Risk Factors Dashboard
Once a year, publicly traded companies issue a comprehensive report of their business, called a 10-K. A component mandated in the 10-K is the ‘Risk Factors’ section, where companies disclose any major potential risks that they may face. This dashboard highlights all major changes and additions in new 10K reports, allowing investors to quickly identify new potential risks and opportunities.
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Item 1A.Risk Factors
Enterprise Risk Management Process Integration
The Bank maintains a written Information Security Program based on a collection of information security policies, regulatory requirements, standards, guidelines, processes, procedures, third-party recommendations, and industry best practices. The purpose of this Program is to establish a company-wide approach for assessing and protecting the integrity, availability, and confidentiality of the Bank’s information assets.
Third-party Access
We are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition. Although we have a robust cybersecurity program that is designed to assess, identify, and manage material risks from cybersecurity threats, we cannot provide absolute surety that we have properly identified or mitigated all vulnerabilities or risks of incidents. We, and the third parties that we engage, are subject to constant and evolving threats of attack and cybersecurity incidents may be difficult to detect for periods of time. A cybersecurity incident could harm our business strategy, results of operations, financial condition, reputation, and/or subject us to regulatory actions or litigation which may result in fines, judgments or indictments.
provides general oversight over the information security and technology programs. The TISC oversees the technology and cybersecurity strategies and their alignment with business strategies, the effectiveness of the information security program, monitors the results of third-party testing and risk assessments and responses to breaches of customer data, among other project management, cybersecurity, and business continuity oversight functions. The Committee meets five times during the year, or more as needed. An information security advisor participates in the meetings and is available to provide additional insights into cybersecurity methodologies, best practices, threat trends, and resource planning.
In October 2024, the Company hired a new CISO who is a Certified Information Systems Security Professional with over 12 years in banking experience with a background in cybersecurity, information security, and network administration. The former CISO, who has over 18 years of banking experience, is a Certified Information Systems Security Professional, and has been involved with the management of information and cybersecurity for over ten years, was promoted to the Chief Risk Officer role in October 2024. The CISO regularly reports to the Board Technology & Information Security Committee on information and cybersecurity strategy, testing, training, policies, procedures, cybersecurity insurance, and overall effectiveness of the Information Security Program and would report and discuss material incidents, and ongoing mitigation status, if any should occur. The CISO is the chair of Management’s Information Security Committee that meets on a monthly basis to evaluate threats, incidents, defense system effectiveness, accepted risks, results of third-party cyber assessments and engagements, and the overall adequacy of the cybersecurity program . In addition, the Chief Information Officer has over 15 years of experience in managing bank technologies, information security, and risk management, and collaborates in supporting the Information Security Program. The CISO reports directly to the Chief Risk Officer and meets on a monthly basis with the Executive Management team to discuss cybersecurity risk management matters.
An investment in the Company's common stock is subject to a variety of risks and uncertainties including, without limitation, those set forth below, any of which could cause the Company's actual results to vary materially from recent results or from the other forward-looking statements that the Company may make from time to time in news releases, periodic reports and other written or oral communications. This Form 10-K is qualified in its entirety by these risk factors.
Realization of any of the risks outlined in the following sections, the Company's inability to identify, respond and correct a
breakdown in the integrity of the design or functioning of the Company’s internal controls and contingency plan, or additional risks and uncertainties that management is not aware of, or may currently deem immaterial, or unanticipated Merger related costs may impair the Company's business in a variety of ways, including, but not limited to, any one or a combination of the following consequences: higher than anticipated Merger related costs or penalties if Enterprise was to cancel the Merger, loss of assets; an interruption in the ability to conduct business and process transactions; loss of customer business; loss of key personnel; expose customers' personal information to unauthorized parties; additional regulatory scrutiny and potential enforcement actions and/or penalties against the Company or the Bank; damage the Company's reputation; expose the Company to civil litigation and possible financial liability; result in unanticipated charges against capital; increase operational costs; decrease revenue; restrict funding sources, which could adversely impact the Company's ability to meet cash needs; force the Company to liquidate investments or other assets; limit growth and branch network expansion; close locations or reduce staffing; or limit permissible activities. As a result, the Company's overall business, financial condition, results of operations, capital position, ability to pay dividends on outstanding common stock, liquidity position, and financial performance could be materially and adversely affected. If this were to happen, the value of the Company's common stock could decline significantly, and shareholders could lose some or all their investment.
