What changed in this filing

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Item 1A. Risk Factors

2022-03-11 compared with 2021-03-11 · 159 added, 170 removed, 542 unchanged (38% of the section changed)

investment in the Company’s common stock is subject to a variety of risks and uncertainties including, without limitation,

those set forth below, any of which could cause the Company’s actual results to vary materially from recent results, or

from the other forward looking statements that the Company may make from time to time in news releases, annual reports and other

written or oral communications.

The material risks and uncertainties that management believes may affect the Company are described

These risks and uncertainties are not listed in any particular order of priority and are not necessarily the only ones

facing the Company.

Additional risks and uncertainties that management is not aware of or focused on or that management currently

deems immaterial may also impair the Company’s business, financial condition and results of operations.

those set forth below, any of which could cause the Company's actual results to vary materially from recent results, or from the

other forward looking statements that the Company may make from time to time in news releases, annual reports and other written

or oral communications.

The material risks and uncertainties that management believes may affect the Company are described below.

These risks and uncertainties are not listed in any particular order of priority and are not necessarily the only ones facing

Additional risks and uncertainties that management is not aware of or focused on or that management currently deems

immaterial may also impair the Company’s business, financial condition and results of operations.

annual report on Form 10-K is qualified in its entirety by these risk factors.

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of operations and prospects will depend on a number of evolving factors, including:

duration, extent, and severity of the pandemic.

COVID-19 does not yet appear to

be contained and could affect significantly more households and businesses.

and severity of the pandemic continue to be impossible to predict.

duration, extent, and severity of the pandemic, including the emergence of new variants.

COVID-19 does not yet appear to be contained and could affect significantly more

households and businesses.

The duration and severity of the pandemic continue to be impossible

effects on our customers, counterparties, employees and third-party service providers.

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operations could be materially and adversely affected.

We are unable to estimate the impact of COVID-19 on our business and

operations at this time.

The global pandemic could cause us to experience higher credit losses in our lending portfolio, impairment

of our goodwill and other financial assets, further reduced demand for our products and services and other negative impacts on

our financial position, results of operations and prospects.

Sustained adverse effects may also prevent us from satisfying our

minimum regulatory capital ratios and other supervisory requirements or result in downgrades in our credit ratings.

Our business and operations have not been materially impacted by COVID-19

as of December 31, 2021.

However, the ongoing pandemic could cause us to experience higher credit losses in our lending portfolio,

impairment of our goodwill and other financial assets, reduced demand for our products and services and other negative impacts

on our financial position, results of operations and prospects.

Sustained adverse effects may also prevent us from satisfying

our minimum regulatory capital ratios and other supervisory requirements or result in downgrades in our credit ratings.

Loan Portfolio Includes Loans with a Higher Risk of Loss.

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downturn in the real estate market or local economy could adversely affect the value of the properties securing the loans or revenues

from the borrowers’ businesses thereby increasing the risk of non-performing loans.

from the borrowers’ businesses thereby increasing the risk of nonperforming loans.

Company’s Allowance for Loan Losses May Not be Adequate to Cover Loan Losses, Which Could Have a Material Adverse Effect

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that represents management’s estimate of probable losses inherent within the existing portfolio of loans.

The determination

of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires the Company

to make significant estimates of current credit risks and trends, all of which may undergo material changes.

In addition, bank

regulatory agencies periodically review the Company’s allowance for loan losses and may require an increase in the provision

for loan losses or the recognition of further loan charge-offs, based on judgments that differ from those of the Company’s

While the Company strives to carefully monitor credit quality and to identify loans that may become non-performing,

it may not be able to identify deteriorating loans before they become non-performing assets, or be able to limit losses on those

loans that have been identified to be non-performing.

The FASB has announced changes to accounting standards that will impact

the way banking organizations estimate their allowance for loan losses beginning in January 2020, with the implementation of these

changes becoming effective for the Company in fiscal years beginning after December 15, 2022.

These changes or any others to accounting

rules governing credit impairment estimates and recognition may increase the level of the allowance for loan losses.

Any increases

in the allowance for loan losses will result in a decrease in net income and, depending upon the magnitude of the changes, could

have a material adverse effect on the Company’s financial condition and results of operations.

in the Company’s Non-performing Assets Could Adversely Affect the Company’s Results of Operations and Financial Condition

in the Future.

Non-performing assets adversely affect net income in various ways.

While the Company pays interest expense

to fund non-performing assets, no interest income is recorded on non-accrual loans or other real estate owned, thereby adversely

affecting income and returns on assets and equity.

