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Item 1A. Risk Factors

2023-03-10 compared with 2022-03-11 · 644 added, 618 removed, 83 unchanged (94% of the section changed)

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

If any of the following risks actually occur, the

Company’s business, financial condition and results of operations could be materially and adversely affected.

to happen, the value of the Company’s common stock could decline significantly, and stockholders could lose some or all

of their investment.

If any of the following risks actually occur, the Company’s

business, financial condition and results of operations could be materially and adversely affected.

If this were to happen, the value

of the Company’s common stock could decline significantly, and stockholders could lose some or all of their investment.

Related to our Business and Industry

COVID-19 pandemic is adversely impacting us and our customers, counterparties, employees and third-party service providers.

the COVID-19 pandemic has severely disrupted the U.S.

economy and may continue disrupting banking and other financial activity

in the areas in which we operate and the adverse impacts on our business, financial position, results of operations and prospects

could continue to be significant.

Our business is dependent upon the willingness and ability of our employees and customers

to conduct banking and other financial transactions.

The ongoing COVID-19 global public health crisis and the resulting “stay-at-home”

orders have resulted in widespread volatility, severe disruptions in the U.S.

economy at large, and for small businesses in particular,

deterioration in household, business, economic and market conditions.

The extent of the continued impact of the COVID-19 pandemic

and actions taken in response to the pandemic on our capital, liquidity and other financial positions and on our business, results

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

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.

and its associated consequences and uncertainties may affect individuals, households,

and businesses differently and unevenly.

In the near-term if not longer, however, our

credit, operational and other risks are generally expected to increase.

effects on economies and markets.

Whether the actions of governmental and nongovernmental

authorities will be successful in mitigating the adverse effects of COVID-19 is

National, regional and local economies and markets could suffer disruptions

that are lasting.

In addition, governmental actions are meaningfully influencing the

interest-rate environment, which could adversely affect our results of operations and

financial condition.

efficacy and availability of widespread vaccinations.

Additionally,

if the ongoing COVID-19 pandemic has an adverse effect on (i) customer deposits, (ii) the ability of our borrowers to satisfy

their obligations to us, (iii) the demand for our loans or our other products and services, (iv) other aspects of our business

operations, or (v) on financial markets, real estate markets, or economic growth, this could, depending on the extent of the decline

in customer deposits or loan defaults, materially and adversely affect our liquidity and financial condition and our results of

operations could be materially and adversely affected.

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.

Business and Results of Operations May be Adversely Affected by the Financial Markets, Fiscal, Monetary, and Regulatory Policies and

Economic Conditions.

These Factors Could Have a Material Adverse Effect on Our Earnings, Net Interest Margin, Rate of Growth, Financial

Condition and Stock Price.

The economy in the United States and globally has experienced volatility in recent years and may continue

to do so for the foreseeable future, particularly as a result of the COVID-19 pandemic.

There can be no assurance that economic conditions

will not worsen.

Our business may be affected by unfavorable or uncertain economic conditions such as the level and volatility of interest

rates, availability and market conditions of financing, business activity or investor or business confidence, unexpected changes in gross

domestic product, economic growth or its sustainability, inflation, supply chain disruptions, consumer spending, employment levels, labor

shortages, wage inflation, federal government shutdowns, developments related to the U.S.

federal debt ceiling, energy prices, home prices,

commercial property values, bankruptcies, fluctuations or other significant changes in both debt and equity capital markets and currencies,

liquidity of financial markets and the availability and cost of capital and credit, natural disasters, epidemics and pandemics (including

COVID-19), terrorist attacks, acts of war or a combination of these or other factors.

fluctuations may impact our margin requirements and affect our business liquidity.

Also, any sudden or prolonged market downturn, as

a result of the above factors or otherwise, could result in a decline in net interest income and noninterest income and adversely affect

our results of operations and financial condition, including asset quality, capital and liquidity levels.

particular, the Company may face the following risks in connection with the economic or market environment:

Company’s and the Bank’s ability to borrow from other financial institutions

or to access the debt of equity capital markets on favorable terms or at all could be adversely

affected by further disruptions in the capital markets or other events, including actions

by ratings agencies and deteriorating investor expectations.

Company faces increased regulation of the banking and financial services industry.

with such regulation may increase its costs and limit its ability to pursue business opportunities.

consumer and business confidence levels that could result in declines in credit usage, adverse

changes in payment patterns and increases in loan delinquencies and default rates, which

management expects would adversely impact the Bank’s charge-offs and provision for

developments may adversely affect the Bank’s securities portfolio by causing other-than-temporary-impairments,

prompting write-downs and securities losses.

● Competition

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

of financial services companies in connection with current market conditions or otherwise.

Company’s ability to assess the creditworthiness of its customers may be impaired if

the models and approaches the Company uses to select, manage, and underwrite its customers

become less predictive of future behaviors.

Company could suffer decreases in demand for loans or other financial products and services

or decreased deposits or other investments in accounts with the Company.

value of loans and other assets or collateral securing loans may decrease.

economic conditions relating to the COVID-19 pandemic have improved, the Federal Reserve has shifted its focus to limiting inflationary

and other potentially adverse effects of the extensive pandemic-related government stimulus, which signals the potential for a continued

period of economic uncertainty even though the pandemic has subsided.

In addition, there are continuing concerns related to, among other

things, the level of U.S.

government debt and fiscal actions that may be taken to address that debt, a potential resurgence of economic

and political tensions with China and the Russian invasion of Ukraine, all of which may have a destabilizing effect on financial markets

and economic activity.

Economic pressure on consumers and overall economic uncertainty may result in changes in consumer and business

spending, borrowing and saving habits.

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.

Continuing COVID-19 Pandemic Could Adversely Affect Our Businesses and Our Customers, Counterparties, Employees, and Third-Party Service

The pandemic has adversely affected, and may continue to adversely affect, our customers and other businesses in our

market area, as well as counterparties and third party vendors.

Although many health and safety restrictions have been lifted and vaccine

distribution has increased, certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may continue

The growth in economic activity and demand for goods and services, alongside labor shortages and supply chain complications

and/or disruptions, has also contributed to rising inflationary pressures.

The final outcome and/or potential duration of the economic

disruption that resulted from the onset and subsequent recovery from COVID-19 remains uncertain at this time as the financial markets

continue to be impacted.

Our business and operations have not been materially impacted by COVID-19 as of December 31, 2022.

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.

As a result, the full extent of the resulting adverse impacts on our business,

financial condition, liquidity and results of operations remains inestimable at this time, and will depend on a number of evolving factors

and future developments beyond our control and that we are unable to predict.

Rate Volatility Could Adversely Affect Our Results of Operations and Financial Condition.

We cannot predict or control changes

in interest rates.

Interest rates are highly sensitive to many factors that are beyond the Company’s control, including monetary

policy of the federal government, inflation and deflation, volatility of domestic and global financial markets, volatility of credit

markets, and competition.

In response to the economic conditions resulting from the COVID-19 pandemic, the Federal Reserve Board's target

Fed Funds Rate was reduced to nearly 0% in March 2020.

However, in a series of actions to combat rising inflation that began in March

2022, the Federal Reserve Board raised the Fed Funds Rate to 4.50% - 4.75% as of February 1, 2023.

Changes in monetary policy, including

changes in interest rates, influence not only the interest we receive on loans and securities and the interest we pay on deposits and

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

liabilities, and the average duration of our assets.

Company’s earnings and cash flows are largely dependent upon its net interest income, meaning the difference between interest income

earned on interest-earning assets and interest expense paid on interest-bearing liabilities.