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The material risks and uncertainties that management believes may affect the Company are outlined below. These risks and uncertainties are not listed in any order of priority and are not necessarily the only ones facing the Company.
RISK MANAGEMENT CONTROLS
Risk Management Controls and Procedures Could Fail or Be Circumvented
Management regularly reviews and updates the Company's internal controls, corporate governance policies, Information Security Program, compensation policies, Code of Business Conduct and Ethics and security controls to prevent and detect errors and potential monetary losses, loss of confidential information and data, denial of service attacks and loss of physical assets by theft, malicious destruction or damage, fraud, or robbery from both internal and external, physical or cyber sources.
The Company is at risk of ineffective design of internal controls, any circumvention of the Company's internal controls and procedures, whether intentional or unintentional, or failure to comply with regulations related to controls and procedures, or failure to adequately execute controls and procedures, whether by employees, management, directors, or external elements, or any illegal activity conducted by a Bank customer or employee.
RISKS RELATED TO THE MERGER
Because the market price of Independent common stock will fluctuate, Enterprise shareholders cannot be sure of the trading price of the stock portion of the Merger Consideration they will receive.
In the Merger, each share of Enterprise common stock issued and outstanding immediately prior to the effective time, except for (i) shares held as treasury stock or (ii) owned directly by Independent (other than, in the case of (ii), shares held in trust or custodial accounts, managed accounts and the like or shares held in satisfaction of a debt previously contracted), will be converted into the right to receive (i) 0.60 of a share of Independent common stock and (ii) $2.00 in cash. This exchange ratio is fixed and will not be adjusted for changes in the market price of either Independent common stock or Enterprise common stock. Changes in the price of Independent common stock between now and the time of the Merger will affect the value that Enterprise shareholders will receive in the Merger. Neither Independent nor Enterprise is permitted to terminate the Merger Agreement as a result of any increase or decrease in the market price of Independent common stock or Enterprise common stock.
Stock price changes may result from a variety of factors, including general market and economic conditions, changes in Independent’s businesses, operations and prospects, and regulatory considerations, many of which are beyond Enterprise’s and Independent’s control. At the time of the Enterprise special meeting to vote on the Merger, Enterprise shareholders will not know the market value of the consideration that Enterprise shareholders will receive at the effective time. You should obtain current market quotations for shares of Independent common stock and for shares of Enterprise common stock.
The market price of Independent common stock after the Merger may be affected by factors different from those currently affecting the shares of Enterprise common stock or Independent common stock.
In the Merger, Enterprise shareholders will become Independent shareholders. Independent’s business differs from that of Enterprise. Accordingly, the results of operations of Independent and the market price of Independent common stock after the completion of the Merger may be affected by factors different from those currently affecting the independent results of operations of each of Independent and Enterprise.
Enterprise will be subject to business uncertainties and contractual restrictions while the Merger is pending.
Uncertainty about the effect of the Merger on employees and customers may have an adverse effect on Enterprise and, consequently, on Independent. These uncertainties may impair Enterprise’s ability to attract, retain and motivate key personnel until the Merger is consummated, and could cause customers and others that deal with Enterprise to seek to change existing business relationships with Enterprise. Retention of certain employees may be challenging during the pendency of the Merger, as certain employees may experience uncertainty about their future roles with Independent. If key employees depart because of issues relating to the uncertainty or difficulty of integration or a desire not to remain with Independent, Independent’s business following the Merger could be harmed. In addition, the Merger Agreement restricts Enterprise from taking certain actions without the consent of Independent until the Merger occurs, and generally requires Enterprise to continue its operations in the ordinary course, until completion of the Merger. These restrictions may prevent Independent and Enterprise from pursuing attractive business opportunities that may arise prior to the completion of the Merger.
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Independent may fail to realize all of the anticipated benefits of the Merger, particularly if the integration of Independent’s and Enterprise’s businesses is more difficult than expected.