The twelve months

ended 2020 was impacted by a higher provision for loan losses resulting from the COVID-19 pandemic mandated shutdowns and economic

disruption that caused elevated unemployment levels and deterioration in household, business, economic and market conditions.

The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity

and requires the Company to make significant estimates of current credit risks and trends, all of which may undergo material changes.

In addition, bank regulatory agencies periodically review the Company’s allowance for loan losses and may require an increase

in the provision for loan losses or the recognition of further loan charge-offs, based on judgments that differ from those of

the Company’s management.

While the Company strives to carefully monitor credit quality and to identify loans that may become

nonperforming, it may not be able to identify deteriorating loans before they become nonperforming assets, or be able to limit

losses on those loans that have been identified to be nonperforming.

The FASB has announced changes to accounting standards that

will impact the way banking organizations estimate their allowance for loan losses beginning in January 2020, with the implementation

of these changes becoming effective for the Company in fiscal years beginning after December 15, 2022.

These changes or any others

to accounting rules governing credit impairment estimates and recognition may increase the level of the allowance for loan losses.

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

changes, could have a material adverse effect on the Company’s financial condition and results of operations.

in the Company's Nonperforming Assets Could Adversely Affect the Company's Results of Operations and Financial Condition in the

Nonperforming assets adversely affect net income in various ways.

While the Company pays interest expense to fund

nonperforming assets, no interest income is recorded on nonaccrual loans or other real estate owned, thereby adversely affecting

income and returns on assets and equity.

In addition, loan administration and workout costs increase, resulting in additional

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loan, may result in a loss.

These non-performing loans and other real estate owned also increase the Company’s risk profile

and the capital that regulators believe is appropriate in light of such risks, and have an impact on the Company’s FDIC

risk based deposit insurance premium rate.

The resolution of non-performing assets requires significant time commitments from

management and staff.

The Company may experience further increases in non-performing loans in the future, and non-performing assets

may result in further costs and losses in the future, either of which could have a material adverse effect on the Company’s

financial condition and results of operations.

These nonperforming loans and other real estate owned also increase the Company's risk profile and

the capital that regulators believe is appropriate in light of such risks, and have an impact on the Company's FDIC risk based

deposit insurance premium rate.

The resolution of nonperforming assets requires significant time commitments from management and

The Company may experience further increases in nonperforming loans in the future, and nonperforming assets may result

in further costs and losses in the future, either of which could have a material adverse effect on the Company's financial condition

and results of operations.

Company's Use of Appraisals in Deciding Whether to Make a Loan Does Not Ensure the Value of the Collateral.

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Environmental laws could force the Company to clean up the properties at the Company's expense.

The Company may

also be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up

costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up

hazardous or toxic substances, or chemical releases at a property.

The cost associated with investigation or remediation activities

could be substantial and could increase the Company’s operating expenses.

It may cost much more to clean a property than

the property is worth and it may be difficult or impossible to sell contaminated properties.

The Company could also be liable

for pollution generated by a borrower’s operations if the Company takes a role in managing those operations after a default.

In addition, as the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based

on damages and costs resulting from environmental contamination emanating from the property.

The Company may also be

held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs

incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous

or toxic substances, or chemical releases at a property.

The cost associated with investigation or remediation activities could

be substantial and could increase the Company’s operating expenses.

It may cost much more to clean a property than the property

is worth and it may be difficult or impossible to sell contaminated properties.

The Company could also be liable for pollution

generated by a borrower’s operations if the Company takes a role in managing those operations after a default.

as the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages

and costs resulting from environmental contamination emanating from the property.

Company’s Investment Securities Portfolio is Subject to Credit Risk and Liquidity Risk and Declines in Value in its Investment

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any failures or interruptions of the independent firms’ systems or in their delivery of services, or failure to perform

in accordance with contracted service level agreements, for any number of reasons could also impact the Company’s ability

to conduct business and process transactions and result in loss of customer business and damage to the Company’s reputation,

any of which may have a material adverse effect on the Company’s business, financial condition and results of operation.

in accordance with contracted service level agreements, for any number of reasons could also impact the Company's ability to conduct

business and process transactions and result in loss of customer business and damage to the Company's reputation, any of which

may have a material adverse effect on the Company’s business, financial condition and results of operation.

Company Relies on Dividends from the Bank for Substantially All of its Revenue.

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It receives substantially all of its revenue from dividends paid by the Bank.

These dividends are

the principal source of funds used to pay dividends on the Company’s common stock and interest and principal on the Company’s

subordinated debt.

Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to the Company.

If the Bank, due to its capital position, inadequate net income levels, or otherwise, is unable to pay dividends to the Company,

then the Company will be unable to service debt, pay obligations or pay dividends on the Company’s common stock.

also has the authority to use its enforcement powers to prohibit the Bank from paying dividends if, in its opinion, the payment

of dividends would constitute an unsafe or unsound practice.

The Bank’s inability to pay dividends could have a material

adverse effect on the Company’s business, financial condition, results of operations and the market price of the Company’s

These dividends

are the principal source of funds used to pay dividends on the Company’s common stock and interest and principal on the

Company’s subordinated debt.

Various federal and state laws and regulations limit the amount of dividends that the Bank

may pay to the Company.

If the Bank, due to its capital position, inadequate net income levels, or otherwise, is unable to pay

dividends to the Company, then the Company will be unable to service debt, pay obligations or pay dividends on the Company’s

common stock.

The OCC also has the authority to use its enforcement powers to prohibit the Bank from paying dividends if, in its

opinion, the payment of dividends would constitute an unsafe or unsound practice.

The Bank’s inability to pay dividends

could have a material adverse effect on the Company’s business, financial condition, results of operations and the market

price of the Company’s common stock.

Carrying Value of the Company’s Goodwill Could Become Impaired.

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and results of operations.

of the London Interbank Offered Rate (“LIBOR”) Could Adversely Affect Our Business, Financial Condition, and

Results of Operations.

On November 30, 2020, the ICE Benchmark Administration (“IBA”)

announced that it intends to publish one week and two month USD-LIBOR (as defined below) settings until December 31, 2021, and

the remaining USD-LIBOR settings until the end of June 2023.

The IBA announcement was supported by similar announcements from

the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, and the Board of Governors

of the Federal Reserve System, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency (collectively,

Regulators”).

Both the FCA and the U.S.

Regulators in their announcements also encouraged banks to cease

entering into new contracts referencing USD-LIBOR after December 2021.

These announcements indicate that the continuation

of LIBOR on the current basis may not be assured after 2021.

In April 2018, the New York Federal Reserve commenced publishing

an alternative reference rate to LIBOR as calculated for the U.S.

dollar (“USD-LIBOR”), the Secured Overnight Financing

Rate (“SOFR”), proposed by a group of major market participants (the Alternative Reference Rates Committee (“ARRC”)),

convened by the U.S.

Federal Reserve with participation by SEC Staff and other regulators.

SOFR is based on transactions in the

more robust U.S.

Treasury repurchase market and has been proposed as the alternative to USD-LIBOR for use in derivatives and other

financial contracts that currently rely on USD-LIBOR as a reference rate.

ARRC has proposed a paced market transition plan to

SOFR from LIBOR and organizations are currently working on industry-wide and company-specific transition plans as it relates to

derivatives and cash markets exposed to LIBOR.

Though an alternative reference rate for

USD-LIBOR, SOFR, exists, significant uncertainties still remain.

We can provide no assurance regarding the future of LIBOR and

when our LIBOR-based instruments will transition from USD-LIBOR as a reference rate to SOFR or another reference rate.

have a significant number of loans, derivative contracts, borrowings and other financial instruments with attributes that are

either directly or indirectly dependent on LIBOR.

The transition from LIBOR, or any changes or reforms to the determination

or supervision of LIBOR, could have an adverse impact on the market for or value of any LIBOR-linked securities,

loans, and other financial obligations or extensions of credit held by or due to us, could create considerable costs and additional

risk and could have an adverse impact on our overall financial condition or results of operations.

Since proposed alternative

rates are calculated differently, payments under contracts referencing new rates will differ from those referencing LIBOR.

The transition will change our market risk profiles, requiring changes to risk and pricing models, valuation tools, product design

and hedging strategies.

Furthermore, failure to adequately manage this transition process with our customers could adversely impact

our reputation.

Although we are currently unable to assess what the ultimate impact of the transition from LIBOR will

be, failure to adequately manage the transition could have a material adverse effect on our business, financial condition and

results of operations.

of the London Interbank Offered Rate (“ LIBOR”) Could Adversely Affect Our Business, Financial Condition,

and Results of Operations.

LIBOR is expected to be phased out beginning after

December 31, 2021 when private-sector banks are no longer required to report the information used to set the rate.

data, LIBOR may no longer be published, or the lack of quality and quantity of data may cause the rate to no longer be representative

of the market.

On March 5, 2021, the U.K.