Net interest income is the most significant

component of our net income, accounting for approximately 85.5% of total revenues in 2022.

Changes in market interest rates, in the shape

of the yield curve or in spreads between different market interest rates can have a material effect on our net interest margin.

on some interest-earning assets, such as loans and investments, and interest-bearing liabilities, such as deposits and borrowings, adjust

concurrently with, or within a brief period after, changes in market interest rates, while others adjust only periodically or not at

all during their terms.

Thus, changes in market interest rates might, for example, result in an increase in the interest paid on interest-bearing

liabilities that is not accompanied by a corresponding increase in the interest earned on interest-earning assets, or the increase in

interest earned might be at a slower pace, or in a smaller amount, than the increase in interest paid, reducing our net interest income

and/or net interest margin.

In addition, we rely on lower-cost, core deposits as our primary source of funding and changes in interest

rates could increase our cost of funding, reduce our net interest margin and/or create liquidity challenges We have policies and procedures

designed to manage the risks associated with changes in interest rates and actively manage these risks through hedging and other risk

mitigation strategies.

However, if our assumptions are wrong or overall economic conditions are significantly different than anticipated,

our hedging and other risk mitigation strategies may be ineffective and may adversely impact our financial condition and results of operations.

Loan Portfolio Includes Loans with a Higher Risk of Loss.

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real estate loans, consumer loans, and residential mortgage loans primarily within its market area.

The lending strategy focuses

on residential real estate lending as well as servicing commercial customers, including increased emphasis on commercial and industrial

lending and commercial deposit relationships.

Commercial and industrial loans, commercial real estate loans, and consumer loans

may expose a lender to greater credit risk than loans secured by residential real estate because the collateral securing these

loans may not be sold as easily as residential real estate.

In addition, commercial real estate and commercial and industrial

loans may also involve relatively large loan balances to individual borrowers or groups of borrowers.

The lending strategy focuses on residential

real estate lending as well as servicing commercial customers, including increased emphasis on commercial and industrial lending and

commercial deposit relationships.

Commercial and industrial loans, commercial real estate loans, and consumer loans may expose a lender

to greater credit risk than loans secured by residential real estate because the collateral securing these loans may not be sold as easily

as residential real estate.

In addition, commercial real estate and commercial and industrial loans may also involve relatively large

loan balances to individual borrowers or groups of borrowers.

loans also have greater credit risk than residential real estate for the following reasons:

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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

on the Company’s Business, Financial Condition and Results of Operations.

A significant source of risk for the Company

arises from the possibility that losses will be sustained because borrowers, guarantors and related parties may fail to perform

in accordance with the terms of their loan agreements.

Most loans originated by the Bank are secured, but some loans are unsecured

based upon management’s evaluation of the creditworthiness of the borrowers.

With respect to secured loans, the collateral

securing the repayment of these loans principally includes a wide variety of real estate, and to a lesser extent personal property,

either of which may be insufficient to cover the obligations owed under such loans.

values and the financial performance of borrowers may be adversely affected by changes in prevailing economic, environmental and

other conditions, including declines in the value of real estate, changes in interest rates and debt service levels, changes in

oil and gas prices, changes in monetary and fiscal policies of the federal government, widespread disease, terrorist activity,

environmental contamination and other external events, which are beyond the control of the Company.

In addition, collateral appraisals

that are out of date or that do not meet industry recognized standards might create the impression that a loan is adequately collateralized

when in fact it is not.

Although the Company may acquire any real estate or other assets that secure defaulted loans through foreclosures

or other similar remedies, the amounts owed under the defaulted loans may exceed the value of the assets acquired.

Company maintains an allowance for loan losses, which is established through a provision for loan losses charged to earnings,

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

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

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

Company’s Business, Financial Condition and Results of Operations.

A significant source of risk for the Company arises

from the possibility that losses will be sustained because borrowers, guarantors and related parties may fail to perform in accordance

with the terms of their loan agreements.

Most loans originated by the Bank are secured, but some loans are unsecured based upon management’s

evaluation of the creditworthiness of the borrowers.

With respect to secured loans, the collateral securing the repayment of these loans

principally includes a wide variety of real estate, and to a lesser extent personal property, either of which may be insufficient to

cover the obligations owed under such loans.

values and the financial performance of borrowers may be adversely affected by changes in prevailing economic, environmental and other

conditions, including declines in the value of real estate, changes in interest rates and debt service levels, changes in oil and gas

prices, changes in monetary and fiscal policies of the federal government, widespread disease, terrorist activity, environmental contamination

and other external events, which are beyond the control of the Company.

In addition, collateral appraisals that are out of date or that

do not meet industry recognized standards might create the impression that a loan is adequately collateralized when in fact it is not.

Although the Company may acquire any real estate or other assets that secure defaulted loans through foreclosures or other similar remedies,

the amounts owed under the defaulted loans may exceed the value of the assets acquired.

Company maintains an allowance for loan losses, which is established through a provision for loan losses charged to earnings, 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 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.

January 1, 2023, FASB-announced changes to accounting standards that impact the way banking organizations estimate their allowance for

loan losses became effective for the Company.

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 subsequent to adoption

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 Future.

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

reductions of earnings.

When taking collateral in foreclosures and similar proceedings, the Company is required to carry the property

or loan at its then-estimated fair market value less estimated cost to sell, which, when compared to the carrying value of the

loan, may result in a loss.

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.

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 reductions of earnings.

taking collateral in foreclosures and similar proceedings, the Company is required to carry the property or loan at its then-estimated

fair market value less estimated cost to sell, which, when compared to the carrying value of the loan, may result in a loss.

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 staff.

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.

In considering

whether to make a loan secured by real property or other business assets, the Company generally requires an internal evaluation

or independent appraisal of the asset.

However, these assessment methods are only an estimate of the value of the collateral at

the time the assessment is made, and involve a large degree of estimates and assumptions and an error in fact or judgment could

adversely affect the reliability of the valuation.

Changes in those estimates resulting from continuing change in the economic

environment and events occurring after the initial assessment may cause the value of the assets to decrease in future periods.

As future events and their effects cannot be determined with precision, actual values could differ significantly from these estimates.

As a result of any of these factors, the value of collateral backing a loan may be less than estimated at the time of assessment,

and if a default occurs the Company may not recover the outstanding balance of the loan.

In considering whether

to make a loan secured by real property or other business assets, the Company generally requires an internal evaluation or independent

appraisal of the asset.

However, these assessment methods are only an estimate of the value of the collateral at the time the assessment

is made, and involve a large degree of estimates and assumptions and an error in fact or judgment could adversely affect the reliability

of the valuation.

Changes in those estimates resulting from continuing change in the economic environment and events occurring after

the initial assessment may cause the value of the assets to decrease in future periods.

As future events and their effects cannot be

determined with precision, actual values could differ significantly from these estimates.

As a result of any of these factors, the value

of collateral backing a loan may be less than estimated at the time of assessment, and if a default occurs the Company may not recover

the outstanding balance of the loan.

Company’s Investments are Subject to Interest Rate Risks, Credit Risk and Liquidity Risk and Declines in Value in its Investments

May Require the Company to Record OTTI Charges That Could Have a Material Adverse Effect on the Company’s Results of Operations

and Financial Condition.

There are inherent risks associated with the Company’s investment activities, many of which are

beyond the Company’s control.

