CoastalSouth Bancshares (COSO) risk factors, FY2025 10-K

RISKS RELATED TO ECONOMIC CONDITIONS

1. 01Changes and instability in economic conditions, geopolitical matters and financial markets, including a contraction of economic activity, could adversely impact our business, results of operations and financial condition
2. 02Recessionary conditions and economic factors could result in heightened credit risk and increases in our level of nonperforming loans which could adversely impact our results of operations and financial condition
3. 03We are exposed to higher credit and concentration risk from our commercial real estate, commercial and industrial and commercial construction lending
4. 04Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability
5. 05Our decisions regarding credit risk could be inaccurate and our allowance for credit losses may be inadequate, which could have a material adverse effect on our business, financial condition, results of operations and future prospects
6. 06Our largest loan relationships currently make up a significant percentage of our total loans held-for-investment portfolio
7. 07We may have more credit risk and higher credit losses to the extent loans are concentrated by location or industry of the borrowers or collateral
8. 08We are subject to environmental liability risk associated with our lending activities
9. 09Liquidity is essential to our business model and a lack of liquidity, or an increase in the cost of liquidity, could materially impair our ability to fund our operations and jeopardize our results of operation, financial condition and cash flows
10. 10The proportion of our deposit account balances that exceed FDIC insurance limits may expose us to enhanced liquidity risk in times of financial distress
11. 11We are subject to interest rate risk, which could adversely affect our profitability
12. 12A flat or inverted yield curve may reduce our net interest margin and adversely affect our loan and investment portfolios

OPERATIONAL RISKS

1. 13We could experience losses due to competition with other financial institutions and non-banks
2. 14customer satisfaction with our level of service
3. 15We may not be able to overcome the integration and other risks associated with any future acquisitions, which could have an adverse effect on our ability to implement our business strategy
4. 16regulatory timeframes for review of applications may limit the number and frequency of transactions we may be able to consummate
5. 17Failure to keep pace with technological change could adversely affect our business
6. 18New lines of business or new products and services may subject us to additional risk
7. 19Our residential mortgage warehouse lending program is subject to various risks that could adversely impact our results of operations and financial condition
8. 20SBA lending and other government guaranteed lending is an important part of our business. These lending programs are dependent upon the federal government, and we face specific risks associated with originating SBA and other government guaranteed loans
9. 21Fraud is a major, and increasing, operational risk for us and all banks
10. 22Our internal controls may be ineffective
11. 23We may not be able to attract and retain skilled people
12. 24Loss of key employees may disrupt relationships with certain customers
13. 25Our business continuity plans or data security systems could prove to be inadequate, resulting in Cyberattacks, other data or security breaches or a material interruption in, or disruption to, our business and a negative impact on our results of operations
14. 26We are dependent upon outside third parties for the processing and handling of our records and data
15. 27We may be adversely affected by the soundness of other financial institutions

LEGAL AND REGULATORY RISKS

1. 28Our industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a materially adverse effect on our operations
2. 29Monetary policies and regulations of the Federal Reserve could have an adverse effect on our business, financial condition and results of operations
3. 30The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted
4. 31Federal and state regulators periodically examine our business and may require us to remediate adverse examination findings or may take enforcement action against us
5. 32We are subject to stringent capital requirements, which could have an adverse effect on our operations
6. 33registered under the Exchange Act. However, there can be no assurance that the Federal Reserve will continue this practice, and we could lose our status as a small bank holding company for these purposes
7. 34We are subject to numerous “fair and responsible banking” laws and other laws and regulations designed to protect consumers, and failure to comply with these laws could lead to a wide variety of sanctions
8. 35We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or another incident involving personal, confidential, or proprietary information of individuals could damage our reputation and otherwise adversely affect our business
9. 36We are a bank holding company and are dependent upon the Bank for cash flow, and the Bank’s ability to make cash distributions is restricted
10. 37The Bank is our principal asset, and all of the Bank’s outstanding stock has been pledged to secure the Line of Credit to the Company from an unrelated lender
11. 38The Federal Reserve may require us to commit capital resources to support the Bank
12. 39We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations
13. 40Our Bank’s FDIC deposit insurance premiums and assessments may increase

RISKS RELATED TO OUR COMMON STOCK

1. 41The trading of our common stock may be characterized by low trading volume. The value of your common stock may be subject to sudden decreases due to the volatility of the price of our common stock
2. 42and other developments affecting our competitors or us
3. 43An investment in our common stock is not an insured deposit and may lose value
4. 44The reduced disclosures and relief from certain other significant disclosure requirements that are available to emerging growth companies may make our common stock less attractive to investors
5. 45In addition, even if we comply with the greater obligations of public companies that are not emerging growth companies, we may avail ourselves of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as we are an emerging growth company
6. 46Our dividend policy may change without notice and any payment of dividends in the future is subject to the discretion of our Board of Directors
7. 47If equity research analysts do not publish research or reports about our business, or if they do publish such reports but issue unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline
8. 48If a substantial number of shares become available for sale and are sold in a short period of time, the market price of our common stock could decline
9. 49A future issuance of stock could dilute the value of our common stock
10. 50Our common stock is subordinate to our existing and future indebtedness
11. 51We may issue shares of preferred stock in the future which adversely affect holders of our common stock and depress the price of our common stock
12. 52Our Articles of Incorporation and Bylaws, and certain banking laws applicable to us, could have an antitakeover effect that decreases our chances of being acquired, even if our acquisition is in our shareholders’ best interests
13. 53An investment in our common stock is not an insured deposit and is not guaranteed by the FDIC, so you could lose some or all of your investment