The success of the Merger will depend, in part, on our ability to successfully combine the businesses of Independent and Enterprise. Independent may fail to realize some or all of the anticipated benefits of the transaction if the integration process takes longer or is more costly than expected. Furthermore, any number of unanticipated adverse occurrences for either the business of Enterprise or Independent may cause us to fail to realize some or all of the expected benefits. The integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the Merger. Each of these issues might adversely affect Independent, Enterprise or both during the transition period, resulting in adverse effects on Independent following the Merger. As a result, revenues may be lower than expected or costs may be higher than expected and the overall benefits of the Merger may not be as great as anticipated.
Independent may be unable to retain Independent and/or Enterprise personnel successfully after the Merger is completed.
The success of the Merger will depend in part on Independent’s ability to retain the talents and dedication of key employees currently employed by Independent and Enterprise. It is possible that these employees may decide not to remain with Independent or Enterprise, as applicable, while the Merger is pending or with Independent after the Merger is completed. If Independent and Enterprise are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, Independent and Enterprise could face disruptions in their operations, loss of existing customers, loss of key knowledge, expertise or know-how and unanticipated additional recruitment costs. In addition, following the Merger, if key employees terminate their employment, Independent’s business activities may be adversely affected, and management’s attention may be diverted from successfully integrating Independent and Enterprise to hiring suitable replacements, all of which may cause Independent’s business to suffer. In addition, Independent and Enterprise may not be able to locate or retain suitable replacements for any key employees who leave either company.
Independent and Enterprise are expected to incur significant costs related to the Merger and integration.
Independent and Enterprise have incurred and expect to incur significant, non-recurring costs in connection with negotiating the Merger Agreement and closing the Merger. In addition, Independent will incur integration costs following the completion of the Merger as Independent integrates the Enterprise business, including facilities and systems consolidation costs and employment-related costs.
Although Independent and Enterprise each expect the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the business, which should allow Independent and Enterprise to offset integration-related costs over time, there can be no assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these transaction and integration costs in the near term or at all. Independent and Enterprise may also incur additional costs to maintain employee morale and to retain key employees. Independent and Enterprise will also incur significant legal, financial advisory, accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the Merger. Some of these costs are payable regardless of whether the Merger is completed.
The Merger Agreement limits Enterprise’s ability to pursue alternatives to the Merger.
The Merger Agreement contains provisions that limit Enterprise’s ability to solicit, initiate, encourage or take any actions to facilitate competing third-party proposals to acquire all or substantially all of Enterprise, subject to certain exceptions relating to the exercise of fiduciary duties by the Enterprise board of directors. These provisions, which include a $22,488,000 termination fee payable under certain circumstances, might discourage a potential competing acquirer that might have an interest in acquiring all or substantially all of Enterprise from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the Merger, or might result in a potential competing acquirer proposing to pay a lower per share price to acquire Enterprise than it might otherwise have proposed to pay.
Regulatory approvals may not be received, may take longer to receive than expected or may impose burdensome conditions that are not presently anticipated.
Before the Merger may be completed, certain approvals or consents must be obtained from the various bank regulatory and other authorities of the United States and the Commonwealth of Massachusetts. These governmental entities, including the Federal Reserve Board, the FDIC and the Massachusetts Division of Banks, may impose conditions on the completion of
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the Merger or require changes to the terms of the Merger. While Independent and Enterprise do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the Merger or imposing additional costs on or limiting the revenues of Independent following the Merger, any of which might have a material adverse effect on Independent following the Merger. Independent is not obligated to complete the Merger if the regulatory approvals received in connection with the completion of the Merger include any conditions or restrictions that would constitute a “materially burdensome regulatory condition,” as defined in the Merger Agreement.
There can be no assurance as to whether the regulatory approvals will be received or the timing of the approvals.
Failure to complete the Merger could negatively impact the future business and financial results of Enterprise.
If the Merger is not completed for any reason, including the failure to receive the requisite Enterprise vote, the ongoing business of Enterprise may be adversely affected and Enterprise will be subject to several risks, including the following:
•Enterprise may experience negative reactions from the financial markets, including negative impacts on the market price of Enterprise common stock;
•the manner in which industry contacts, business partners and other parties perceive Enterprise may be negatively impacted, which in turn could affect Enterprise’s marketing operations or their ability to compete for new business or obtain renewals in the marketplace more broadly;
•Enterprise may experience negative reactions from employees;
•Enterprise may be required, under certain circumstances, to pay Independent a termination fee of $22,488,000 under the Merger Agreement;
•Enterprise will be required to pay certain costs relating to the Merger, whether or not the Merger is completed, such as legal, accounting, financial advisor and printing fees;
•under the Merger Agreement, Enterprise is subject to certain restrictions on the conduct of its business prior to completion of the Merger, which may adversely affect its ability to execute certain of its business strategies; and
•matters relating to the Merger may require substantial commitments of time and resources by Enterprise’s management, which could otherwise have been devoted to other opportunities that may have been beneficial to Enterprise as an independent company.
