Risk Factors Update Summary

• An economic recession or downturn could harm business operations, financial performance, and results. This could result in a decrease in net interest income derived from lending and deposit activities.
• Acquisitions of financial institutions may involve operational risks, unforeseen liabilities, and asset quality problems.
• Inflation began to rise sharply at the end of 2021 and has remained elevated through 2023. Small to medium-sized businesses may be impacted more during periods of high inflation, affecting loan repayments.
• Completing acquisitions may result in loss of key employees, disruptions, and inconsistencies affecting relationships.
• Paying an acquisition premium above fair market value could negatively impact the market price.
• Changes in accounting standards may impact financial statements, requiring restatements and affecting reputation.
• The passage of the Adjustable Interest Rate (LIBOR) Act may impact the company's instruments indexed to LIBOR. The replacement tool remains in question, affecting the value of LIBOR-based contracts.
• Issuing additional shares for acquisitions may lead to dilution and adversely affect stock price.
• Impairment of goodwill from acquisitions could result in charges to earnings and negative impacts.
• Failure in or breach of operational or security systems could disrupt business, damage reputation, and increase costs.
• The pending merger with Community West Bancshares poses risks. Failure to complete the merger could lead to adverse consequences, including negative market reactions and financial impacts.
• Agribusiness lending presents unique credit risks. The company's total gross loan portfolio was $33.16 million, with $1.034 billion in total loans and leases, including commercial loans.
• The company faces competition primarily from other banks in attracting and retaining qualified banking professionals. The loss of fee income, customer deposits, and funds could have a material adverse effect.
• The company may recognize losses on securities held in its portfolio if interest rates increase or economic conditions deteriorate. The carrying value of the securities portfolio was approximately $906.287 million as of December 31, 2023.