Risk Factors Update Summary

• The company is now considered to be in a liability-sensitive position, expecting a $10.5 million increase in net interest income with a 200 basis point decrease in short-term interest rates.
• The Federal Reserve increased the federal funds target rate seven times in 2022, totaling a 4.25% increase, with additional increases expected in 2023.
• Material additions to the allowance for credit losses could decrease net income significantly.
• The recent acquisition and future expansion may result in increased costs of doing business.
• Increased competition could require the company to increase rates on commercial real estate portfolios.
• The company's ability to grow certain loan types may be constrained due to regulatory guidance.
• Changes in accounting standards, including the implementation of the Current Expected Credit Loss methodology, could significantly affect financial reporting.