If the Merger is not completed, Enterprise cannot assure its Enterprise shareholders that the risks described above will not materialize and will not materially affect the business and financial results of Enterprise.
Enterprise shareholders will not have dissenters’ rights in the Merger.
Dissenters’ rights are statutory rights that, if applicable under law, enable Enterprise shareholders to dissent from an extraordinary transaction, such as a Merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to Enterprise shareholders in connection with the extraordinary transaction. Under Section 13 of the MBCA, Enterprise shareholders do not have the right to receive the appraised value of their shares in connection with the Merger.
Shareholder litigation could prevent or delay the completion of the Merger or otherwise negatively impact the business and operations of Independent and Enterprise.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, Merger or other business combination agreements like the Merger Agreement. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Independent’s and Enterprise’s respective liquidity and financial condition.
One of the conditions to the closing of the Merger is that no order, injunction or decree issued by any court or government entity of competent jurisdiction or other legal restraint preventing the consummation of the Merger, the bank Merger or any of the other transactions contemplated by the Merger Agreement be in effect. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, the bank Merger or any of the other transactions contemplated by the Merger Agreement, then such injunction may delay or prevent the Merger from being completed within the expected timeframe or at all, which may adversely affect Independent’s and Enterprise’s respective business, financial position and results of operations. Even if such injunction is eventually lifted and the Merger is later completed,
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the resulting delays and costs incurred may continue to affect the combined company following the completion of the Merger.
Additionally, there can be no assurance that any of the defendants will be successful in the outcome of any potential lawsuits. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is completed may adversely affect the combined company’s business, financial condition, results of operations and cash flows.
RISKS RELATED TO ECONOMICS & FINANCIAL MARKETS
The Company's financial results are impacted by the general economic conditions of the United States and the primary market areas in which the Company operates. Any weakening in general economic conditions in the United States or the New England region, a long-term deterioration of the regional economy, the local impact of worsening national economic conditions or continued geopolitical instability could negatively impact the Company’s financial results.
The Company is Subject to Interest Rate Risk
The Company's earnings and cash flows are largely dependent upon its net interest income, meaning the difference, or spread, between interest income earned and interest expense paid. Changes in market interest rates may affect the rates on our loan, investment and deposit products at differing speeds in both time and scale, which could negatively impact the demand for bank products and net interest margin. Changes in market interest rates may affect the rates on our loan, investment and deposit products at differing speed in both time and scale, which could negatively impact the spread and demand for bank products. Our net interest margin may decrease even if the Federal Reserve Bank lowers the federal funds rate interest rate. Interest rates are highly sensitive to many factors that are beyond the Company's control, including competition from both banks and non-bank financial service providers, the monetary policy of the Federal Reserve, inflation and deflation, and volatility of domestic and global financial markets due to any number of factors including, among other things, widening geopolitical tensions. Interest rates are highly sensitive to many factors that are beyond the Company's control, including competition, the monetary policy of the Federal Reserve, inflation and deflation, and volatility of domestic and global financial markets due to any number of factors including, among other things, the persistence of the ongoing inflationary environment in the United States and in our market area and current geopolitical tensions. The current environment of elevated interest rates could continue to increase our funding costs and negatively impact our net interest margin and our asset-liability management strategies for funding loan growth.
The Company is subject to Inflation and Deflation Risks
Unlike an industrial company, virtually all assets and liabilities of the Company are monetary in nature. As a result, interest rates, which are impacted by inflation, have a more significant impact on the Company's performance than the general level of inflation. Interest rates do not necessarily move in the same direction, or at the same magnitude, as the prices of other goods and services impacted by inflation.
Persistent inflation could lead to tighter-than-expected monetary policy and higher interest rates, which could slow loan growth and increase cost of funds for the Company, reduce net interest margin and profitability, lower asset prices and weaken economic activity. Conversely a prolonged period of deflation may also lead to a deterioration in economic conditions in the United States and our markets causing stress on commercial customers and unemployment, which could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations.
