2020 Annual Report

related products, their underwriting, origination, servicing and sales. The Dodd-Frank Act significantly expanded underwriting requirements applicable to loans secured by 1-4 family residential real property and augmented federal law combating predatory lending practices. In addition to numerous disclosure requirements, the Dodd-Frank Act imposed new standards for mortgage loan originations on all lenders, including banks and savings associations, in an effort to strongly encourage lenders to verify a borrower’s ability to repay, while also establishing a presumption of compliance for certain “qualified mortgages.” The CFPB has from time to time released additional rules as to qualified mortgages and the borrower’s ability to repay, most recently in October of 2020. The CFPB’s rules have not had a significant impact on the Bank’s operations, except for higher compliance costs. Item 1.A. RISK FACTORS Investing in the Company’s common stock involves various risks, many of which are specific to the Company’s business. Before making an investment decision, you should carefully read and consider the risk factors described below as well as the other information included in this report and other documents we file with the SEC. The discussion below addresses the material risks and uncertainties, of which the Company is currently aware, that could have a material adverse effect on the Company’s business, results of operations, financial condition, and growth prospects. Other risks that the Company does not know about now, or that the Company does not currently believe are significant, could negatively impact the Company’s business or the trading price of the Company’s securities. Summary This is a summary of some of the material risks and uncertainties that management believes affects us. The list is not exhaustive but provides a high-level summary of some of the material risks that are further described in this Item 1A. We encourage you to read Item 1A in its entirety. Credit Risks • Loan concentrations in our loan portfolio; • the overall health of the local and national real estate market; • business and economic conditions generally and in the financial services industry, nationally and within our market area; • the ability to successfully manage credit risk; • the ability to maintain an adequate level of allowance for loan losses; • new or revised accounting standards, including as a result of the implementation of the new Current Expected Credit Loss standard; and • the concentration of large loans to certain borrowers. Liquidity and Funding Risks • The ability to successfully manage liquidity risk; • the dependence on non-core funding sources and our cost of funds; • the concentration of large deposits from certain clients; and • the ability to raise additional capital to implement our business plan. Operational, Strategic and Reputational Risks • The ability to implement the Company’s growth strategy and manage costs effectively; • the composition of senior leadership team and the ability to attract and retain key personnel; • the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; • interruptions involving our information technology and telecommunications systems or third-party servicers; • competition in the financial services industry; • severe weather, natural disasters, widespread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism, civil unrest or other adverse external events; and

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