What changed in this filing

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Item 1A. Risk Factors

2025-03-03 compared with 2024-03-05 · 314 added, 296 removed, 727 unchanged (46% of the section changed)

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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

In 2024 and early 2025, continued regional economic uncertainty—exacerbated by persistent inflation, supply chain disruptions,

and subdued consumer spending—has further increased the risks in our primary markets.

Some elements of the business environment that affect

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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);

unemployment; natural disasters; epidemics and pandemics;

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, 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.

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

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

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

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, the Russian invasion of Ukraine, and the Middle East conflict, all of which may have a

destabilizing effect on financial markets and economic activity.

Economic pressure on consumers and overall economic uncertainty may result

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

These economic conditions and/or other negative developments

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

our loans and investments, and our ongoing operations, costs and profitability.

Declines in real estate values and sales volumes and high

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

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

These negative events may cause us to incur losses and may adversely

affect our capital, liquidity and financial condition.

A significant portion of our loan portfolio is

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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

The 2006 “Concentrations in Commercial Real Estate

Lending, Sound Risk Management Practices” (the “CRE Guidance”) 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

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capital at December 31, 2024.

If the FDIC, our primary federal regulator, were to impose restrictions on the amount of commercial real

estate loans we can hold in our portfolio our earnings would be adversely affected.

In December 2015, the regulatory agencies released

a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”).

In the 2015 Statement,

the regulatory agencies, among other things, indicate the intent to continue “to pay special attention” to commercial real

estate lending activities and concentrations going forward.

If the FDIC, our primary federal regulator, were to impose restrictions on

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

a statement on prudent risk management for commercial real estate lending that indicated, among other things, the intent to continue “to

pay special attention” to commercial real estate lending activities and concentrations going forward.

More recently, in 2024, the

FDIC and the Federal Reserve reaffirmed their commitment to stringent oversight of CRE exposures in response to evolving market conditions.

In early 2025, preliminary guidance from regulators suggested that any further acceleration in CRE loan growth or deterioration in loan

performance could prompt the imposition of additional limits or remedial actions, which, if implemented, could curtail our growth and

adversely affect our earnings.

Repayment of our commercial business loans is

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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-

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,

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

the duration of the credit;

the duration of

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.

and 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

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an ongoing review of the quality, mix, and size of our overall loan portfolio;

our historical loan loss experience;

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.

ongoing review

of financial information provided by borrowers;

and the amount and quality of collateral, including guarantees, securing the loans.

The determination of the appropriate level of the allowance

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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

A percentage of the loans in our portfolio may

include exceptions to our loan policies and supervisory guidelines.

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and international instability.

In 2024 and early 2025, increased competition for deposits and volatility in wholesale funding markets

have added to liquidity pressures.

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

on alternative investments and general economic conditions.

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

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if we continue to grow and experience increasing loan demand.

We may be required to slow or discontinue loan growth, capital expenditures

We may be required

to slow or discontinue loan growth, capital expenditures

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

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

regulatory developments in 2023 and early 2024 have led to enhanced expectations in areas such as cybersecurity, data privacy, digital

asset management, and anti-money laundering.

These evolving requirements are increasing our compliance costs and the complexity of our

regulatory obligations.

Failure to comply with laws, regulations or policies

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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.

Federal and state fair lending laws and regulations,

such as the Equal Credit Opportunity Act and the Fair Housing Act, impose nondiscriminatory lending requirements on financial institutions.

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

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

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

Private parties may also have the

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

adversely impact our rating under the CRA.

As of our most recent examination report, the Bank

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

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

This rating will also result in a loss of expedited processing

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

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

A “Needs to Improve” rating

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

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

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

These restrictions,

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

The FDIC may take

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

of these limitations and conditions, we may be unable or may fail to pursue, evaluate or complete

transactions that might have been strategically or competitively significant.

We are subject to fair lending laws, and failure

to comply with these laws could lead to material penalties.

Federal and state fair

lending laws and regulations, such as the Equal Credit Opportunity Act and the Fair Housing Act, impose nondiscriminatory lending

requirements on financial institutions.

The Department of Justice, CFPB and other federal and state agencies are responsible for

enforcing these laws and regulations.

A finding by these regulators of noncompliance with these laws could result in a wide variety

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

on expansion activity.