Refer to Item 7A. "Quantitative and Qualitative Disclosures About Market Risk," below in this Form 10-K, for more information on the projected impact of interest rates on the Company’s balance sheet at December 31, 2024.
The Company's Investment Portfolio Could Incur Losses or Fair Value Could Deteriorate
There are inherent risks associated with the Company's investment activities. These risks include the impact from changes in interest rates, credit risk related to weakness in real estate values, municipalities, government sponsored enterprises, or other industries, the impact of changes in income tax rates on the value of tax-exempt securities, adverse changes in regional or national economic conditions, and general turbulence in domestic and foreign financial markets, among other things. These conditions could adversely impact the ultimate collectability of the Company's investments. If an investment's value is in an unrealized loss position, the Company is required to assess the security to determine if a valuation allowance for the credit exposure of the debt security is necessary, which, if necessary, is recorded as a charge to earnings.
Persistent high market interest rates have resulted in unrealized losses on the Company's fixed income bond portfolio. If market interest rates remain higher than at the time of purchase, the fair value of the fixed income bond portfolio will decrease, resulting in additional unrealized losses, and depending on the extent of the rise in interest rates, the increase in unrealized losses could be significant. The non-credit portion of unrealized losses are recorded to AOCI, a component of
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Shareholders' Equity. A significant increase in market rates may have a negative impact on the Company's book value per common share. A significant increase in market rates may have a negative impact on book value per common share. The Company's bond portfolio is expected to mature at par and therefore the unrealized losses in the portfolio that result from higher market interest rates will decrease as the bonds become closer to maturity. However, if the Company were required to sell investment securities with an unrealized loss for any reason, including liquidity needs, the unrealized loss would become realized and reduce both net income for the reported period and regulatory capital, which as currently reported, excludes unrealized losses on investment securities. However, if the Company were required to sell investment securities with an unrealized loss for any reason, including liquidity needs, the unrealized loss would become realized and reduce 28Table of Contentsboth net income for the reported period and regulatory capital, which as currently reported, excludes unrealized losses on investment securities.
The Potential for Bank Failures and any Related Negative Impact on Customer Confidence in the Safety and Soundness of the Banking Industry may Adversely Affect our Business
If other financial institutions experience severe financial difficulties, it could result in an adverse impact on the regional banking industry, generally, and the business environment in which the Company operates. Regional bank failures or failure of confidence in the financial industry generally, could result in significant market volatility among publicly traded bank holding companies which may cause uncertainty in the investor community, generally.
This uncertainty may negatively impact customer confidence in the safety and soundness of the banking system and, as a result, the Company's customers may choose to withdraw some or all of their deposited funds, which could have a materially adverse impact on our liquidity, cost of funding, loan growth, net interest margin, capital and results of operations. In addition, advances in technology have increased the speed at which deposits can be moved, as well as the speed and reach of media attention, including social media, and its ability to disseminate concerns or rumors, in each case potentially exacerbating liquidity concerns.
RISKS RELATED TO LIQUIDITY
Deposit Outflows May Increase Reliance on Borrowings and Brokered Deposits as Sources of Funds
The Company has historically funded its asset growth through customer deposits and to a lesser extent through wholesale borrowings (e.g., brokered deposits and borrowed funds). As a general matter, customer deposits are typically a lower cost source of funds than external wholesale funding. If the balance of the Company's customer deposits decrease or are less than the Company's asset growth, the Company may have to rely more heavily on higher-costing wholesale funding or other sources of external funding or may have to significantly increase deposit rates to maintain deposit levels in the future, all of which may lower the Company's net interest income, net interest margin and its profitability.
Sources of External Funding Could Become Restricted and Impact the Company's Liquidity
Liquidity risk is the potential that we will be unable to meet our obligations as they come due because of an inability to liquidate assets or obtain adequate funding. The Bank’s access to funding sources in amounts adequate to finance our activities or on acceptable terms could be impaired by factors that affect our organization, the financial services industry, or the economy in general. Factors that could detrimentally impact access to liquidity sources include a downturn in the markets in which our loans are concentrated or adverse regulatory actions against the Bank. Market conditions or other events could also negatively affect the level or cost of funding, affecting the Bank’s ongoing ability to meet liability maturities and deposit withdrawals, meet contractual obligations and fund asset growth and new business transactions at a reasonable cost, in a timely manner and without adverse consequences. Fluctuations in interest rates could impact both the level of income and expense recorded on most of our assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, any of which in turn could have a material adverse effect on our liquidity and ability to fund future growth, our operating results, and financial condition.