These risks include the impact from changes in interest rates, weakness in real estate, municipalities,

government-sponsored enterprises, or other industries, the impact of changes in income tax rates on the value of tax-exempt securities,

adverse changes in regional or national economic conditions, and general turbulence in domestic and foreign financial markets, among

other things.

These conditions could adversely impact the fair market value and/or the ultimate collectability of the Company’s

In addition to fair market value impairment, carrying values may be adversely impacted due to a fundamental deterioration

of the individual municipality, government agency, or corporation whose debt obligations the Company owns or of the individual company

or fund in which the Company has invested.

an investment’s value is deemed other than temporarily impaired, then the Company is required to write down the carrying value

of the investment which may involve a charge to earnings.

The determination of the level of OTTI involves a high degree of judgment and

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

Any OTTI charges, depending upon the magnitude of the charges, could have a material adverse effect on the Company’s financial

condition and results of operations.

Company is Subject to Environmental Risks Associated with Real Estate Held as Collateral or Occupied.

When a borrower

defaults on a loan secured by real property, the Company may purchase the property in foreclosure or accept a deed to the property

surrendered by the borrower.

The Company may also take over the management of commercial properties whose owners have defaulted

The Company also occupies owned and leased premises where branches and other bank facilities are located.

Company's lending, foreclosure and facilities policies and guidelines are intended to exclude properties with an unreasonable

risk of contamination, hazardous substances could exist on some of the properties that the Company may own, acquire, manage or

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.

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

Securities Portfolio May Require the Company to Record OTTI Charges That Could Have a Material Adverse Effect on the Company’s

Results of Operations and Financial Condition.

There are inherent risks associated with the Company’s investment

activities, many of which are beyond the Company’s control.

These risks include the impact from changes in interest rates,

weakness in real estate, municipalities, government sponsored enterprises, or other industries, the impact of changes in income

tax rates on the value of tax exempt securities, adverse changes in regional or national economic conditions, and general turbulence

in domestic and foreign financial markets, among other things.

These conditions could adversely impact the fair market value and/or

the ultimate collectability of the Company’s investments.

In addition to fair market value impairment, carrying values may

be adversely impacted due to a fundamental deterioration of the individual municipality, government agency, or corporation whose

debt obligations the Company owns or of the individual company or fund in which the Company has invested.

an investment’s value is deemed other than temporarily impaired, then the Company is required to write down the carrying

value of the investment which may involve a charge to earnings.

The determination of the level of OTTI involves a high degree

of judgment and requires the Company to make significant estimates of current market risks and future trends, all of which may

undergo material changes.

Any OTTI charges, depending upon the magnitude of the charges, could have a material adverse effect

on the Company’s financial condition and results of operations.

Rate Volatility Could Adversely Affect our Results of Operations and Financial Condition.

The Company’s earnings

and cash flows are largely dependent upon its net interest income, meaning the difference between interest income earned on interest-earning

assets and interest expense paid on interest-bearing liabilities.

The re-pricing frequency and magnitude of the Company’s

assets and liabilities are not identical, and therefore subject the Company to the risk of adverse changes in interest rates.

Interest rates are highly sensitive to many factors that are beyond the Company’s control, including monetary policy of

the federal government, inflation and deflation, volatility of domestic and global financial markets, volatility of credit markets,

and competition.

If the interest rates paid on interest-bearing deposits and other liabilities increase at a faster rate or magnitude

than the interest rates received on loans and other investments, the Company’s net interest income, and therefore earnings,

could be adversely affected.

Earnings could also be adversely affected if the interest rates received on loans and other investments

fall more quickly or steeply than falling interest rates paid on interest-bearing liabilities.

When a borrower defaults

on a loan secured by real property, the Company may purchase the property in foreclosure or accept a deed to the property surrendered

by the borrower.

The Company may also take over the management of commercial properties whose owners have defaulted on loans.

also occupies owned and leased premises where branches and other bank facilities are located.

While the Company's lending, foreclosure

and facilities policies and guidelines are intended to exclude properties with an unreasonable risk of contamination, hazardous substances

could exist on some of the properties that the Company may own, acquire, manage or occupy.

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.

much more to clean a property than the property is worth and it may be difficult or impossible to sell contaminated properties.

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.

Change or Government Action and Societal Responses to Climate Change Could Adversely Affect Our Results of Operations.

change can increase the likelihood of the occurrence and severity of natural disasters and can also result in longer-term shifts in climate

patterns such as extreme heat, sea level rise and more frequent and prolonged drought.

Such significant climate change effects may negatively

impact the Company’s geographic markets, disrupting the operations of the Company, our customers or third parties on which we rely.

Damages to real estate underlying mortgage loans or real estate collateral and declines in economic conditions in geographic markets

in which the Company’s customers operate may impact our customers’ ability to repay loans or maintain deposits due to climate

change effects, which could increase our delinquency rates and average credit loss.

as the effects of climate change continue to create a level of concern for the state of the global environment, companies are facing

increasing scrutiny from customers, regulators, investors and other stakeholders related to their environmental, social and governance

(“ESG”) practices and disclosure.

New government regulations could result in more stringent forms of ESG oversight and reporting

and diligence and disclosure requirements.

Increased ESG related compliance costs, in turn, could result in increases to our overall

operational costs.

Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards,

including with respect to the Company’s involvement in certain industries or projects associated with causing or exacerbating climate

change, may negatively affect the Company’s reputation and commercial relationships, which could adversely affect our business.

in Our Primary Market Area May Reduce Our Ability to Attract and Retain Deposits and Originate Loans.

We operate in a

competitive market for both attracting deposits, which is our primary source of funds, and originating loans.

Historically, our

most direct competition for deposits has come from savings and commercial banks.

Our competition for loans comes principally from

commercial banks, savings institutions, mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies

and brokerage and investment banking firms.

We also face additional competition from internet-based institutions, brokerage firms

and insurance companies.

Competition for loan originations and deposits may limit our future growth and earnings prospects.

We operate in a competitive

market for both attracting deposits, which is our primary source of funds, and originating loans.

Historically, our most direct competition

for deposits has come from savings and commercial banks.

Our competition for loans comes principally from commercial banks, savings institutions,

mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies and brokerage and investment banking firms.

We also face additional competition from internet-based institutions, brokerage firms and insurance companies.

Competition for loan originations

and deposits may limit our future growth and earnings prospects.

Outflows May Increase Reliance on Borrowings and Brokered Deposits as Sources of Funds.

The Company has traditionally

funded asset growth principally through deposits and borrowings.

As a general matter, deposits are typically a lower cost source

of funds than external wholesale funding (brokered deposits and borrowed funds), because interest rates paid for deposits are

typically less than interest rates charged for wholesale funding.

If, as a result of competitive pressures, market interest rates,

alternative investment opportunities that present more attractive returns to customers, general economic conditions or other events,

the balance of the Company’s deposits decreases relative to the Company’s overall banking operations, the Company

may have to rely more heavily on wholesale or other sources of external funding, or may have to increase deposit rates to maintain

deposit levels in the future.

Any such increased reliance on wholesale funding, or increases in funding rates in general could

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

The Company has traditionally funded

asset growth principally through deposits and borrowings.

As a general matter, deposits are typically a lower cost source of funds than

external wholesale funding (brokered deposits and borrowed funds), because interest rates paid for deposits are typically less than interest

rates charged for wholesale funding.

If, as a result of competitive pressures, market interest rates, alternative investment opportunities

that present more attractive returns to customers, general economic conditions or other events, the balance of the Company’s deposits

decreases relative to the Company’s overall banking operations, the Company may have to rely more heavily on wholesale or other

sources of external funding, or may have to increase deposit rates to maintain deposit levels in the future.

