Pioneer Bancorp (PBFS) risk factors, FY2024 10-K

Risks Related to Changes in Macroeconomic Conditions, Interest Rates and Inflation

1. 01Our business may be adversely affected by economic downturns in our market area and the national economy
2. 02Changes in interest rates may reduce our profits
3. 03Inflation can have an adverse impact on our business and on our customers
4. 04Certain events involving the failure of financial institutions may adversely affect our business, and the market price of our common stock
5. 05Changes in market conditions, changes in discount rates, changes in mortality assumptions or lower returns on assets may increase required contributions to, and costs associated with, our tax-qualified defined benefit plan in future periods

Risks Related to Lending

1. 06We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability
2. 07Our loan portfolio consists of a high percentage of loans secured by commercial real estate. These loans carry a greater credit risk than loans secured by one- to four-family properties
3. 08A portion of our loan portfolio is comprised of commercial and industrial loans secured by accounts receivable, inventory, equipment or other business assets, the deterioration in value of which could increase the potential for future losses
4. 09We make and hold in our portfolio commercial construction loans, which are considered to have greater credit risk than residential loans made by financial institutions
5. 10Our allowance for credit losses on loan may not be sufficient to absorb losses in our loan portfolio
6. 11If our non-performing assets increase, our earnings will be adversely affected
7. 12A portion of our loan portfolio consists of loan participations secured by properties outside our market area. Loan participations may have a higher risk of loss than loans we originate because we are not the lead lender and we have limited control over credit monitoring

Risks Related to Legal, Regulatory, Fraud and Compliance Matters

1. 13We are subject to fraud and compliance risk
2. 14We are a defendant in a variety of litigation and other actions, which may have a material adverse effect on our financial condition and results of operations
3. 15We are subject to sanctions and other negative actions if regulatory agencies with supervisory authority over us determine that we failed to comply with applicable laws and regulations
4. 16Conversion to a national bank subjects the Bank to new and potentially heightened examination and reporting requirements that may increase our costs of operations and compliance
5. 17Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations will subject us to fines or sanctions
6. 18We are subject to the Community Reinvestment Act (“CRA”) and fair lending laws, and failure to comply with these laws could lead to material penalties
7. 19The level of our commercial real estate loan portfolio subjects us to additional regulatory scrutiny
8. 20We are subject to environmental liability risk associated with lending activities
9. 21Climate change and related legislative and regulatory initiatives may materially affect our business and results of operations
10. 22Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks

Risks Related to Accounting Matters

1. 23Changes in management’s estimates and assumptions may have a material impact on our consolidated financial statements and our financial condition or operating results
2. 24Changes in accounting standards could affect reported earnings
3. 25The cost of additional finance and accounting systems, procedures and controls in order to satisfy our public company reporting requirements has increased and will continue to increase our expenses

Risks Related to Liquidity

1. 26A lack of liquidity could adversely affect our financial condition and results of operations
2. 27Municipal deposits are price sensitive and could result in an increase in interest expense or funding fluctuations

Risks Related to Our Insurance and Wealth Management Businesses

1. 28Conditions in insurance markets could adversely affect our earnings
2. 29Involvement in wealth management creates risks associated with the industry
3. 30We may not be able to attract and retain wealth management clients

Risks Related to Our Securities Portfolio

1. 31Changes in the valuation of our securities portfolio may reduce our profits and our capital levels

Risks Related to Competition

1. 32Strong competition within our market area may reduce our profits and slow growth

Risks Related to Operations

1. 33We use a third party to originate residential mortgage loans
2. 34Our business strategy involves moderate growth, and our financial condition and results of operations may be adversely affected if we fail to grow or fail to manage our growth effectively
3. 35We continually encounter technological changes and the failure to understand and adapt to these changes could hurt our business
4. 36We are subject to stringent capital requirements, which may adversely impact our return on equity, require us to raise additional capital, or restrict us from paying dividends or repurchasing shares
5. 37Our success depends on attracting and retaining certain key personnel
6. 38Systems failures or breaches of our network security could subject us to increased operating costs as well as litigation and other liabilities
7. 39Our risk management framework may not be effective in mitigating risk and reducing the potential for significant losses
8. 40We are a community financial institution and our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance
9. 41Severe weather, acts of terrorism, geopolitical and other external events could impact our ability to conduct business

Risks Relating to Ownership of Our Common Stock

1. 42Pioneer Bancorp, MHC’s majority control of our common stock will enable it to exercise voting control over most matters put to a vote of stockholders and will prevent stockholders from forcing a sale or a second-step conversion transaction you may find advantageous
2. 43Our common stock is not heavily traded, and the stock price may fluctuate significantly
3. 44Federal Reserve Board regulations and policy effectively prohibit Pioneer Bancorp, MHC from waiving the receipt of dividends, which will likely preclude us from paying any dividends on our common stock
4. 45capital requirements, restrictions under Federal Reserve Board regulations and policy, our business strategy and other factors that our board of directors deems relevant
5. 46Various factors may make takeover attempts more difficult to achieve
6. 47We are an emerging growth company, and if we elect to comply only with the reduced reporting and disclosure requirements applicable to emerging growth companies, our common stock may be less attractive to investors