Financial Conduct Authority (“FCA”) published a statement confirming that

all LIBOR settings will either cease to be provided or no longer be representative (i) immediately after December 31, 2021, in

the case of all sterling, euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings, and (ii)

immediately after June 30, 2023, in the case of all remaining US dollar settings.

The International Swaps and Derivative Association

(“ISDA”) or Alternative Reference Rates Committee (“ARRC”) fallback spread adjustments were fixed as of

the FCA announcement date and are expected to be implemented at the point each relevant reference rate ceases or becomes non-representative.

The ARRC formed by the FRB has proposed a paced market transition plan to the Secured Overnight Financing Rate (SOFR) from LIBOR

and organizations are continuing to work on industry wide and company-specific transition plans as it relates to derivatives and

cash markets exposed to LIBOR.

The Company is monitoring this activity and evaluating the related risks.

This includes identifying

outstanding LIBOR-based loans without ARRC recommended fallback language, internal training and education, and working with our

core provider to ensure proper integration once an alternative reference is implemented.

Management is monitoring ARRC publications

for best practices as the Company transitions legacy LIBOR loans by the June 30, 2023 deadline.

have a significant number of loans, derivative contracts, and other financial instruments with attributes that are either directly

or indirectly dependent on LIBOR.

The transition from LIBOR, or any changes or reforms to the determination or supervision

of LIBOR, could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other

financial obligations or extensions of credit held by or due to us, could create considerable costs and additional risk and could

have an adverse impact on our overall financial condition or results of operations.

Since proposed alternative rates are calculated

differently, payments under contracts referencing new rates will differ from those referencing LIBOR.

The transition will

change our market risk profiles, requiring changes to risk and pricing models, valuation tools, product design and hedging strategies.

Furthermore, failure to adequately manage this transition process with our customers could adversely impact our reputation.

we are currently unable to assess what the ultimate impact of the transition from LIBOR will be, failure to adequately

manage the transition could have a material adverse effect on our business, financial condition and results of operations.

of External Funding Could Become Restricted and Impact the Company’s Liquidity.

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in order to raise the necessary funds to support the Company's operations and growth.

Any such increase in funding costs

or restrictions could have a negative impact on the Company’s net interest income and, consequently, on its results of operations

and financial condition.

Any such increase in funding costs or restrictions

could have a negative impact on the Company’s net interest income and, consequently, on its results of operations and financial

Operate In a Highly-Regulated Environment That is Subject to Extensive Government Supervision and Regulation, Which May Interfere

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Company's failure to remain "adequately-capitalized" for bank regulatory purposes could affect customer confidence,

restrict the Company’s ability to grow (both assets and branching activity), increase the Company’s costs of funds

and FDIC insurance costs, prohibit the Company’s ability to pay dividends on common shares, and its ability to make acquisitions,

and have a negative impact on the Company’s business, results of operation and financial conditions, generally.

ceases to be a “well-capitalized” institution for bank regulatory purposes, its ability to accept brokered deposits

and the interest rates that it pays may be restricted.

restrict the Company's ability to grow (both assets and branching activity), increase the Company's costs of funds and FDIC insurance

costs, prohibit the Company's ability to pay dividends on common shares, and its ability to make acquisitions, and have a negative

impact on the Company's business, results of operation and financial conditions, generally.

If the Bank ceases to be a "well-capitalized"

institution for bank regulatory purposes, its ability to accept brokered deposits and the interest rates that it pays may be restricted.

in Accounting Standards Could Materially Impact the Company's Financial Condition and Results of Operations.

time to time, the FASB changes the accounting and reporting standards that govern the recording of financial transactions and

preparation of financial statements.

Future changes may be difficult to implement and may materially impact how the Company records

and reports its financial transactions, financial condition, and results of operations and could impact the Company’s business

activities and strategy.

to time, the FASB changes the accounting and reporting standards that govern the recording of financial transactions and preparation

of financial statements.

Future changes may be difficult to implement and may materially impact how the Company records and reports

its financial transactions, financial condition, and results of operations and could impact the Company's business activities

and strategy.

in Tax Policies at Both the Federal and State Levels Could Impact the Company's Financial Condition and Results of Operations.

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• Competition

in banking and financial services industry could intensify as a result of the consolidation

of financial services companies in connection with current market conditions.

in banking and financial services industry could intensify as a result of the consolidation of financial services companies in

connection with current market conditions.

in the Local Economy May Affect our Future Growth Possibilities.

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financial condition.