Any such increased reliance

on wholesale funding, or increases in funding rates in general could have a negative impact on the Company’s net interest income

and, consequently, on its results of operations and financial condition.

Company, as Part of its Strategic Plans, Periodically Considers Potential Acquisitions.

The Risks Presented by Acquisitions Could

Adversely Affect Our Financial Condition and Results of Operations .

Any acquisitions will be accompanied by the risks

commonly encountered in acquisitions including, among other things:

our ability to realize anticipated cost savings and avoid

unanticipated costs relating to the merger, the difficulty of integrating operations and personnel, the potential disruption of

our or the acquired company’s ongoing business, the inability of our management to maximize our financial and strategic

position, the inability to maintain uniform standards, controls, procedures and policies, and the impairment of relationships

with the acquired company’s employees and customers as a result of changes in ownership and management.

These risks may

prevent us from fully realizing the anticipated benefits of an acquisition or cause the realization of such benefits to take longer

than expected.

The Risks Presented by Acquisitions Could Adversely

Affect Our Financial Condition and Results of Operations .

Any acquisitions will be accompanied by the risks commonly encountered

in acquisitions including, among other things:

our ability to realize anticipated cost savings and avoid unanticipated costs relating

to the merger, the difficulty of integrating operations and personnel, the potential disruption of our or the acquired company’s

ongoing business, the inability of our management to maximize our financial and strategic position, the inability to maintain uniform

standards, controls, procedures and policies, and the impairment of relationships with the acquired company’s employees and customers

as a result of changes in ownership and management.

These risks may prevent us from fully realizing the anticipated benefits of an acquisition

or cause the realization of such benefits to take longer than expected.

Company Relies on Third-Party Service Providers.

The Company relies on independent firms to provide critical services

necessary to conducting its business.

The Company relies on independent firms to provide critical services necessary

to conducting its business.

These services include, but are not limited to:

electronic funds delivery networks;

clearing houses;

check clearing houses;

electronic banking services;

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correspondent banking services;

information security assessments and technology support services;

information security

assessments and technology support services;

and loan underwriting and review services.

The occurrence of

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.

The occurrence of 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.

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

The Company is a separate and distinct

legal entity from the Bank.

The Company is a separate and distinct legal

entity from the Bank.

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

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.

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

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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assets and liabilities).

This may occur, for example, when the estimated fair value of the Company declines due to changes in

the assumptions and inputs used in management’s estimate of fair value.

A determination that goodwill has become impaired

results in an immediate write-down of goodwill to its determined value with a resulting charge to operations.

Any write down of

goodwill will result in a decrease in net income and, depending upon the magnitude of the charge, could have a material adverse

effect on the Company’s financial condition and results of operations.

This may occur, for example, when the estimated fair value of the Company declines due to changes in the assumptions

and inputs used in management’s estimate of fair value.

A determination that goodwill has become impaired results in an immediate

write-down of goodwill to its determined value with a resulting charge to operations.

Any write down of goodwill will result in a decrease

in net income and, depending upon the magnitude of the charge, could have a material adverse effect on the Company’s financial

condition and results of operations.

Related to Legal, Governmental and Regulatory Changes

Dividends Are Not Paid on Our Investment in the FHLB, or if Our Investment is Classified as Other-Than-Temporarily Impaired, Our

Earnings and/or Shareholders’ Equity Could Decrease.

As a member of the FHLB, the Company is required to own a minimum

required amount of FHLB capital stock, calculated periodically based primarily on its level of borrowings from the FHLB.

stock is classified as a restricted investment and carried at cost, which management believes approximates fair value of the FHLB

If negative events or deterioration in the FHLB financial condition or capital levels occurs, the Company's investment

in FHLB capital stock may become other-than-temporarily impaired to some degree.

There can be no assurance that FHLB stock dividends

will be declared in the future.

If either of these were to occur, the Company’s results of operations and financial condition

may be adversely affected.

Dividends Are Not Paid on Our Investment in the FHLB, or if Our Investment is Classified as Other-Than-Temporarily Impaired, Our Earnings

and/or Shareholders’ Equity Could Decrease.

As a member of the FHLB, the Company is required to own a minimum required

amount of FHLB capital stock, calculated periodically based primarily on its level of borrowings from the FHLB.

This stock is classified

as a restricted investment and carried at cost, which management believes approximates fair value of the FHLB stock.

If negative events

or deterioration in the FHLB financial condition or capital levels occurs, the Company's investment in FHLB capital stock may become

other-than-temporarily impaired to some degree.

There can be no assurance that FHLB stock dividends will be declared in the future.

either of these were to occur, the Company’s results of operations and financial condition may be adversely affected.

Concentration

in Commercial Real Estate Lending is Subject to Heightened Risk Management and Regulatory Review.

If a concentration in

commercial real estate lending is present, as measured under government banking regulations, management must employ heightened

risk management practices that address the following key elements:

board and management oversight and strategic planning, portfolio

management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing,

and maintenance of increased capital levels as needed to support the level of commercial real estate lending.

If a concentration

is determined to exist, the Company may incur additional operating expenses in order to comply with additional risk management

practices and increased capital requirements which could have a material adverse effect on the Company’s 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.

If a concentration in commercial

real estate lending is present, as measured under government banking regulations, management must employ heightened risk management practices

that address the following key elements:

board and management oversight and strategic planning, portfolio management, development of

underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital

levels as needed to support the level of commercial real estate lending.

If a concentration is determined to exist, the Company may incur

additional operating expenses in order to comply with additional risk management practices and increased capital requirements which could

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

of the London Interbank Offered Rate Could Adversely Affect Our Business, Financial Condition, and Results of Operations .

In 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates the London Interbank Offered

Rate (“LIBOR”), announced that the FCA intends to stop persuading or compelling banks to submit the rates required to calculate

LIBOR after 2021.

This announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after

bank regulators issued a Statement on LIBOR Transition on November 30, 2020 and subsequent guidance encouraging

banks to transition away from U.S.

Dollar (USD) LIBOR by December 31, 2021 at the latest for new contracts.

LIBOR is currently anticipated

to be fully phased out by June 30, 2023.

The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured

Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to LIBOR for use in derivatives

and other financial contracts that are currently indexed to LIBOR.

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 .

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.

The Company adopted SOFR as its

preferred benchmark as an alternative to LIBOR for use in new and legacy contracts beginning on January 1, 2022.

have certain loans, derivative contracts, and other financial instruments with attributes that are either directly or indirectly dependent

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

The Company’s external wholesale

funding sources include borrowing capacity at the FHLB, capacity in the brokered deposit markets, other borrowing arrangements

with correspondent banks, as well as accessing the public markets through offerings of the Company’s stock or issuance of

If, as a result of general economic conditions or other events, these sources of external funding become restricted or are

eliminated, the Company may not be able to raise adequate funds or may incur substantially higher funding costs or operating restrictions

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

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

With Our Ability to Conduct Business and May Adversely Impact the Results of our Operations.

Banking regulations are primarily

intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not the interests

of stockholders.

These regulations affect the Company’s lending practices, capital structure, investment practices, dividend

policy and growth, among other things.

The Company is subject to extensive federal and state supervision and regulation that govern

nearly all aspects of our operations and can have a material impact on our business.

Federal banking agencies have significant

discretion regarding the supervision, regulation and enforcement of banking laws and regulations.

funding sources include borrowing capacity at the FHLB, capacity in the brokered deposit markets, other borrowing arrangements with correspondent

banks, as well as accessing the public markets through offerings of the Company’s stock or issuance of debt.