If, as a result of general economic conditions or other events, sources of external funding become restricted or are eliminated, the Company may not be able to raise adequate funds, may incur substantially higher funding costs, be required to sell assets, restrict operations, or restrict the payment of dividends. Furthermore, if the Company is unable to raise adequate funds through external sources, the Company may need to sell assets with unrealized losses in order to generate additional liquidity, which could decrease the capital of the Company and have an adverse effect on our business, financial condition and results of operations.
RISKS RELATED TO LENDING
There are inherent risks associated with the Company's lending activities. These risks include, among other things, the impact of changes in the economic conditions in the market areas in which the Company operates impacting our commercial customer's businesses and changes in interest rates. These risks include, among other things, the impact of changes in the economic conditions in the market areas in which the Company operates and changes in interest rates. In addition, the Company may be impacted by the following risks associated with its lending activities:
Commercial Lending Generally Involves a Higher Degree of Risk than Retail Residential Mortgage Lending
The Company's loan portfolio consists primarily of commercial real estate, commercial and industrial, and commercial
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construction loans. These types of loans are generally viewed as having more risk of default than owner-occupied residential real estate loans and typically have larger balances. The underlying commercial real estate values, lower demand for office and retail space, increase costs to complete construction projects. Customer cash flows can be more easily influenced by adverse conditions in the related industries, the real estate market or in the economy.
Commercial real estate values may be elevated and the outlook for commercial real estate remains dependent on the broader economic environment and, specifically, how major subsectors respond to higher interest rate environment and prices for, and availability of, commodities, goods and services. Credit performance across the industry over the medium- and long-term is susceptible to economic and market forces and our non-performing loans and charge-offs may increase. Some degree of general instability in the broad commercial real estate market may occur in the coming quarters as loans are repricing at higher interest rates and in markets with higher vacancy rates under current economic conditions. Our commercial borrowers may experience greater difficulties meeting their obligations if debt service coverage declines as adjustable-rate loans reprice to higher interest rates and customer cash flows are impacted by inflationary pressures. Conversely, in periods of decreasing interest rates, likely resulting from economic slowdown or recession, borrowers may experience difficulties meeting their obligations and seek to refinance their loans for lower rates, which may adversely affect income from these lending activities. Instability and uncertainty in the commercial real estate markets and elevated level of interest rates could have a material adverse effect on our financial condition and results of operations.
The Company May Need to Increase its Allowance for Credit Losses
The determination of the appropriate level of the allowance for credit losses inherently involves a high degree of subjectivity and requires the Company to make significant estimates of current credit risks, non-performing trends, and economic forecasts, all of which may undergo material changes. In addition, bank regulatory agencies periodically review the Company's allowance for credit losses and may require an increase in the provision for credit losses or the recognition of loan charge-offs, based on judgments that may differ from those of the Company's management.
Increases in the Company's Non-performing Assets Could Adversely Affect the Company's Results of Operations and Financial Condition in the Future
Non-performing assets adversely affect our net income in various ways. No interest income is recorded on non-accrual loans or other real estate owned, thereby adversely affecting income and returns on assets and equity. In addition, loan administration and workout costs increase, including significant time commitments from management and staff, resulting in additional reductions of earnings. When taking collateral in foreclosures and similar proceedings, the Company is required to carry the property or loan at its then-estimated fair value less estimated cost to sell, which, when compared to the carrying value of the loan, may result in a loss. In addition, any errors in documentation or previously unknown defects in deeds may impact the Company's ability to perfect title of the collateral in foreclosure. In addition, any errors in documentation or previously unknown defects 27Table of Contentsin deeds may impact the Company's ability to perfect title of the collateral in foreclosure. These non-performing loans and other real estate owned assets also increase the Company's risk profile and the capital that regulators believe is appropriate in light of such risks and have an impact on the Company's FDIC risk-based deposit insurance premium rate.
