparties,

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or fraudulent behavior by our employees, clients, counterparties or other third parties.

We are exposed to many types of operational risk,

including the risk of fraud by employees and third parties, clerical recordkeeping errors and transactional errors.

Our business is dependent

on our employees as well as third-party service providers to process a large number of increasingly complex transactions.

materially and adversely affected if employees, clients, counterparties or other third parties caused an operational breakdown or failure,

either as a result of human error, fraudulent manipulation or purposeful damage to any of our operations or systems.

In deciding whether to extend credit or to enter

into other transactions with clients and counterparties, we may rely on information furnished to us by or on behalf of clients and counterparties,

We are exposed to many types of operational risk, including

the risk of fraud by employees and third parties, clerical recordkeeping errors and transactional errors.

Our business is dependent on

our employees as well as third-party service providers to process a large number of increasingly complex transactions.

We could be materially

and adversely affected if employees, clients, counterparties or other third parties caused an operational breakdown or failure, either

as a result of human error, fraudulent manipulation or purposeful damage to any of our operations or systems.

In deciding whether to extend credit or to enter into

other transactions with clients and counterparties, we may rely on information furnished to us by or on behalf of clients and counterparties,

including financial statements and other financial information, which we do not independently verify.

We also may rely on representations

of clients and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports

of independent auditors.

For example, in deciding whether to extend credit to clients, we may assume that a client’s audited financial

statements conform with GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows

of the client.

Our financial condition and results of operations could be negatively affected to the extent we rely on financial statements

that do not comply with GAAP or are materially misleading, any of which could be caused by errors, omissions, or fraudulent behavior by

our employees, clients, counterparties, or other third parties.

of clients and counterparties as to the accuracy and completeness

of that information and, with respect to financial statements, on reports of independent auditors.

For example, in deciding whether to

extend credit to clients, we may assume that a client’s audited financial statements conform with GAAP and present fairly, in all

material respects, the financial condition, results of operations and cash flows of the client.

Our financial condition and results of

operations could be negatively affected to the extent we rely on financial statements that do not comply with GAAP or are materially misleading,

any of which could be caused by errors, omissions, or fraudulent behavior by our employees, clients, counterparties, or other third parties.

In addition, criminals committing fraud increasingly

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compromises are widely reported in the media.

As a result of the increased sophistication of

fraud activity, we have increased our spending on systems and controls to detect and prevent fraud.

This will result in continued ongoing

investments in the future.

Nevertheless, these investments may prove insufficient and fraudulent activity could result in losses to us

or our customers;

As a result of the increased sophistication of fraud

activity, we have increased our spending on systems and controls to detect and prevent fraud.

This will result in continued ongoing investments

in the future.

Nevertheless, these investments may prove insufficient and fraudulent activity could result in losses to us or our customers;

loss of business and/or customers;

damage to our reputation;

the incurrence of additional expenses (including the cost

of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks);

the incurrence of additional expenses (including the cost of notification

to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks);

disruption to our business;

our inability to grow our online services or other businesses;

our inability

to grow our online services or other businesses;

additional regulatory scrutiny or penalties;

or our exposure to civil litigation

and possible financial liability any of which could have a material adverse effect on our business, financial condition and results of

or our exposure to civil litigation and

possible financial liability any of which could have a material adverse effect on our business, financial condition and results of operations.

Our operational or security systems may experience

an interruption or breach in security, including as a result of cyber-attacks.

We rely heavily on communications and information

systems to conduct our business.

Any failure, interruption or breach in security of these systems, including as a result of cyber-attacks,

could result in failures or disruptions in our client relationship management, deposit, loan, and other systems and also the disclosure

or misuse of confidential or proprietary information.

While we have systems, policies and procedures designed to prevent or limit the

effect of the failure, interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions

We rely heavily on communications and information systems

to conduct our business.

Any failure, interruption or breach in security of these systems, including as a result of cyber-attacks, could

result in failures or disruptions in our client relationship management, deposit, loan, and other systems and also the disclosure or misuse

of confidential or proprietary information.