If, as a result of

general economic conditions or other events, these sources of external funding become restricted or are eliminated, the Company may not

be able to raise adequate funds or may incur substantially higher funding costs or operating restrictions 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.

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

Our Ability to Conduct Business and May Adversely Impact the Results of our Operations.

Banking regulations are primarily intended

to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not the interests of stockholders.

These regulations affect the Company’s lending practices, capital structure, investment practices, dividend policy and growth,

among other things.

The Company is subject to extensive federal and state supervision and regulation that govern nearly all aspects of

our operations and can have a material impact on our business.

Federal banking agencies have significant discretion regarding the supervision,

regulation and enforcement of banking laws and regulations.

laws, regulations and policies are subject to amendment by Congress, state legislatures and federal and state regulatory agencies.

Changes to statutes, regulations or policies, including changes in the interpretation of regulations or policies, could materially

impact our business.

These changes could also impose additional costs on us and limit the types of products and services that

we may offer our customers.

Compliance with laws and regulations can be difficult and costly, and the failure to comply with any

law, regulation or policy could result in sanctions by financial regulatory agencies, including civil monetary penalties, private

lawsuits, or reputational damage, any of which could adversely affect our business, financial condition, or results of operations.

While we have policies and procedures designed to prevent such violations, there can be no assurance that violations will not

See the section titled, “Supervision and Regulation” in ITEM 1.

the 2008 global financial crisis, financial institutions have been subject to increased scrutiny from Congress, state legislatures

and federal and state financial regulatory agencies.

Changes to the legal and regulatory framework have significantly altered

the laws and regulations under which we operate.

Compliance with these changes and any additional or amended laws, regulations

and regulatory policies may reduce our ability to effectively compete in attracting and retaining customers.

The passage and continued

implementation of the Dodd-Frank Act, among other laws and regulations, has increased our costs of doing business and resulted

in decreased revenues and net income.

We cannot provide assurance that future changes in laws, regulations and policies will not

adversely affect our business.

and Federal Regulatory Agencies Periodically Conduct Examinations of Our Business, Including for Compliance With Laws and Regulations,

and Our Failure to Comply With Any Supervisory Actions to Which We Are or Become Subject as a Result of Such Examinations May

Adversely Affect Our Business.

Federal and state regulatory agencies periodically conduct examinations of our business,

including our compliance with applicable laws and regulations.

If, as a result of an examination, an agency were to determine

that the financial, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of our

operations had become unsatisfactory, or violates any law or regulation, such agency may take certain remedial or enforcement

actions it deems appropriate to correct any deficiency.

Remedial or enforcement actions include the power to enjoin “unsafe

or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice,

to issue an administrative order that can be judicially enforced against a bank, to direct an increase in the bank’s capital,

to restrict the bank’s growth, to assess civil monetary penalties against a bank’s officers or directors, and to remove

officers and directors.

In the event that the FDIC concludes that, among other things, our financial conditions cannot be corrected

or that there is an imminent risk of loss to our depositors, it may terminate our deposit insurance.

to statutes, regulations or policies, including changes in the interpretation of regulations or policies, could materially impact our

These changes could also impose additional costs on us and limit the types of products and services that we may offer our customers.

Compliance with laws and regulations can be difficult and costly, and the failure to comply with any law, regulation or policy could

result in sanctions by financial regulatory agencies, including civil monetary penalties, private lawsuits, or reputational damage, any

of which could adversely affect our business, financial condition, or results of operations.

While we have policies and procedures designed

to prevent such violations, there can be no assurance that violations will not occur.

See the section titled, “Supervision and

Regulation” in ITEM 1.

Since the 2008 global financial crisis, financial

institutions have been subject to increased scrutiny from Congress, state legislatures and federal and state financial regulatory agencies.

Changes to the legal and regulatory framework have significantly altered the laws and regulations under which we operate.

Compliance with

these changes and any additional or amended laws, regulations and regulatory policies may reduce our ability to effectively compete in

attracting and retaining customers.

The passage and continued implementation of the Dodd-Frank Act, among other laws and regulations,

has increased our costs of doing business and resulted in decreased revenues and net income.

We cannot provide assurance that future changes

in laws, regulations and policies will not adversely affect our business.

State and Federal Regulatory Agencies Periodically

Conduct Examinations of Our Business, Including for Compliance With Laws and Regulations, and Our Failure to Comply With Any Supervisory

Actions to Which We Are or Become Subject as a Result of Such Examinations May Adversely Affect Our Business.

Federal and state

regulatory agencies periodically conduct examinations of our business, including our compliance with applicable laws and regulations.

If, as a result of an examination, an agency were to determine that the financial, capital resources, asset quality, earnings prospects,

management, liquidity, or other aspects of any of our operations had become unsatisfactory, or violates any law or regulation, such agency

may take certain remedial or enforcement actions it deems appropriate to correct any deficiency.

Remedial or enforcement actions include

the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from

any violation or practice, to issue an administrative order that can be judicially enforced against a bank, to direct an increase in the

bank’s capital, to restrict the bank’s growth, to assess civil monetary penalties against a bank’s officers or directors,

and to remove officers and directors.

In the event that the FDIC concludes that, among other things, our financial conditions cannot be

corrected or that there is an imminent risk of loss to our depositors, it may terminate our deposit insurance.

The OCC, as the supervisory

and regulatory authority for federal savings associations, has similar enforcement powers with respect to our business.

also has authority to take enforcement actions, including cease-and-desist orders or civil monetary penalties, if it finds that

we offer consumer financial products and services in violation of federal consumer financial protection laws.

we were unable to comply with future regulatory directives, or if we were unable to comply with the terms of any future supervisory

requirements to which we may become subject, then we could become subject to a variety of supervisory actions and orders, including

cease and desist orders, prompt corrective actions, memoranda of understanding, and other regulatory enforcement actions.

supervisory actions could, among other things, impose greater restrictions on our business, as well as our ability to develop

any new business.

We could also be required to raise additional capital, or dispose of certain assets and liabilities within a

prescribed time period, or both.

Failure to implement remedial measures as required by financial regulatory agencies could result

in additional orders or penalties from federal and state regulators, which could trigger one or more of the remedial actions described

The terms of any supervisory action and associated consequences with any failure to comply with any supervisory action

could have a material negative effect on our business, operating flexibility and overall financial condition.

Company’s Capital Levels Could Fall Below Regulatory Minimums.

The Company and the Bank are subject to the capital

adequacy guidelines of the FRB and the OCC, respectively.

Failure to meet applicable minimum capital ratio requirements (including

the capital conservation "buffer" imposed by Basel III) may subject the Company and/or the Bank to various enforcement

actions and restrictions.

If the Company’s capital levels decline, or if regulatory requirements increase, and the Company

is unable to raise additional capital to offset that decline or meet the increased requirements, then its capital ratios may fall

below regulatory capital adequacy levels.

The Company’s capital ratios could decline due to it experiencing rapid asset

growth, or due to other factors, such as, by way of example only, possible future net operating losses, impairment charges against

tangible or intangible assets, or adjustments to retained earnings due to changes in accounting rules.

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.

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.

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.

The CFPB also

has authority to take enforcement actions, including cease-and-desist orders or civil monetary penalties, if it finds that we offer consumer

financial products and services in violation of federal consumer financial protection laws.

