Central Bancompany (CBC) risk factors, FY2025 10-K

Other

1. 01We may not be able to measure and manage our credit risk adequately, which could adversely affect our profitability
2. 02Our allowance for credit losses may prove to be insufficient to absorb potential losses in our loan and lease portfolio
3. 03The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, other real estate owned, and repossessed personal property may not accurately describe the net value of the asset
4. 04We are subject to a variety of risks in connection with any sale of loans we may conduct

Market Risks

1. 05Our business may be adversely affected by unfavorable economic conditions generally, and in Missouri and our other Primary Markets in particular
2. 06Our business is significantly dependent on conditions in the real estate market, as a significant percentage of our loan and lease portfolio is secured by real estate, especially commercial real estate
3. 07Our business is subject to risk arising from our lending to small and mid-sized businesses
4. 08Our wealth management and trust business may be adversely affected by unfavorable economic and market conditions generally
5. 09Changes in interest rates and monetary policy may adversely affect our results of operations
6. 10We could recognize losses on investment securities held in our investment portfolio, particularly if interest rates increase or economic and market conditions deteriorate
7. 11Liquidity risks could affect operations and jeopardize our business, financial condition and results of operations
8. 12Loss of deposits could increase our funding costs
9. 13Our liquidity is dependent on dividends from The Central Trust Bank
10. 14We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions
11. 15We may need to raise additional capital in the future, and such capital may not be available when needed or at all

Operational Risks

1. 16The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition, results of operations, and brand
2. 17Employee misconduct or mistakes could expose us to significant legal liability and harm our brand
3. 18If our techniques for managing risks are ineffective, we may be exposed to material unanticipated losses
4. 19We depend on the accuracy and completeness of information about customers and counterparties
5. 20Our financial and accounting estimates and risk management framework rely on analytical forecasting and models
6. 21Accounting rules require us to make subjective determinations and use estimates, which may vary from actual results and materially impact our financial condition and results of operations
7. 22We are subject to risk arising from failure or circumvention of our controls and procedures
8. 23Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition

Legal, Regulatory and Compliance Risks

1. 24We are subject to extensive government regulation and supervision
2. 25We are subject to capital adequacy standards and, if we fail to meet these standards, we will be subject to restrictions on our ability to make capital distributions and other restrictions
3. 26We are required to act as a source of financial and managerial strength for our Bank in times of stress
4. 27Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings
5. 28We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act of 1977 and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions
6. 29Increases in FDIC insurance premiums and assessments may adversely affect our results of operations
7. 30Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities
8. 31We face a risk of non-compliance and enforcement actions with the federal Bank Secrecy Act of 1970 and other anti-money laundering and counter terrorist financing statutes and regulations
9. 32We are subject to government regulation and oversight relating to data and privacy protection
10. 33We may be subject to regulatory exam findings, claims, and litigation pertaining to our fiduciary responsibilities
11. 34We are planning to terminate our frozen defined benefit pension plan, which could expose us to significant costs or delays

Strategic Risks

1. 35Geographic concentration in our existing markets may unfavorably impact our long-term growth
2. 36New lines of business, products or services may subject us to additional risks
3. 37We may not be able to successfully execute our strategic plan
4. 38Future acquisitions and expansion activities may not be successful or may disrupt our business, dilute shareholder value and adversely affect our operating results
5. 39Our future success is dependent on our ability to compete effectively in a highly competitive industry and market areas
6. 40We continually encounter technological changes and the failure to understand and adapt to these changes could hurt our business
7. 41We are dependent on our management team and key employees
8. 42We are exposed to risks of harm to our brand, which could negatively impact investor and customer confidence

Risks Related to Our Common Stock

1. 43The Voting Trust has significant control over us, and its interests may conflict with ours or those of other investors in the future
2. 44We are a “controlled company” within the meaning of Nasdaq rules and, as a result, qualify for exemptions from certain corporate governance requirements, and our shareholders do not have the same protections afforded to shareholders of companies that are subject to such requirements
3. 45The market price of shares of our common stock may be volatile or may decline regardless of our operating performance, which could cause the value of an investment in our common stock to decline
4. 46We qualify as an “emerging growth company,” and the reduced public company reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors
5. 47Fulfilling our public company financial reporting and other regulatory obligations as a public company will be expensive and time consuming and may strain our resources
6. 48Certain federal banking laws, Missouri laws and provisions of our organizational documents may discourage or delay acquisition attempts for us that our shareholders might consider favorable