While we have systems, policies and procedures designed to prevent or limit the effect of

the failure, interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions

or security breaches will not occur or, if they do occur, that they will be adequately addressed.

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Furthermore, information security risks for financial

institutions have generally increased in recent years in part because of the proliferation of new technologies, the use of the Internet

and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime,

hackers, terrorists, activists, and other external parties.

Our technologies, systems, networks, and our customers’ devices may

become the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring,

misuse, loss or destruction of our or our customers’ confidential, proprietary and other information, or otherwise disrupt our or

our customers’ or other third parties’ business operations.

As cyber threats continue to evolve, we may also be required to

expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information

security vulnerabilities.

While we have not experienced any material losses

relating to cyber-attacks or other information security breaches to date, we may suffer such losses in the future and any information

security breach could result in significant costs to us, which may include fines and penalties, potential liabilities from governmental

or third party investigations, proceedings or litigation, legal, forensic and consulting fees and expenses, costs and diversion of management

attention required for investigation and remediation actions, and the negative impact on our reputation and loss of confidence of our

customers and others, any of which could have a material adverse impact on our business, financial condition and operating results.

Our controls and procedures may fail or be

circumvented.

institutions have increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications

technologies to conduct financial transactions, and the increasing sophistication and activities of organized crime, hackers, terrorists,

activists, and other external parties.

Our technologies, systems, networks, and our customers’ devices may become the target of

cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction

of our or our customers’ confidential, proprietary and other information, or otherwise disrupt our or our customers’ or other

third parties’ business operations.

As cyber threats continue to evolve, we may also be required to expend significant additional

resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.

While we have not experienced any material losses relating

to cyber-attacks or other information security breaches to date, we may suffer such losses in the future and any information security

breach could result in significant costs to us, which may include fines and penalties, potential liabilities from governmental or third

party investigations, proceedings or litigation, legal, forensic and consulting fees and expenses, costs and diversion of management attention

required for investigation and remediation actions, and the negative impact on our reputation and loss of confidence of our customers

and others, any of which could have a material adverse impact on our business, financial condition and operating results.

Our enterprise risk management framework may

not be effective in mitigating risk and reducing the potential for losses.

Our enterprise risk management framework seeks to mitigate

risk and loss to us.

We have established comprehensive policies and procedures and an internal control framework designed to provide a

sound operational environment for the types of risk to which we are subject, including credit risk, market risk (interest rate and price

risks), liquidity risk, operational risk, compliance risk, legal risk, strategic risk, and reputational risk.

However, as with any risk

management framework, there are inherent limitations to our current and future risk management strategies, including risks that we have

not appropriately anticipated or identified.

In addition, our businesses and the markets in which we operate are continuously evolving.

We may fail to adequately or timely enhance our enterprise risk framework to address those changes.

If our enterprise risk framework is

ineffective, either because it fails to keep pace with changes in the financial markets, regulatory requirements, our businesses, our

counterparties, clients or service providers or for other reasons,

we could incur losses, suffer reputational damage or find ourselves

out of compliance with applicable regulatory or contractual mandates.

In addition to our executive committee, the Risk Committee of the

Board, the Audit Committee of the Board, as well as the Company’s Chief Risk Officer are all responsible for the “risk management

framework” of the Company.

These committees each meet regularly, with the authority to convene additional meetings, as circumstances

Our interest rate risk is overseen by the Risk Committee

which monitors our compliance with regulatory guidance in the formulation and implementation of our interest rate risk program.

Committee reviews the results of our interest rate risk modeling quarterly to assess whether we have appropriately measured our interest

rate risk, mitigated our exposures appropriately and any residual risk is acceptable.

In addition to our annual review of this policy,

our Board of Directors reviews the interest rate risk policy limits at least annually.

Our controls and procedures may fail or be circumvented.

We regularly review and update our internal controls,

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could adversely affect our business.