If we were unable to comply with future regulatory

directives, or if we were unable to comply with the terms of any future supervisory requirements to which we may become subject, then

we could become subject to a variety of supervisory actions and orders, including cease and desist orders, prompt corrective actions,

memoranda of understanding, and other regulatory enforcement actions.

Such supervisory actions could, among other things, impose greater

restrictions on our business, as well as our ability to develop any new business.

We could also be required to raise additional capital,

or dispose of certain assets and liabilities within a prescribed time period, or both.

Failure to implement remedial measures as required

by financial regulatory agencies could result in additional orders or penalties from federal and state regulators, which could trigger

one or more of the remedial actions described above.

The terms of any supervisory action and associated consequences with any failure

to comply with any supervisory action could have a material negative effect on our business, operating flexibility and overall financial

The Company’s Capital Levels Could Fall

Below Regulatory Minimums.

The Company and the Bank are subject to the capital adequacy guidelines of the FRB and the OCC, respectively.

Failure to meet applicable minimum capital ratio requirements (including the capital conservation "buffer" imposed by Basel

III) may subject the Company and/or the Bank to various enforcement actions and restrictions.

If the Company’s capital levels decline,

or if regulatory requirements increase, and the Company is unable to raise additional capital to offset that decline or meet the increased

requirements, then its capital ratios may fall below regulatory capital adequacy levels.

The Company’s capital ratios could decline

due to it experiencing rapid asset growth, or due to other factors, such as, by way of example only, possible future net operating losses,

impairment charges against tangible or intangible assets, or adjustments to retained earnings due to changes in accounting rules.

The 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,

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

The Company’s financial performance is impacted by federal and state tax laws.

Enactment of new legislation, or

changes in the interpretation of existing law, may have a material effect on the Company’s financial condition and results

of operations.

A deferred tax asset is created by the tax effect of the differences between an asset’s book value and its

The deferred tax asset is measured using enacted tax rates expected to apply to taxable income in the years in which

the temporary differences are expected to be recovered or settled.

Accordingly, a reduction in enacted tax rates may result in

a decrease in current tax expense and a decrease to the Company’s deferred tax asset, with an offsetting charge to current

Company’s financial performance is impacted by federal and state tax laws.

Enactment of new legislation, or changes in the interpretation

of existing law, may have a material effect on the Company’s financial condition and results of operations.

A deferred tax asset

is created by the tax effect of the differences between an asset’s book value and its tax basis.

The deferred tax asset is measured

using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered

Accordingly, a reduction in enacted tax rates may result in a decrease in current tax expense and a decrease to the Company’s

deferred tax asset, with an offsetting charge to current tax expense.

The alternative would occur with an increase to enacted tax rates.

In addition, certain tax strategies taken in the

past derive their tax benefit from the current enacted tax rates.

Accordingly, a change in enacted tax rates may result in a decrease/increase

to anticipated benefit of the Company’s previous transactions which in turn, could have a material effect on the Company's

financial condition and results of operations.

In addition, certain tax strategies taken in the past derive their tax benefit from the current enacted tax rates.

Accordingly, a change

in enacted tax rates may result in a decrease/increase to anticipated benefit of the Company’s previous transactions which in turn,

could have a material effect on the Company's financial condition and results of operations.

Related to Cybersecurity and Data Privacy

Face Cybersecurity Risks and Risks Associated With Security Breaches Which Have the Potential to Disrupt Our Operations, Cause

Material Harm to Our Financial Condition, Result in Misappropriation of Assets, Compromise Confidential Information and/or Damage

Our Business Relationships and Can Provide No Assurance That the Steps We and Our Service Providers Take in Response to These

Risks Will Be Effective.

We depend upon data processing, communication and information exchange on a variety of computing

platforms and networks and over the internet.

In addition, we rely on the services of a variety of vendors to meet our data

processing and communication needs.

We face cybersecurity risks and risks associated with security breaches or disruptions

such as those through cyber-attacks or cyber intrusions over the internet, malware, computer viruses, attachments to emails, social

engineering and phishing schemes or persons inside our organization.

The risk of a security breach or disruption, particularly

through cyber-attacks or cyber intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists,

has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world

have increased.

These incidents may result in disruption of our operations, material harm to our financial condition, cash flows

and the market price of our common stock, misappropriation of assets, compromise or corruption of confidential information collected

in the course of conducting our business, liability for stolen information or assets, increased cybersecurity protection and insurance

costs, regulatory enforcement, litigation and damage to our stakeholder relationships.

These risks require continuous and likely

increasing attention and other resources from us to, among other actions, identify and quantify these risks, upgrade and expand

our technologies, systems and processes to adequately address them and provide periodic training for our employees to assist them

in detecting phishing, malware and other schemes.

Such attention diverts time and other resources from other activities and there

is no assurance that our efforts will be effective.

Face Cybersecurity Risks and Risks Associated With Security Breaches Which Have the Potential to Disrupt Our Operations, Cause Material

Harm to Our Financial Condition, Result in Misappropriation of Assets, Compromise Confidential Information and/or Damage Our Business

Relationships and Can Provide No Assurance That the Steps We and Our Service Providers Take in Response to These Risks Will Be Effective.

We depend upon data processing, communication and information exchange on a variety of computing platforms and networks and over

the internet.

In addition, we rely on the services of a variety of vendors to meet our data processing and communication needs.

We face cybersecurity risks and risks associated with security breaches or disruptions such as those through cyber-attacks or cyber intrusions

over the internet, malware, computer viruses, attachments to emails, social engineering and phishing schemes or persons inside our organization.

The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusions, including by computer hackers, nation-state

affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and

intrusions from around the world have increased.

These incidents may result in disruption of our operations, material harm to our financial

condition, cash flows and the market price of our common stock, misappropriation of assets, compromise or corruption of confidential

information collected in the course of conducting our business, liability for stolen information or assets, increased cybersecurity protection

and insurance costs, regulatory enforcement, litigation and damage to our stakeholder relationships.

These risks require continuous and

likely increasing attention and other resources from us to, among other actions, identify and quantify these risks, upgrade and expand

our technologies, systems and processes to adequately address them and provide periodic training for our employees to assist them in

detecting phishing, malware and other schemes.

Such attention diverts time and other resources from other activities and there is no

assurance that our efforts will be effective.

the normal course of business, we collect and retain certain personal information provided by our customers, employees and vendors.

We also rely extensively on computer systems to process transactions and manage our business.

We can provide no assurance that

the data security measures designed to protect confidential information on our systems established by us will be able to prevent

unauthorized access to this personal information.

There can be no assurance that our efforts to maintain the security and integrity

of the information we and our service providers collect and our and their computer systems will be effective or that attempted

security breaches or disruptions would not be successful or damaging.

Even the most well protected information, networks,

systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and

generally are not recognized until launched against a target, and in some cases are designed not be detected and, in fact, may

not be detected.

Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other

preventative measures, and thus it is impossible for us to entirely mitigate this risk.

also rely extensively on computer systems to process transactions and manage our business.

We can provide no assurance that the data

security measures designed to protect confidential information on our systems established by us will be able to prevent unauthorized

access to this personal information.

There can be no assurance that our efforts to maintain the security and integrity of the information

we and our service providers collect and our and their computer systems will be effective or that attempted security breaches or disruptions

would not be successful or damaging.

Even the most well protected information, networks, systems and facilities remain potentially

vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against

a target, and in some cases are designed not be detected and, in fact, may not be detected.

Accordingly, we may be unable to anticipate

these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely

mitigate this risk.

