Peoples Bancorp of North Carolina (PEBK) risk factors, FY2024 10-K

Other

1. 01Unfavorable economic conditions could adversely affect our business
2. 02Inflation can have an adverse impact on our customers and their ability to repay
3. 03Recessionary conditions could result in increases in our level of nonperforming loans and/or reduce demand for our products and services, which would lead to lower revenue, higher loan losses and lower earnings
4. 04We are subject to credit risk and may incur losses if loans are not repaid
5. 05Our loan portfolio includes loans with a higher risk of loss
6. 06A significant amount of the Bank’s business is concentrated in lending which is secured by property located in the Catawba Valley and surrounding areas
7. 07Our use of appraisals in deciding whether to make a loan on or secured by real property does not ensure the value of the real property collateral
8. 08Our allowance for credit losses may be insufficient and could therefore reduce earnings
9. 09If our non-performing assets increase, our earnings will suffer
10. 10Changes in interest rates affect profitability and assets
11. 11A small number of large deposit relationships provide a significant level of funding for the Bank
12. 12We may not be able to retain or grow our deposit base, which could adversely impact our funding costs
13. 13Increases in FDIC insurance premiums may adversely affect our net income and profitability
14. 14Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations
15. 15Our business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, our business and a negative impact on our results of operations
16. 16In the normal course of business, we process large volumes of transactions involving millions of dollars. If our internal controls fail to work as expected, if our systems are used in an unauthorized manner, or if our employees subvert our internal controls, we could experience significant losses
17. 17Financial services companies depend on the accuracy and completeness of information about customers and counterparties
18. 18We are subject to extensive regulation, which could have an adverse effect on our operations
19. 19We face a risk of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations and related enforcement actions
20. 20We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties
21. 21Consumers may decide not to use banks to complete their financial transactions
22. 22The soundness of other financial institutions could adversely affect us
23. 23Liquidity risk could impair our ability to fund operations and jeopardize our financial condition

Risks related to decline in value of investment securities portfolio

1. 24We could experience losses due to competition with other financial institutions
2. 25industry and general economic trends
3. 26Failure to keep pace with technological change could adversely affect our business
4. 27We rely on other companies to provide key components of our business infrastructure
5. 28Negative publicity could damage our reputation
6. 29Loss of key personnel could adversely impact results
7. 30We may be subject to examinations by taxing authorities which could adversely affect our results of operations
8. 31Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition
9. 32Our internal controls may be ineffective
10. 33Credit losses on investment securities or inability to realize deferred tax assets could require charges to earnings, which could result in a negative impact on our results of operations
11. 34Because we engage in lending secured by real estate and may be forced to foreclose on the collateral property and own the underlying real estate, we may be subject to the increased costs associated with the ownership of real property, which could result in reduced net income
12. 35We are subject to losses due to errors, omissions or fraudulent behavior by our employees, clients, counterparties or other third parties
13. 36Our articles of incorporation and bylaws, and certain banking laws may have an anti-takeover effect

RISKS RELATED TO THE COMPANY’S STOCK

1. 37Our stock price can be volatile
2. 38Future sales of our stock by our shareholders or the perception that those sales could occur may cause our stock price to decline
3. 39Our common stock is not FDIC insured
4. 40We may reduce or eliminate dividends on our common stock
5. 41We may need additional access to capital, which we may be unable to obtain on attractive terms or at all