The financial services industry is continually

undergoing rapid technological change with frequent introductions of new technology-driven products and services.

The effective use of

technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.

Our future success depends,

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 operations.

The financial services industry is continually undergoing

rapid technological change with frequent introductions of new technology-driven products and services.

The effective use of technology

increases efficiency and enables financial institutions to better serve customers and to reduce costs.

Our future success depends, 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 operations.

Many of our competitors have substantially greater resources

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Risks Related to Our Industry

We are subject to interest rate risk, which

could adversely affect our financial condition and profitability.

A significant portion of our banking assets are

subject to changes in interest rates.

As of December 31, 2022, approximately 87% of our loan portfolio was in fixed rate loans, while

only 13% was in variable rate loans.

Like most financial institutions, our earnings significantly depend on our net interest income, the

principal component of our earnings, which is the difference between interest earned by us from our interest-earning assets, such as loans

and investment securities, and interest paid by us on our interest-bearing liabilities, such as deposits and borrowings.

We expect that

we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either

our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice

In either event, if market interest rates should move contrary to our position, this “gap” will negatively impact our

Many factors beyond our control impact interest rates, including economic conditions, governmental monetary policies, inflation,

recession, changes in unemployment, the money supply, and disorder and instability in domestic and foreign financial markets.

in monetary policies of the various government agencies could influence not only the interest we receive on loans and securities and the

interest we pay on deposits and borrowings, but such changes could also affect our ability to originate loans and obtain deposits, the

fair value of our financial assets and liabilities, and the average duration of our assets and liabilities.

In a declining interest rate environment, there

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

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

We are subject to interest rate risk, which could

adversely affect our financial condition and profitability.

A significant portion of our banking assets

are subject to changes in interest rates.

As of December 31, 2023, approximately 84% of our loan portfolio was in fixed rate loans,

while only 16% was in variable rate loans.

Like most financial institutions, our earnings significantly depend on our net interest

income, the principal component of our earnings, which is the difference between interest earned by us from our interest-earning

assets, such as loans and investment securities, and interest paid by us on our interest-bearing liabilities, such as deposits and

We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and

liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than

our interest-earning assets, or vice versa.

In either event, if market interest rates should move contrary to our position, this

“gap” will negatively impact our earnings.

Many factors beyond our control impact interest rates, including economic

conditions, governmental monetary policies, inflation, recession, changes in unemployment, the money supply, and disorder and

instability in domestic and foreign financial markets.

Changes in monetary policies of the various government agencies could

influence not only the interest we receive on loans and securities and the interest we pay on deposits and borrowings, but such

changes could also affect our ability to originate loans and obtain deposits, the fair value of our financial assets and

liabilities, and the average duration of our assets and liabilities.

In a declining interest rate environment, there may

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

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 for

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.

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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

portion of our noninterest income.

We generate mortgage revenues primarily from gains on the sale of residential mortgage loans pursuant

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

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.

In addition, our results of operations are affected by the amount of noninterest expenses associated with mortgage

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.

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

our net interest income and require significant operational work.

The United Kingdom’s Financial Conduct Authority

(“FCA”) regulates the London Interbank Offered Rate (“LIBOR”), the reference rate previously used for many of

our transactions, including our lending and borrowing and our purchase and sale of securities, as well as the derivatives that we use

to manage risk related to such transactions.

The FCA announced in July 2017 that the sustainability of LIBOR could not be guaranteed.

Accordingly, although the FCA confirmed the extension of overnight and 1-, 3-, 6-, and 12-month LIBOR through June 30, 2023 in order to

accord financial institutions greater time with which to manage the transition from LIBOR, the FCA is no longer persuading, or compelling,

banks to submit to LIBOR.

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,

or changes in market perceptions of the acceptability of LIBOR as a benchmark could result in changes to our risk exposures (for example,

if the anticipated discontinuation of LIBOR adversely affects the availability or cost of floating-rate funding and, therefore, our exposure

to fluctuations in interest rates) or otherwise result in losses on a product or having to pay more or receive less on securities that

we own or have issued.