Continually Encounter Technological Change and The Failure to Understand and Adapt to These Changes Could Hurt Our Business.

financial services industry is undergoing rapid technological change with frequent introductions of new technology-driven products

and services and technological advances are likely to intensify competition.

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 customers.

Failure to successfully keep pace with technological changes

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

and results of operations.

Possibility of the Economy’s Return to Recessionary Conditions and the Possibility of Further Turmoil or Volatility in the

Financial Markets Would Likely Have an Adverse Effect on the Company’s Business, Financial Position and Results of Operations.

The Company continues to face risks resulting from the aftermath of the severe recession generally and the moderate pace

of the current recovery.

A slowing or failure of the economic recovery would likely aggravate the adverse effects of these difficult

economic and market conditions on the Company and on others in the financial services industry.

In particular, the Company may

face the following risks in connection with the economic or market environment:

Company’s and the Bank’s ability to borrow from other financial institutions

or to access the debt or equity capital markets on favorable terms or at all could be

adversely affected by further disruptions in the capital markets or other events, including

actions by rating agencies and deteriorating investor expectations.

Company faces increased regulation of the banking and financial services industry.

with such regulation may increase its costs and limit its ability to pursue business

opportunities.

developments may affect customer confidence levels and may cause increases in loan delinquencies

and default rates, which management expects would adversely impact the Bank’s charge-offs

and provision for loan losses.

developments may adversely affect the Bank’s securities portfolio by causing other-than-temporary-impairments,

prompting write-downs and securities losses.

• 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 the Local Economy May Affect our Future Growth Possibilities.

The Company’s success depends principally on the

general economic conditions of the primary market areas in which the Company operates.

The local economic conditions in these

regions have a significant impact on the demand for the Company’s products and services, as well as the ability of the Company’s

customers to repay loans, the value of the collateral securing loans and the stability of the Company’s deposit funding

The Company’s market area is principally located in Hampden and Hampshire Counties, Massachusetts and Hartford

and Tolland Counties in northern Connecticut.

The local economy may affect future growth possibilities.

The Company’s future

growth opportunities depend on the growth and stability of our regional economy and the ability to expand in our market area.

Disasters, Acts of Terrorism, Public Health Issues and Other External Events Could Harm Our Business.

Natural disasters

can disrupt our operations, result in damage to our properties, reduce or destroy the value of the collateral for our loans and

negatively affect the economies in which we operate, which could have a material adverse effect on our results of operations and

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

services and technological advances are likely to intensify competition.

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 customers.

Failure to successfully keep pace with technological changes affecting the financial services industry could

have a material adverse impact on our business and, in turn, our financial condition and results of operations.

General Risk Factors

Changes in the Local Economy May Affect our

Future Growth Possibilities.

The Company’s success depends principally on the general economic conditions of the primary

market areas in which the Company operates.

The local economic conditions in these regions have a significant impact on the demand for

the Company’s products and services, as well as the ability of the Company’s customers to repay loans, the value of the collateral

securing loans and the stability of the Company’s deposit funding sources.

The Company’s market area is principally located

in Hampden and Hampshire Counties, Massachusetts and Hartford and Tolland Counties in northern Connecticut.

The local economy may affect

future growth possibilities.

The Company’s future growth opportunities depend on the growth and stability of our regional economy

and the ability to expand in our market area.

Natural Disasters, Acts of Terrorism, Public Health Issues and Other External Events Could Harm Our Business.

disasters can disrupt our operations, result in damage to our properties, reduce or destroy the value of the collateral for our loans

and negatively affect the economies in which we operate, which could have a material adverse effect on our results of 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.

The Company’s success depends, in large part,

on its ability to attract, retain and develop key personnel.

Competition for the best people in most activities engaged in by

the Company can be intense, and the Company may not be able to hire or retain the key personnel that it depends upon for success.

The unexpected loss of key personnel or the inability to identify and develop individuals for planned succession to key senior

positions within management, or on the Board, could have a material adverse impact on the Company’s business because of

the loss of their skills, knowledge of the Company’s market, years of industry or business experience and the difficulty

of promptly finding qualified replacements.

and Procedures Could Fail, or Be Circumvented by Theft, Fraud or Robbery.

Management regularly reviews and updates the

Company’s internal controls over financial reporting, corporate governance policies, compensation policies, Code of Business

Conduct and Ethics and security controls to prevent and detect theft, fraud or robbery from both internal and external sources.

Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable,

not absolute, assurances that the objectives of the system are met.

Any failure or circumvention of the Company’s internal

controls and procedures, or failure to comply with regulations related to controls and procedures, or a physical theft or robbery,

whether by employees, management, directors, or external elements, or any illegal activity conducted by a Bank customer, could

result in loss of assets, regulatory actions against the Company, financial loss, damage the Company’s reputation, cause

a loss of customer business, and expose the Company to civil litigation and possible financial liability, any of which could have

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

to the Company’s Reputation Could Affect the Company’s Profitability and Shareholders' Value.

is dependent on its reputation within its market area, as a trusted and responsible financial company, for all aspects of its

business with customers, employees, vendors, third-party service providers, and others, with whom the Company conducts business

or potential future business.

Any negative publicity or public complaints, whether real or perceived, disseminated by word of

mouth, by the general media, by electronic or social networking means, or by other methods, regarding, among other things, the

Company’s current or potential business practices or activities, cyber-security issues, regulatory compliance, an inability

to meet obligations, employees, management or directors’ ethical standards or actions, or about the banking industry in

general, could harm the Company’s reputation.

Any damage to the Company’s reputation could affect its ability to retain

and develop the business relationships necessary to conduct business which in turn could negatively impact the Company’s

profitability and shareholders’ value.

Company is Exposed to Legal Claims and Litigation.

The Company is subject to legal challenges under a variety of circumstances

in the course of its normal business practices in regards to laws and regulations, duties, customer expectations of service levels,

in addition to potentially illegal activity (at a federal or state level) conducted by any of our customers, use of technology

and patents, operational practices and those of contracted third-party service providers and vendors, and stockholder matters,

among others.

Regardless of the scope or the merits of any claims by potential or actual litigants, the Company may have to engage

in litigation that could be expensive, time-consuming, disruptive to the Company's operations, and distracting to management.

Whether claims or legal action are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable

to the Company, they may result in significant financial liability, damage the Company’s reputation, subject the Company

to additional regulatory scrutiny and restrictions, and/or adversely affect the market perception of our products and services,

as well as impact customer demand for those products and services.

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

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.

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 Company May Not be Able to Attract, Retain

or Develop Key Personnel.

The Company’s success depends, in large part, on its ability to attract, retain and develop key

Competition for the best people in most activities engaged in by the Company can be intense, and the Company may not be able

to hire or retain the key personnel that it depends upon for success.

The unexpected loss of key personnel or the inability to identify

and develop individuals for planned succession to key senior positions within management, or on the Board, could have a material adverse

impact on the Company’s business because of the loss of their skills, knowledge of the Company’s market, years of industry

or business experience and the difficulty of promptly finding qualified replacements.

Controls and Procedures Could Fail, or Be Circumvented

by Theft, Fraud or Robbery.

Management regularly reviews and updates the Company’s internal controls over financial reporting,

corporate governance policies, compensation policies, Code of Business Conduct and Ethics and security controls to prevent and detect

theft, fraud or robbery from both internal and external sources.

Any system of controls, however well designed and operated, is based

in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.

failure or circumvention of the Company’s internal controls and procedures, or failure to comply with regulations related to controls

and procedures, or a physical theft or robbery, whether by employees, management, directors, or external elements, or any illegal activity

conducted by a Bank customer, could result in loss of assets, regulatory actions against the Company, financial loss, damage the Company’s

reputation, cause a loss of customer business, and expose the Company to civil litigation and possible financial liability, any of which

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

Damage to the Company’s Reputation Could

Affect the Company’s Profitability and Shareholders' Value.