Private parties may also have the ability to challenge an institution's performance under fair lending laws

in private class action litigation, which if successful could adversely impact our rating under the CRA.

As of our most recent

examination report, the Bank received a “Satisfactory” CRA rating.

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.

In 2025, the U.S.

political landscape remains uncertain,

with the Republicans holding the majority in both the U.S.

House of Representatives and the U.S.

A unified Republican Congress

has created conditions for potential shifts in policy, though partisan division may still result in challenges to enacting sweeping reforms.

Under the Biden Administration, Congressional committees with jurisdiction over the banking sector 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 Trump Administration, alongside

a unified Republican Congress, may pursue policies or changes that (i) reverse or suspend key actions implemented under the Biden Administration,

(ii) promote deregulation by easing regulatory burdens on financial institutions, (iii) adopt a technology-forward approach, and (iv)

take a more favorable stance on bank mergers and acquisitions, potentially streamlining the approval process to encourage consolidation

within the banking sector.

The prospects for the enactment of major banking reform legislation remain unclear at this time.

Furthermore, leadership changes within federal banking

agencies and financial regulators continue to shape the regulatory environment.

Since the change in presidential administration in 2020,

key positions across agencies—including the Comptroller of the Currency, CFPB, CFTC, SEC, and the U.S.

Treasury—experienced

significant turnover.

While some leadership positions were filled, others remained vacant, leading to ongoing shifts in regulatory priorities

and enforcement approaches.

In early 2025, additional turnover and policy realignments within these agencies have further contributed

to regulatory uncertainty in the financial services sector.

The unified Republican government could further alter the composition of these

agencies, introducing new leadership and new policies and rules that could significantly impact the banking sector.

The potential impact

of the unified Republican government on additional changes in agency structure, personnel, policies and priorities on the financial services

sector, including the Company and the Bank, cannot be fully 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.

We face a risk of noncompliance and enforcement

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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.

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

experiences financial distress.

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

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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.

In June 2016, the Financial

Accounting Standards Board (“FASB”) issued an accounting standard update, “Financial Instruments-Credit Losses (Topic

326), Measurement of Credit Losses on Financial Instruments,” which replaces the current “incurred loss” model for recognizing

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

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

Under the CECL model, we are

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

securities, at the net amount expected to be collected.

The measurement of expected credit losses is based on information about past events,

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

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

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

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

Accordingly, the adoption of the CECL model

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

Moreover, the CECL model

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

If we are required to materially increase our level of allowance

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

Risks Related to Our Operations

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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.

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

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our business, results of operations and financial condition.

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

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

Large-scale weather catastrophes or other significant

climate change effects that either damage or destroy residential or multifamily real estate underlying mortgage loans or real estate collateral,

or negatively affects the value of real estate collateral or the ability of borrowers to continue to make payments on loans, could decrease

the value of our real estate collateral or increase our delinquency rates in the affected areas and thus diminish the value of our loan

Such events could also cause downturns in economic and market conditions generally, which could have an adverse effect on our

business and financial results.

The potential losses and costs associated with climate change related risks are difficult to predict and

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

We face increasing climate change risks, including

more frequent severe weather events—such as hurricanes, tropical storms, tornadoes, winter storms, freezes, and floods—that

could damage or destroy residential and multifamily real estate collateral or impair borrowers’ ability to make payments.

could lower the value of our collateral, raise delinquency rates, and trigger broader economic downturns, thereby materially affecting

our business and financial results.

The potential losses and costs associated with these climate-related risks are difficult to predict.

We rely on other companies to provide key components

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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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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

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.

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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

to invest in technological improvements.

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

successful in marketing these products and services to our customers.

Failure to successfully keep pace with technological change affecting

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

of operations.

increases efficiency and enables financial

institutions to better serve customers and to reduce

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 to invest in technological improvements.

We may not be able to effectively implement new technology-driven

products and services or be successful in marketing these products and services to our customers.

Failure to successfully keep pace with

technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our

financial condition and results of operations.

In 2024 and early 2025, the pace of technological change has accelerated, and the rapid

evolution of cybersecurity threats, as well as the need to integrate new digital platforms, has increased the risks associated with failure

The development and use of AI presents risks

and challenges that may adversely impact our business.

The development and use of AI by us or our third-party

vendors poses significant risks.