In addition, such uncertainty could result in pricing volatility and increased capital requirements, loss of market

share in certain products, adverse tax or accounting impacts, and compliance, legal and operational costs and risks associated with client

disclosures, discretionary actions taken or negotiation of fallback provisions, systems disruption, business continuity, and model disruption.

We do not have substantial exposure to LIBOR-based products, including loans, securities, derivatives and hedges, and trust preferred

In addition, all of our LIBOR-based loan documents allow for use of an alternate index if the current index is not available.

We continue to prepare for the transition of our existing LIBOR exposures prior to the final LIBOR cessation date of June 30, 2023.

continue to monitor market developments and regulatory updates, including recent announcements from the ICE Benchmark Administrator, as

well as collaborate with regulators and industry groups on the transition of existing exposures.

In addition, the implementation of LIBOR

reform proposals may result in increased compliance costs and operational costs, including costs related to continued participation in

LIBOR and the transition to a replacement reference rate or rates.

We cannot reasonably estimate the expected cost.

Throughout 2023, the target Federal Funds rate increased to between

5.25% and 5.50%.

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.

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 portion

of our noninterest income.

We generate mortgage revenues primarily from gains on the sale of residential mortgage loans pursuant to programs

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

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

In addition, our results of operations are affected by the amount of noninterest expenses associated with mortgage 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.

Inflationary pressures and rising prices may

affect our results of operations and financial condition.

In 2021 through 2022, inflation rose to levels not

seen for over 40 years, reaching 7% and 6.5%, respectively.

In 2023, the annual inflation rate decreased to 3.4% but inflationary pressures

are currently expected to remain elevated throughout 2024.

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 Federal Reserve has implemented significant

economic strategies that have affected interest rates, inflation, asset values, and the shape of the yield curve.

In 2020, in response to economic disruption

associated with the COVID-19 pandemic, the Federal Reserve quickly reduced short-term rates to extremely low levels and acted to

influence the markets to reduce long-term rates as well.

During 2021, the Federal Reserve significantly reduced such

“easing” actions that held down long-term rates.

During 2022, the Federal Reserve switched to a tightening policy.

raised short-term rates significantly and rapidly throughout the year.

Those actions triggered a significant decline in the values

of most categories of U.S.

stocks and bonds;

significantly raised recessionary expectations for the U.S.;

and inverted the yield

curve in the U.S.

for much of the last two quarters of 2022.

Effects on the yield curve often are most pronounced

at the short end of the curve, which is of particular importance to us and other banks.

Among other things, easing strategies are intended

to lower interest rates, expand the money supply, and stimulate economic activity, while tightening strategies are intended to increase

interest rates, discourage borrowing, tighten the money supply, and restrain economic activity.

However, in 2022, short term rates rose

faster than long term rates to the point that the yield curve inverted for much of the final two quarters of 2022.

This sort of phenomenon—where

short term rates rise more strongly and rapidly than long-term rates can follow—is relatively uncommon.

It is unclear how long it will take for long-term rates

Many external factors may interfere with the effects of these plans or cause them to be changed, sometimes quickly.

factors include significant economic trends or events as well as significant international monetary policies and events.

These economic

strategies have had, and will continue to have, a significant impact on our business and on many of our clients.

As exemplified by the

2023 bank failures in the U.S., such strategies also can affect the U.S.

and world-wide financial systems in ways that may be difficult

Negative public opinion surrounding the Company

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always be present given the nature of our business.

Consumers may decide not to use banks to

complete their financial transactions.

Technology and other changes are allowing parties

to complete financial transactions through alternative methods that historically have involved banks.

Adverse developments affecting the financial

services industry, such as recent bank failures or concerns involving liquidity, may have a material adverse effect on the Company’s

The high-profile bank failures in 2023 involving Silicon

Valley Bank, Signature Bank, and First Republic Bank caused general uncertainty and concern regarding the liquidity adequacy of the banking

Although we were not directly affected by these bank failures, the resulting speed and ease in which news, including social media

commentary, led depositors to withdraw or attempt to withdraw their funds from these and other financial institutions, which then caused

the stock prices of many financial institutions to become volatile.

