Smartfinancial (SMBK) risk factors, FY2024 10-K

Risks Related to Our Industry

1. 01Our net interest income could be negatively affected by interest rate adjustments by the Federal Reserve Board
2. 02decrease by approximately $3.4 million over a 12-month period. If interest rates immediately decreased by 200 basis points, we could expect net interest income to increase by approximately $1.5 million over the next 12-month period
3. 03We are dependent on our information technology and telecommunications systems and third-party servicers, and systems failures, interruptions or breaches of security could have an adverse effect on our financial condition and results of operations
4. 04We 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
5. 05The Federal Reserve may require us to commit capital resources to support the Bank
6. 06Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings

Risks Related to Our Company

1. 07If our allowance for credit losses is not sufficient to cover actual losses, our earnings will be adversely affected
2. 08Negative developments in the banking industry could adversely affect our current and projected business operations and our financial condition and results of operations
3. 09Our success depends significantly on economic conditions in our market areas
4. 10Competition from financial institutions and other financial service providers may adversely affect our profitability
5. 11The development and use of artificial intelligence (“AI”) presents risks and challenges that may adversely impact our business
6. 12Our organic loan and lease growth may be limited by regulatory constraints
7. 13To the extent that we are unable to identify and consummate attractive acquisitions, or increase loans and leases through organic loan and lease growth, we may be unable to successfully implement our growth strategy, which could materially and adversely affect us
8. 14We expect to continue to expand in our current markets and in other select markets through additional branches or through acquisitions of all or part of other financial institutions. These types of expansions involve various risks, including the risks detailed below
9. 15We may face risks with respect to future acquisitions
10. 16Our concentration in loans secured by real estate, particularly commercial real estate and construction and development, is subject to risks that could adversely affect our results of operations and financial condition
11. 17Our largest loan relationships currently make up a significant percentage of our total loan portfolio
12. 18Declines in the businesses or industries of our customers could cause increased credit losses and decreased loan balances, which could adversely affect our financial results
13. 19Our use of appraisals in deciding whether to make a loan secured by real property does not ensure the value of the real property collateral
14. 20Liquidity risk could impair our ability to fund our operations and jeopardize our financial condition
15. 21We could recognize losses on securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate
16. 22We face additional risks due to our increase in mortgage banking activities that have and could negatively impact our net income and profitability
17. 23Any expansion into new lines of business might not be successful
18. 24Any deficiencies in our financial reporting or internal controls could materially and adversely affect us, including resulting in material misstatements in our financial statements, and could materially and adversely affect the market price of our common stock
19. 25Inability to retain senior management and key employees or to attract new experienced financial services professionals could impair our relationship with our customers, reduce growth and adversely affect our business
20. 26Employee misconduct could expose us to significant legal liability and reputational harm
21. 27We may be adversely affected by the soundness of other financial institutions

Risks Related to Our Stock

1. 28Our ability to declare and pay dividends is limited
2. 29Even though our common stock is currently traded on the New York Stock Exchange (“NYSE”), it has less liquidity than many other stocks quoted on a national securities exchange
3. 30We may issue additional shares of stock or equity derivative securities, including awards to current and future executive officers, directors and employees, which could result in the dilution of shareholders’ investment
4. 31Corporate responsibility risks could adversely affect our reputation and shareholder, employee, client and third party relationships and may negatively affect our stock price
5. 32Our securities are not FDIC insured
6. 33Anti-takeover laws and certain agreements and charter provisions may adversely affect the price of our common stock