The Company is dependent on its reputation within its market

area, as a trusted and responsible financial company, for all aspects of its business with customers,

employees, vendors, third-party service providers, and others, with whom the Company conducts business or potential future business.

negative publicity or public complaints, whether real or perceived, disseminated by word of mouth, by the general media, by electronic

or social networking means, or by other methods, regarding, among other things, the Company’s current or potential business practices

or activities, cyber-security issues, regulatory compliance, an inability to meet obligations, employees, management or directors’

ethical standards or actions, or about the banking industry in general, could harm the Company’s reputation.

Any damage to the Company’s

reputation could affect its ability to retain and develop the business relationships necessary to conduct business which in turn could

negatively impact the Company’s profitability and shareholders’ value.

The Company is Exposed to Legal Claims and Litigation.

The Company is subject to legal challenges under a variety of circumstances in the course of its normal business practices in

regards to laws and regulations, duties, customer expectations of service levels, in addition to potentially illegal activity (at a federal

or state level) conducted by any of our customers, use of technology and patents, operational practices and those of contracted third-party

service providers and vendors, and stockholder matters, among others.

Regardless of the scope or the merits of any claims by potential

or actual litigants, the Company may have to engage in litigation that could be expensive, time-consuming, disruptive to the Company's

operations, and distracting to management.

Whether claims or legal action are founded or unfounded, if such claims and legal actions are

not resolved in a manner favorable to the Company, they may result in significant financial liability, damage the Company’s reputation,

subject the Company to additional regulatory scrutiny and restrictions, and/or adversely affect the market perception of our products

and services, as well as impact customer demand for those products and services.

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.

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

The Company maintains

insurance policies that provide coverage for various risks at levels the Company deems adequate to provide reasonable coverage

The coverage applies to incidents and events which may impact such areas as:

The Company’s Insurance Coverage May Not

be Adequate to Prevent Additional Liabilities or Expenses.

The Company maintains insurance policies that provide coverage for

various risks at levels the Company deems adequate to provide reasonable coverage for losses.

The coverage applies to incidents and events

which may impact such areas as:

loss of bank facilities;

accidental injury

or death of employees;

accidental injury or death of employees;

injuries sustained on bank premises;

cyber and technology attacks or breaches;

loss of customer nonpublic

personal information;

loss of customer nonpublic personal information;

processing of fraudulent transactions;

robberies, embezzlement and theft;

improper processing of negotiable

items or electronic transactions;

improper loan underwriting and perfection of collateral, among others.

These policies will provide

varying degrees of coverage for losses under specific circumstances, and in most cases after related deductible amounts are paid

by the Company.

However, there is no guarantee that the circumstance of an incident will meet the criteria for insurance coverage

under a specific policy, and despite the insurance policies in place the Company may experience a loss incident or event which

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

Trading Volume in the Company’s Common Stock is Less Than That of Larger Companies.

Although the Company’s

common stock is listed for trading on the NASDAQ, the trading volume in the Company’s common stock is substantially less

than that of larger companies.

Given the lower trading volume of the Company’s common stock, significant purchases or sales

of the Company’s common stock, or the expectation of such purchases or sales, could cause significant volatility in the

price for the Company’s common stock.

Market Price of the Company’s Common Stock May Fluctuate Significantly, and This May Make it Difficult for You to Resell

Shares of Common Stock Owned by You at Times or at Prices You Find Attractive.

The price of the Company’s common

stock on the NASDAQ constantly changes.

The Company expects that the market price of its

common stock will continue to fluctuate, and the Company cannot give you any assurances regarding any trends in the market prices

for its common stock.

Company’s stock price may fluctuate as a result of a variety of factors, many of which are beyond its control.

These factors

include the Company’s:

embezzlement and theft;

improper processing of negotiable items or electronic transactions;

improper loan underwriting and perfection

of collateral, among others.

These policies will provide varying degrees of coverage for losses under specific circumstances, and in most

cases after related deductible amounts are paid by the Company.

However, there is no guarantee that the circumstance of an incident will

meet the criteria for insurance coverage under a specific policy, and despite the insurance policies in place the Company may experience

a loss incident or event which could have a material adverse effect on the Company’s business, reputation, financial condition and

results of operations.

The Trading Volume in the Company’s Common

Stock is Less Than That of Larger Companies.

Although the Company’s common stock is listed for trading on the NASDAQ, the

trading volume in the Company’s common stock is substantially less than that of larger companies.

Given the lower trading volume of the Company’s common stock, significant purchases or sales of the Company’s common stock,

or the expectation of such purchases or sales, could cause significant volatility in the price for the Company’s common stock.

The Market Price of the Company’s Common

Stock May Fluctuate Significantly, and This May Make it Difficult for You to Resell Shares of Common Stock Owned by You at Times or at

Prices You Find Attractive.

The price of the Company’s common stock on the NASDAQ constantly changes.

The Company expects

that the market price of its common stock will continue to fluctuate, and the Company cannot give you any assurances regarding any trends

in the market prices for its common stock.

Company’s stock price may fluctuate significantly as a result of a variety of factors, many of which are beyond its control.

factors include, but are not limited to, the Company’s:

and future dividend practice;

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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 Company’s;

operating and securities price performance of other companies

that investors believe 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

or housing, and developments with respect to financial institutions generally;

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

housing, and developments with respect to financial institutions generally;

● catastrophic

events, including natural disasters, and public health crises;

● instability

in global financial markets and global economies and general market conditions, such

as interest or foreign exchange rates, stock, commodity or real estate valuations or

volatility, budget deficits or sovereign debt level concerns and other geopolitical,

regulatory or judicial events .

addition, the banking industry may be more affected than other industries by certain economic, credit, regulatory or information

security issues.

Although the Company itself may or may not be directly impacted by such issues, the Company’s stock price

may vary due to the influence, both real and perceived, of these issues, among others, on the banking industry in general.

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.

in global financial markets and global economies and general market conditions, such as interest

or foreign exchange rates, stock, commodity or real estate valuations or volatility, budget

deficits or sovereign debt level concerns and other geopolitical, regulatory or judicial

addition, the banking industry may be more affected than other industries by certain economic, credit, regulatory or information security

Although the Company itself may or may not be directly impacted by such issues, the Company’s stock price may vary due

to the influence, both real and perceived, of these issues, among others, on the banking industry in general.

Investment 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.

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

If the Company’s Board of Directors should determine

in the future that there is a need to obtain additional capital through the issuance of additional shares of the Company’s

common stock or securities convertible into shares of common stock, such issuances could result in dilution to existing stockholders’

in the future that there is a need to obtain additional capital through the issuance of additional shares of the Company’s common

stock or securities convertible into shares of common stock, such issuances could result in dilution to existing stockholders’

ownership interest.

Similarly, if the Board of Directors decides to grant additional stock awards or options for the purchase

of shares of common stock, the issuance of such additional stock awards and/or the issuance of additional shares upon the exercise

of such options would expose stockholders to dilution.

Similarly, if the Board of Directors decides to grant additional stock awards or options for the purchase of shares

of common stock, the issuance of such additional stock awards and/or the issuance of additional shares upon the exercise of such options

would expose stockholders to dilution.

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

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.

In 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.

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

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What changed 10-K

Item 1A. Risk Factors