Additional bank failures could have an adverse effect on our financial

condition and results of operations, either directly or through an adverse impact on certain of our customers.

In response to these bank failures and the resulting

market reaction, the Secretary of the Treasury approved actions enabling the FDIC to complete its resolutions of the failed banks in a

manner that fully protects depositors by utilizing the Deposit Insurance Fund, including the use of Bridge Banks to assume all of the

deposit obligations of the failed banks, while leaving unsecured lenders and equity holders of such institutions exposed to losses..

the risk of any additional bank failures, we may face the potential for reputational risk, deposit outflows, increased costs and competition

for liquidity, and increased credit risk which, individually or in the aggregate, could have a material adverse effect on our business,

financial condition and results of operations.

Consumers may decide not to use banks to complete

their financial transactions.

Technology and other changes are allowing parties to

complete financial transactions through alternative methods that historically have involved banks.

For example, consumers can now maintain

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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.

Among other sources of funds, in 2023, we

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

Our brokered deposits were

$379.4 million, representing 11.2% of our total deposits at December 31, 2023 and included fixed-rate time deposits with maturities

through October 2028.

Brokered deposits are utilized, along with other wholesale funding sources, to fund loan growth and offset

core deposit outflows.

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.

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

loss of one or more of these key individuals could curtail our growth and adversely affect our prospects.

We are dependent on key individuals and the loss

of one or more of these key individuals could curtail our growth and adversely affect our prospects.

Arthur Seaver, Jr., our chief executive officer,

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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

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

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, D.

Andrew Borrmann, our chief financial officer,

announced his resignation on February 27, 2024.

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 morale.

Our success also depends, in part, on our continued

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to execute our business strategy may be lengthy.

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

on our ability to identify and retain individuals with experience and relationships in the markets in which we intend to expand.

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.

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

The success of our growth strategy depends on

our ability to identify and retain individuals with experience and relationships in the markets in which we intend to expand.

To expand our franchise successfully, we must identify

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financial condition, and results of operations.

We will face risks with respect to future

We will face risks with respect to future expansion.

We routinely evaluate opportunities to expand into

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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 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 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;

● 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.

There is no assurance that existing branches or

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

produce profits.

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 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;

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.

There is no assurance that existing branches or future

branches, if any, 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 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 any expansion could have a material adverse effect on our business, financial condition and results of operations, including

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 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.

New lines of business or new products and

services may subject us to additional risk.

From time to time, we may implement new lines of

business or offer new products and services within existing lines of business.

There are substantial risks and uncertainties associated

with these efforts, particularly in instances where the markets are not fully developed.

In developing and marketing new lines of business

and/or new products and services, we may invest significant time and resources.

Initial timetables for the introduction and development

of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible.

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

successful implementation of a new line of business and/or a new product or service.

Furthermore, any new line of business and/or new

product or service could have a significant impact on the effectiveness of our system of internal controls.

Failure to successfully manage

these risks in the development and implementation of new lines of business and/or new products or services could have a material adverse

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

New lines of business or new products and services

may subject us to additional risk.

From time to time, we may implement new lines of business

or offer new products and services within existing lines of business.

There are substantial risks and uncertainties associated with these

efforts, particularly in instances where the markets are not fully developed.

In developing and marketing new lines of business and/or

new products and services, we may invest significant time and resources.

Initial timetables for the introduction and development of new

lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible.

factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful

implementation of a new line of business and/or a new product or service.

Furthermore, any new line of business and/or new product or

service could have a significant impact on the effectiveness of our system of internal controls.

Failure to successfully manage these

risks in the development and implementation of new lines of business and/or new products or services could have a material adverse effect

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

Risks Related to Our Common Stock

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and we may be unable to pay future dividends even if we desire to do so.

