Risk Factors Update Summary

• "Need to bolster information security measures to address crucial vulnerabilities or exposures. This could result in financial losses."
• Elevated instances of problematic loan delinquencies, assets, and foreclosures could increase, impacting overall loans or assets.
• "Transition from LIBOR to alternative indices. At December 31, 2022, 2.3% of total deposits were from legal cannabis-related businesses."
• An increase in the allowance for loan credit losses on loans may occur, potentially affecting profits.
• Any failure or breach in security systems, including cyber-attacks, could disrupt operations, leading to financial losses.
• "Recorded a one-time upward adjustment to the ACL on loans of $760 thousand and an ACL on unfunded loan commitments of $695 thousand."
• A rise in interest rates may lead to increased loan prepayments, affecting income and borrower costs.
• Changes in the valuation of securities could result in credit losses, impacting financial condition and capital levels.
• A sustained change in market interest rates could positively impact financial condition, liquidity, and operational results.
• The continued development of internet and mobile banking channels heightens exposure to cyber risks.