The evolving legal and regulatory landscape—covering intellectual property, privacy, consumer protection,

employment, and more—could force costly changes and heighten non-compliance risks.

AI models, especially generative ones, might

produce biased, inaccurate, or harmful outputs, disclose confidential information, or infringe on intellectual property rights.

their inherent complexity limits transparency, complicating oversight and error reduction.

Reliance on third-party models further exposes

us to risks associated with unauthorized training data and their risk management practices.

Any of these issues could lead to legal liabilities,

reputational harm, and adverse impacts on our business.

Our profitability is dependent on our banking

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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, 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.

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, 2024, approximately 81% of our loan portfolio was in fixed rate loans, while only 19%

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 versa.

In either event,

if market interest rates should move contrary to our position, this “gap” will negatively impact our earnings.

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

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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

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

however, due in part to rising inflation, throughout

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

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.

However, starting in March 2022 and continuing through

mid-2023, the Federal Reserve raised the target Federal Funds rate to between 5.25% and 5.50% in response to persistent inflationary pressures.

As of 2025, interest rates remain elevated, and prolonged higher rates could result in net interest margin compression as interest-bearing

liability rates continue to reprice upwards, while interest-earning assets may have already repriced to peak yields.

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

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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.

Inflationary pressures and rising prices

may affect our results of operations and financial condition.

In 2021 through 2022, inflation rose to levels not

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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.

During the latter part of 2024 and into early 2025, the annual inflation rate

averaged approximately 4.2%, although some moderation has been observed in early 2025.

Nonetheless, persistently higher input costs, wage

pressures, and ongoing supply chain disruptions continue to challenge our customers’ ability to service their debt, thereby potentially

increasing our credit risk.

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.

In recent years, the Federal Reserve has maintained

a relatively tight monetary policy to address persistent inflationary pressures, resulting in elevated short-term interest rates.

as inflation began to moderate, the Federal Reserve signaled a gradual recalibration of its policy stance, though it remains cautious

amid ongoing economic uncertainty.

Effects on the yield curve often are most pronounced

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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.

Recent periods have demonstrated that

when short-term rates rise more rapidly than long-term rates, the yield curve can invert—an occurrence that, while relatively uncommon,

may signal potential economic slowdowns or increased recessionary risks.

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

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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

Elevated interest

rates, combined with an inverted or flattening yield curve, can increase borrowing costs, depress asset values, and reduce loan demand—factors

that may adversely affect our operating results and financial condition.

Moreover, unexpected shifts in domestic or international economic

policies, or abrupt changes in market conditions, could lead to rapid alterations in the yield curve and further impact the broader financial

Negative public opinion surrounding the Company

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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 2024 and into 2025, continued concerns regarding the stability

of certain regional banks and potential liquidity risks have further contributed to market volatility and investor caution.

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

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affect our liquidity and operating results.

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.

Among other sources of funds, in 2024, we relied on

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

Our brokered deposits were $550.3 million,

representing 16.0% of our total deposits at December 31, 2024 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.

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

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

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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

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.

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,

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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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.

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;

incurrence and possible impairment of goodwill associated with an acquisition and possible

adverse effects on our results of operations;

potential inaccuracy of the estimates and judgments used to evaluate credit, operations,

management, and market risks with respect to a target institution;

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;

possibility that the expected benefits of a transaction may not materialize in the timeframe

expected or at all, or may be costlier to achieve;

risk that we may be unsuccessful in attracting and retaining deposits and originating high

quality loans in new markets;

or unanticipated expense associated with converting the operating systems of an acquired

or merged company into ours;

in completing a merger, acquisition or other expansion activities due to litigation, closing

conditions or the regulatory approval process;

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

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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.

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

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distributions.

Statutory and regulatory limitations apply to the

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.

Statutory and regulatory limitations apply to the 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.

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 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.

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

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

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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.

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

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Our governing documents:

authorize a class of preferred stock that may be issued in series with terms, including voting rights, established by the board of directors without shareholder approval;

authorize 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).

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;

20,000,000 shares of common stock and 10,000,000 shares of preferred stock that may be issued

by the board of directors without shareholder approval;

our board with staggered three year terms, preventing a change in a majority of the board

at any annual meeting;

advance notice of proposed nominations for election to the board of directors and business

to be conducted at a shareholder meeting;

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;

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;

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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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