The Federal Reserve has issued a policy statement

regarding the payment of dividends by bank holding companies.

In general, the Federal Reserve’s policies provide that dividends

should be paid only out of current earnings and only if the prospective rate of earnings retention by the bank holding company appears

consistent with the organization’s capital needs, asset quality and overall financial condition.

The Federal Reserve’s policies

also require that a bank holding company serve as a source of financial strength to its subsidiary banks by standing ready to use available

The Federal Reserve has issued a policy statement regarding

the payment of dividends by bank holding companies.

In general, the Federal Reserve’s policies provide that dividends should be

paid only out of current earnings and only if the prospective rate of earnings retention by the bank holding company appears consistent

with the organization’s capital needs, asset quality and overall financial condition.

The Federal Reserve’s policies also

require that a bank holding company serve as a source of financial strength to its subsidiary banks by standing ready to use available

resources to provide adequate capital funds to those banks during periods of financial stress or adversity and by maintaining the financial

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Bank’s payment of dividends to the Company.

As a South Carolina chartered bank, the Bank is subject to limitations on the amount

of dividends that it is permitted to pay.

As a South Carolina chartered bank, the Bank is subject to limitations on the

amount of dividends that it is permitted to pay.

Unless otherwise instructed by the S.C.

Board, the Bank is generally permitted under South Carolina

state banking regulations to pay cash dividends of up to 100% of net income in any calendar year without obtaining the prior approval

The FDIC also has the authority under federal law to enjoin a bank from engaging in what in its opinion constitutes

an unsafe or unsound practice in conducting its business, including the payment of a dividend under certain circumstances.

is not permitted to pay cash dividends to the Company, it is unlikely that we would be able to pay cash dividends on our common stock.

Moreover, holders of our common stock are entitled to receive dividends only when, and if declared by our board of directors.

Our stock price may be volatile, which could

result in losses to our investors and litigation against us.

Our stock price has been volatile in the past and

several factors could cause the price to fluctuate substantially in the future.

Board, the Bank is generally permitted

under South Carolina state banking regulations to pay cash dividends of up to 100% of net income in any calendar year without

obtaining the prior approval of the S.C.

The FDIC also has the authority under federal law to enjoin a bank from engaging in

what in its opinion constitutes an unsafe or unsound practice in conducting its business, including the payment of a dividend under

certain circumstances.

If the Bank is not permitted to pay cash dividends to the Company, it is unlikely that we would be able to

pay cash dividends on our common stock.

Moreover, holders of our common stock are entitled to receive dividends only when, and if

declared by our board of directors.

Our stock price may be volatile, which could result

in losses to our investors and litigation against us.

Our stock price has been volatile in the past and several

factors could cause the price to fluctuate substantially in the future.

These factors include but are not limited to:

anticipated variations in earnings, changes in analysts’ recommendations or projections, our announcement of developments related

to our businesses, operations and stock performance of other companies deemed to be peers, new technology used or services offered by

traditional and non-traditional competitors, news reports of trends, irrational exuberance on the part of investors, new federal banking

regulations, and other issues related to the financial services industry.

Our stock price may fluctuate significantly in the future, and

these fluctuations may be unrelated to our performance.

General market declines or market volatility in the future, especially in the

financial institutions sector, could adversely affect the price of our common stock, and the current market price may not be indicative

of future market prices.

Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices

you find attractive.

Moreover, in the past, securities class action lawsuits have been instituted against some companies following periods

of volatility in the market price of its securities.

actual or anticipated

variations in earnings, changes in analysts’ recommendations or projections, our announcement of developments related to our businesses,

operations and stock performance of other companies deemed to be peers, new technology used or services offered by traditional and non-traditional

competitors, news reports of trends, irrational exuberance on the part of investors, new federal banking regulations, and other issues

related to the financial services industry.

Our stock price may fluctuate significantly in the future, and these fluctuations may be unrelated

to our performance.

