Risk Factors Update Summary

• Pending merger with Cambridge introduces uncertainties and risks, including potential delays and expenses. This might result in significant unexpected expenses associated with the merger and integration.
• Increase in FDIC special assessment expense from $10.8 million to $20.4 billion.
• Increases in interest rates may have a material adverse effect on various areas of the business. For example, the net interest income was $142.2 million (1.05% of total loans) at December 31, 2022, and increased to $149.0 million (1.07% of total loans) at December 31, 2023.
• Increase in FDIC Deposit Insurance Fund reserve ratio from 1.27% to 1.35%.
• Failure to retain key employees post-merger could result in adverse effects on operations and financial results. The integration process could lead to the loss of key employees and disruptions in ongoing businesses.
• Potential increase in compensation deductions from $1 million to $1.5 million by 2027.
• Commercial loans, especially those secured by commercial real estate, are riskier and constitute a significant portion of the loan portfolio. Loans secured by real estate increased from $9.9 billion (71.8% of total loans) at December 31, 2022, to $10.5 billion (75.0% of total loans) at December 31, 2023.
• Changes to and replacement of LIBOR may adversely impact financial condition or results of operations. Hedging against interest rate exposure may be necessary to mitigate risks.
• The Company may need to raise additional capital to meet regulatory requirements or support growth. Failure to raise capital when needed could impair operations and financial condition.
• Legal risks from regulatory investigations and private actions could lead to a high level of litigation, potentially reducing revenue. The Company faces significant legal risks that may result in increased litigation costs.