The emergence of widespread health emergencies or pandemics, such as the spread of COVID-19, could lead to

regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability.

such as these may become more common in the future and could cause significant damage such as disruptions to power and communication

services, impacting the stability of our facilities and result in additional expenses, impairing the ability of our borrowers

to repay outstanding loans or reducing the value of collateral securing the repayment of our loans, which could result in the

loss of revenue and/or cause us to incur additional expenses.

A significant natural disaster, such as a tornado, hurricane, earthquake,

fire or flood, could have a material adverse impact on our ability to conduct business, and our insurance coverage may be insufficient

to compensate for losses that may occur.

Acts of terrorism, war, civil unrest, violence or human error could cause disruptions

to our business or the economy as a whole.

While we have established and regularly test disaster recovery procedures, the occurrence

of any such event could have a material adverse effect on our business, operations and financial condition.

The emergence of widespread health emergencies or pandemics, such as the spread of COVID-19, has and may

again lead to regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability.

Events such as these may become more common in the future and could cause significant damage such as disruptions to power and

communication services, impacting the stability of our facilities and result in additional expenses, impairing the ability of

our borrowers to repay outstanding loans or reducing the value of collateral securing the repayment of our loans, which could

result in the loss of revenue and/or cause us to incur additional expenses.

A significant natural disaster, such as a tornado,

hurricane, earthquake, fire or flood, could have a material adverse impact on our ability to conduct business, and our insurance

coverage may be insufficient to compensate for losses that may occur.

Acts of terrorism, war, civil unrest, violence or human

error could cause disruptions to our business or the economy as a whole.

While we have established and regularly test disaster

recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial

Company May Not be Able to Attract, Retain or Develop Key Personnel.

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Any financial liability or reputation damage could have a material

adverse effect on the Company’s business, which in turn, could have a material adverse effect on the Company’s financial

condition and results of operations.

adverse effect on the Company's business, which in turn, could have a material adverse effect on the Company's financial condition

and results of operations.

Company’s Insurance Coverage May Not be Adequate to Prevent Additional Liabilities or Expenses.

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condition, performance, creditworthiness and prospects;

variations in the Corporation’s operating results or the quality of the Corporation’s

variations in the Company’s operating results or the quality of the Company’s

results that vary from the expectations of management, securities analysts and investors;

in expectations as to the Corporation’s future financial performance;

in expectations as to the Company’s future financial performance;

• announcements

of innovations, new products, strategic developments, significant contracts, acquisitions

and other material events by the Corporation or its competitors;

and other material events by the Company or its competitors;

operating and securities price performance of other companies that investors believe

are comparable to the Corporation;

sales of the Corporation’s equity or equity-related securities;

are comparable to the Company’s;

sales of the Company’s equity or equity-related securities;

credit, mortgage and housing markets, the markets for securities relating to mortgages

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in the Company's stock is not insured against loss by the FDIC, or any other public or private entity.

As a result, and

for the other reasons described in this “Risk Factors” section and elsewhere in this report, if you acquire our common

stock, you may lose some or all of your investment.

As a result, and for the

other reasons described in this "Risk Factors" section and elsewhere in this report, if you acquire our common stock,

you may lose some or all of your investment.

Dilution Could Occur if Additional Stock is Issued in the Future.

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Company's Financial Condition and Results of Operation Rely in Part on Management Estimates and Assumptions.

preparing the financial statements in conformity with GAAP, management is required to exercise judgment in determining many of

the methodologies, estimates and assumptions to be utilized.

These estimates and assumptions affect the reported values of assets

and liabilities at the balance sheet date and income and expenses for the years then ended.

Changes in those estimates resulting

from continuing change in the economic environment and other factors will be reflected in the financial statements and results

of operations in future periods.

As future events and their effects cannot be determined with precision, actual results could

differ significantly from these estimates and be adversely affected should the assumptions and estimates used be incorrect, or

change over time due to changes in circumstances.

the financial statements in conformity with GAAP, management is required to exercise judgment in determining many of the methodologies,

estimates and assumptions to be utilized.

These estimates and assumptions affect the reported values of assets and liabilities

at the balance sheet date and income and expenses for the years then ended.

Changes in those estimates resulting from continuing

change in the economic environment and other factors will be reflected in the financial statements and results of operations in

future periods.

As future events and their effects cannot be determined with precision, actual results could differ significantly

from these estimates and be adversely affected should the assumptions and estimates used be incorrect, or change over time due

to changes in circumstances.

financial condition, results of operations and the market price of the Company’s common stock.

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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