General market declines or market volatility in the future, especially in the financial institutions sector, could

adversely affect the price of our common stock, and the current market price may not be indicative of future market prices.

volatility may make it more difficult for you to resell

your common stock when you want and at prices you find attractive.

the past, securities class action lawsuits have been instituted against some companies following periods of volatility in the market price

of its securities.

We could in the future be the target of similar litigation.

Securities litigation

could result in substantial costs and divert management’s attention and resources from our normal business.

Securities litigation could result in substantial costs

and divert management’s attention and resources from our normal business.

Future sales of our stock by our shareholders

or the perception that those sales could occur may cause our stock price to decline.

Although our common stock is listed for trading

on The NASDAQ Global Market, the trading volume in our common stock is lower than that of other larger financial services companies.

public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace

of willing buyers and sellers of our common stock at any given time.

This presence depends on the individual decisions of investors and

general economic and market conditions over which we have no control.

Given the relatively low trading volume of our common stock, significant

sales of our common stock in the public market, or the perception that those sales may occur, could cause the trading price of our common

stock to decline or to be lower than it otherwise might be in the absence of those sales or perceptions.

Although our common stock is listed for trading on

The NASDAQ Global Market, the trading volume in our common stock is lower than that of other larger financial services companies.

trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing

buyers and sellers of our common stock at any given time.

This presence depends on the individual decisions of investors and general economic

and market conditions over which we have no control.

Given the relatively low trading volume of our common stock, significant sales of

our common stock in the public market, or the perception that those sales may occur, could cause the trading price of our common stock

to decline or to be lower than it otherwise might be in the absence of those sales or perceptions.

Economic and other circumstances may require

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the terms on which we may obtain additional capital.

We may need to incur additional debt or equity

financing in the future to make strategic acquisitions or investments or to strengthen our capital position.

Our ability to raise additional

capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control

and our financial performance.

We cannot provide assurance that such financing will be available to us on acceptable terms or at all,

or if we do raise additional capital that it will not be dilutive to existing shareholders.

If we determine, for any reason, that we need to

raise capital, subject to applicable NASDAQ rules, our board generally has the authority, without action by or vote of the shareholders,

to issue all or part of any authorized but unissued shares of stock for any corporate purpose, including issuance of equity-based incentives

We may need to incur additional debt or equity financing

in the future to make strategic acquisitions or investments or to strengthen our capital position.

Our ability to raise additional capital,

if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control and our

financial performance.

We cannot provide assurance that such financing will be available to us on acceptable terms or at all, or if we

do raise additional capital that it will not be dilutive to existing shareholders.

If we determine, for any reason, that we need to raise

capital, subject to applicable NASDAQ rules, our board generally has the authority, without action by or vote of the shareholders, to

issue all or part of any authorized but unissued shares of stock for any corporate purpose, including issuance of equity-based incentives

under or outside of our equity compensation plans.

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ownership interest of our existing shareholders.

Provisions of our articles of incorporation

and bylaws, South Carolina law, and state and federal banking regulations, could delay or prevent a takeover by a third party.

Our articles of incorporation and bylaws could

delay, defer, or prevent a third party takeover, despite possible benefit to the shareholders, or otherwise adversely affect the price

of our common stock.

Provisions of our articles of incorporation and

bylaws, South Carolina law, and state and federal banking regulations, could delay or prevent a takeover by a third party.

Our articles of incorporation and bylaws could delay,

defer, or prevent a third party takeover, despite possible benefit to the shareholders, or otherwise adversely affect the price of our

common stock.

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 10,000,000 shares of common stock and

10,000,000 shares of preferred stock that may be issued by the board of directors without shareholder approval;

● classify our board with staggered three year terms,

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;

● grant the board of directors the discretion, when

considering whether a proposed merger or similar transaction is in the best interests of the Company and our shareholders, to take into

account the effect of the transaction on the employees, clients and suppliers of the Company and upon the communities in which offices

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).

