MetroCity Bankshares (MCBS) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01A decline in general business and economic conditions and any regulatory responses to such conditions could have a material adverse effect on our business, financial position, results of operations and growth prospects
2. 02We face strong competition from financial services companies and other companies that offer commercial and retail banking services, which could harm our business
3. 03Fluctuations in interest rates have impacted net interest income and may otherwise negatively impact our financial condition and results of operations
4. 04Inflation could negatively impact our business, our profitability and our stock price
5. 05Negative developments in the banking industry could adversely affect our current and projected business operations and our financial condition and results of operations
6. 06Our future success is largely dependent upon our ability to successfully execute our business strategy
7. 07Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations
8. 08Our business depends on our ability to successfully manage our asset quality and credit risk
9. 09Because a significant portion of our loan portfolio is comprised of commercial and residential real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses
10. 10The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and riskier
11. 11The non-guaranteed portion of SBA loans that we retain on our balance sheet, as well as the guaranteed portion of SBA loans that we sell, could expose us to various credit and default risks
12. 12We may not be able to meet our unfunded credit commitments, or adequately reserve for losses associated with our unfunded credit commitments
13. 13We use brokered deposits which may be an unstable and/or expensive deposit source to fund earning asset growth
14. 14We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects
15. 15Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future
16. 16Our provision and allowance for credit losses may prove to be insufficient to absorb potential losses in our loan portfolio
17. 17Decreased residential mortgage origination, volume and pricing decisions of competitors may adversely affect our profitability
18. 18We could recognize losses on securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate
19. 19New lines of business or new products and services may subject us to additional risks
20. 20We focus on marketing our services to a limited segment of the population and any adverse change impacting such segment is likely to have an adverse impact on us
21. 21The costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, operating results and financial condition
22. 22Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our business and the value of our common stock
23. 23Our risk management framework may not be effective in mitigating risks and/or losses to us
24. 24We have a continuing need for technological change, and we may not have the resources to effectively implement new technology or we may experience operational challenges when implementing new technology
25. 25System failure or compromises of our network security could subject us to increased operating costs as well as litigation and other liabilities
26. 26Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations
27. 27The developments and use of artificial intelligent (AI) presents risks and challenges that may adversely impact our business
28. 28We depend on the accuracy and completeness of information provided by customers and counterparties and any misrepresented information could adversely affect our business, financial condition and results of operations
29. 29Our accounting estimates and risk management processes rely on analytical and forecasting models
30. 30Changes in accounting standards could materially impact our financial statements
31. 31Failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business and stock price
32. 32We may be adversely affected by the soundness of other financial institutions

Risks Related to Legislative and Regulatory Events

1. 33We are subject to extensive government regulation that could limit or restrict our activities, which in turn may adversely impact our ability to increase our assets and earnings
2. 34Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings
3. 35Changes to monetary policy by the Federal Reserve could adversely impact our results of operations
4. 36We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties
5. 37The Federal Reserve may require us to commit capital resources to support the Bank
6. 38We could face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations
7. 39Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings

Risks Related to Our Common Stock

1. 40An investment in our common stock is not an insured deposit and may lose value
2. 41Environmental, social and governance (“ESG”) and diversity, euity and inclusion (“DEI”) risks could adversely affect our reputation and shareholder, employee, client and third party relationships and may negatively affect our stock price
3. 42Our dividend policy may change, and consequently, your only opportunity to achieve a return on your investment may be if the price of our common stock appreciates
4. 43We may need to raise additional capital in the future
5. 44We have the ability to incur debt and pledge our assets, including our stock in the Bank, to secure that debt