First Community (FCCO) risk factors, FY2024 10-K

Other

1. 01Our business may be adversely affected by economic conditions generally
2. 02Our decisions regarding credit risk and allowance for credit losses may materially and adversely affect our business
3. 03We may have higher credit losses than we have allowed for in our allowance for credit losses
4. 04We have a concentration of credit exposure in commercial real estate and challenges faced by the commercial real estate market could adversely affect our business, financial condition, and results of operations
5. 05Imposition of limits by the bank regulators on commercial and multi-family real estate lending activities could curtail our growth and adversely affect our earnings
6. 06Repayment of our commercial business loans is often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value
7. 07Our focus on lending to small to mid-sized community-based businesses may increase our credit risk
8. 08Our underwriting decisions may materially and adversely affect our business
9. 09We depend on the accuracy and completeness of information about clients and counterparties and our financial condition could be adversely affected if we rely on misleading information
10. 10If we fail to effectively manage credit risk and interest rate risk, our business and financial condition will suffer
11. 11Changes in prevailing interest rates may reduce our profitability
12. 12Changes in the financial markets could impair the value of our investment portfolio
13. 13The Bank is subject to strict capital requirements, which could be amended to be more stringent, in the future

Risks Related to Our Industry

1. 14Inflationary pressures and rising prices may affect our results of operations and financial condition
2. 15The Federal Reserve has implemented significant economic strategies that have affected interest rates, inflation, asset values, and the shape of the yield curve
3. 16Adverse developments affecting the financial services industry, such as the 2023 and 2024 bank failures or concerns involving liquidity, may have a material adverse effect on our operations
4. 17Higher FDIC deposit insurance premiums and assessments could adversely affect our financial condition
5. 18We could experience a loss due to competition with other financial institutions or nonbank companies
6. 19We may be adversely affected by the soundness of other financial institutions
7. 20Failure to keep pace with technological change could adversely affect our business
8. 21The development and use of AI presents risks and challenges that may adversely impact our business
9. 22New lines of business or new products and services may subject us to additional risk
10. 23Consumers may decide not to use banks to complete their financial transactions
11. 24We use brokered deposits which may be an unstable and/or expensive deposit source to fund earning asset growth
12. 25Our ability to obtain brokered deposits as an additional funding source could be limited

Risks Related to Our Strategy

1. 26We may be adversely affected by risks associated with future mergers and acquisitions, including execution risk, which could disrupt our business and dilute shareholder value
2. 27We may be exposed to difficulties in combining the operations of acquired businesses into our own operations, which may prevent us from achieving the expected benefits from our acquisition activities
3. 28New or acquired banking office facilities and other facilities may not be profitable

Risks Related to Our Human Capital

1. 29We are dependent on key individuals, and the loss of one or more of these key individuals could curtail our growth and adversely affect our prospects

Operational Risks

1. 30Our information systems may experience failure, interruption or breach in security
2. 31Increased fraud risk could adversely impact our business
3. 32Our use of third party vendors and our other ongoing third party business relationships are subject to increasing regulatory requirements and attention
4. 33Negative public opinion surrounding the Bank and the financial institutions industry generally could damage our reputation and adversely impact our earnings

Legal, Accounting, Regulatory and Compliance Risks

1. 34We are subject to extensive regulation that could restrict our activities, have an adverse impact on our operations, and impose financial requirements or limitations on the conduct of our business
2. 35Federal, state, and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of doing business
3. 36We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties
4. 37Changes in accounting standards could materially affect our financial statements
5. 38The Federal Reserve may require us to commit capital resources to support the Bank
6. 39We face risks related to the adoption of future legislation and potential changes in federal regulatory agency leadership, policies, and priorities
7. 40We are party to various claims and lawsuits incidental to our business. Litigation is subject to many uncertainties such that the expenses and ultimate exposure with respect to many of these matters cannot be ascertained
8. 41From time to time, we are, or may become, involved in suits, legal proceedings, information-gatherings, investigations and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences
9. 42We could be adversely affected by changes in tax laws and regulations or the interpretations of such laws and regulations
10. 43Our ability to realize deferred tax assets may be reduced, which may adversely impact our results of operations

Risks Related to an Investment in Our Common Stock

1. 44Our ability to pay cash dividends is limited, and we may be unable to pay future dividends even if we desire to do so
2. 45Our stock price may be volatile, which could result in losses to our investors and litigation against us
3. 46Future sales of our stock by our shareholders or the perception that those sales could occur may cause our stock price to decline
4. 47Provisions of our articles of incorporation and bylaws, South Carolina law, and state and federal banking regulations, could delay or prevent a takeover by a third party
5. 48An investment in our common stock is not an insured deposit
6. 49Evolving ESG expectations could increase costs and risks
7. 50Climate change could have a material adverse impact on us and our customers
8. 51Our historical operating results may not be indicative of our future operating results
9. 52A downgrade of the U.S. credit rating could negatively impact our business, results of operations and financial condition