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 10,000,000 shares of preferred stock that may be issued by the board of directors without shareholder approval;

classify our board with staggered three year terms, 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;

grant the board of directors the discretion, when considering whether a proposed merger or similar transaction is in the best interests of the Company and our shareholders, to take into account the effect of the transaction on the employees, clients and suppliers of the Company and upon the communities in which offices 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).

In addition, the South Carolina business combinations

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to the amendment.

Finally, the Change in Bank Control Act and the

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

and is not guaranteed by the FDIC.

Shares of our common stock are not a bank deposit

and, therefore, losses in value are not insured by the FDIC, any other deposit insurance fund or by any other public or private entity.

Investment in shares of our common stock is inherently risky for the reasons described herein and our shareholders will bear the risk

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

Finally, the Change in Bank Control Act and the BHCA

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

Our common stock is not an insured deposit and

is not guaranteed by the FDIC.

Shares of our common stock are not a bank deposit and,

therefore, losses in value are not insured by the FDIC, any other deposit insurance fund or by any other public or private entity.

in shares of our common stock is inherently risky for the reasons described herein and our shareholders will bear the risk 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

asserting lender liability.

From time to time, clients and others make claims

and take legal action pertaining to our performance of fiduciary responsibilities.

These claims are often referred to as “lender

liability” claims and are sometimes brought in an effort to produce or increase leverage against us in workout negotiations or debt

collection proceedings.

We may be subject to claims and litigation asserting

lender liability.

From time to time, clients and others make claims and

take legal action pertaining to our performance of fiduciary responsibilities.

These claims are often referred to as “lender liability”

claims and are sometimes brought in an effort to produce or increase leverage against us in workout negotiations or debt collection proceedings.

Lender liability claims frequently assert one or more of the following allegations:

breach of fiduciary duties,

fraud, economic duress, breach of contract, breach of the implied covenant of good faith and fair dealing, and similar claims.

customer claims and legal action related to the performance of our responsibilities are founded or unfounded, if such claims and legal

actions are not resolved in a favorable manner, they may result in significant financial liability and/or adversely affect our market

reputation, products and services, as well as potentially affecting customer demand for those products and services.

Any financial liability

or reputation damage could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our

financial condition, results of operations and liquidity.

From time to time we are, or may become,

involved in suits, legal proceedings, information-gatherings, investigations and proceedings by governmental and self-regulatory agencies

that may lead to adverse consequences.

Many aspects of the banking business involve a

substantial risk of legal liability.

From time to time, we are, or may become, the subject of information-gathering requests, reviews,

investigations and proceedings, and other forms of regulatory inquiry, including by bank regulatory agencies, self-regulatory agencies,

the SEC and law enforcement authorities.

The results of such proceedings could lead to significant civil or criminal penalties, including

monetary penalties, damages, adverse judgements, settlements, fines, injunctions, restrictions on the way we conduct our business or reputational

Unresolved Staff Comments.

breach of fiduciary duties, fraud, economic duress,

breach of contract, breach of the implied covenant of good faith and fair dealing, and similar claims.

Whether customer claims and legal

action related to the performance of our responsibilities are founded or unfounded, if such claims and legal actions are not resolved

in a favorable manner, they may result in significant financial liability and/or adversely affect our market reputation, products and

services, as well as potentially affecting customer demand for those products and services.

Any financial liability or reputation damage

could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition,

results of operations and liquidity.

From time to time, we are, or may become, involved

in suits, legal proceedings, information-gatherings, investigations and proceedings by governmental and self-regulatory agencies that

may lead to adverse consequences.

Many aspects of the banking business involve a substantial

risk of legal liability.

From time to time, we are, or may become, the subject of information-gathering requests, reviews, investigations

and proceedings, and other forms of regulatory inquiry, including by bank regulatory agencies, self-regulatory agencies, the SEC and law

enforcement authorities.

The results of such proceedings could lead to significant civil or criminal penalties, including monetary penalties,

damages, adverse judgements, settlements, fines, injunctions, restrictions on the way we conduct our business or reputational harm.

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