The Company's Use of Appraisals in Deciding Whether to Make a Loan Does Not Ensure the Value of the Collateral
In considering whether to make a loan secured by real property or other business assets, the sale of which may provide ultimate recovery of the outstanding balance of the loan, the Company generally requires an internal evaluation or independent appraisal of the collateral supporting the loan. However, these assessment methods are only an estimate of the value of the collateral at the time the assessment is made and involve estimates and assumptions. An error in fact, estimate or judgment could adversely affect the reliability of the valuation. Furthermore, changes in those estimates due to the economic environment and events occurring after the initial assessment, may cause the value of the collateral to differ significantly from the initial valuations. As a result, the value of collateral securing a loan may be less than estimated at the time of assessment, and if a default occurs the Company may not recover the outstanding balance of the loan.
The Company is Subject to Environmental Risks Associated with Real Estate Held as Collateral or Occupied
While the Company’s lending, foreclosure and facilities policies and guidelines are intended to exclude properties with an unreasonable risk of contamination, hazardous substances could exist on some of the properties that the Company may own, acquire, manage, or occupy. Environmental laws could force the Company to clean up the properties at the Company’s expense. It may cost much more to clean a property than the property is worth, and it may be difficult or impossible to sell contaminated properties. The Company could also be liable for pollution generated by a borrower’s operations if the Company takes a role in managing those operations after a default.
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Concentrations in Commercial Real Estate Loans are Subject to Heightened Risk Management and Regulatory Review
If a concentration in commercial real estate lending is present, as measured under government banking regulations, management must employ heightened risk management lending practices that address the following key elements: board and management oversight and strategic planning, portfolio management, development of underwriting standards, portfolio risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending. Management believes that it is in compliance with the enhanced risk management practices. When a concentration is determined to exist, the Company may incur additional operating expenses in order to comply with additional risk management practices and increased capital requirements. If a concentration is determined to exist, the Company may incur additional operating expenses in order to comply with additional risk management practices and increased capital requirements.
RISKS RELATED TO INFORMATION & TECHNOLOGY RESOURCES
The use of technology related products, services, delivery channels, access points and processes expose the Company to various risks, particularly operational, privacy, cybersecurity, strategic, reputation and compliance risk. The ongoing move towards more cloud-based and third-party hosted technology solutions may subject the Bank to certain heightened cyber risks. The potential use of generative artificial intelligence to launch sophisticated cyber-attacks, and the threat that foreign state-sponsored agencies' cyber threat operations may pose heightened risk of disruptions to U.S. critical infrastructure and thereby the Bank's operations. Banks are required by regulatory agencies to prudently manage cyber, third-party, cloud-based and technology-related risks as part of their comprehensive risk management policies by identifying, measuring, monitoring, and controlling these risks. Banks 29Table of Contentsare required by regulatory agencies to prudently manage cyber, third-party, cloud-based and technology-related risks as part of their comprehensive risk management policies by identifying, measuring, monitoring, and controlling these risks.
Failure to Keep Pace with Technological Change Could Affect the Company's Profitability
The banking industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products, services, extended service and settlement frequencies, data management and delivery channels. Failure to successfully plan or keep pace with technological changes affecting the banking industry, or failure to adequately plan, train and educate staff and customers on the use and risks of new technologies and extended service cycles, failure to capture or manage data, or failure to comply adequately with regulatory guidance regarding information and cybersecurity could have a material adverse effect on the Company's business and, in turn, the Company's financial condition and results of operations. Failure to successfully plan or keep pace with technological changes affecting the banking industry, or failure to adequately train and educate staff and customers on the use and risks of new technologies, failure to capture or manage data, or failure to comply adequately with regulatory guidance regarding information and cybersecurity could have a material adverse effect on the Company's business and, in turn, the Company's financial condition and results of operations. In addition, there may be significant time and expenses associated with upgrading and implementing new technology, technology compliance, information security and cybersecurity processes.
Information Systems Could Experience an Interruption, Failure, Breach in Security, or Cyber-Attack
The Company relies heavily on public utilities infrastructure, internal information and operating systems, and cloud-based solutions and storage to conduct its business effectively, and these systems could fail in a variety of ways. In addition, the use of network, cloud-based, or third-party hosted systems expose the Company to the increased sophistication and activity of cyber-criminals, both domestic and international. Current geopolitical tensions could result in serious and catastrophic attempts at cyber-attacks on the U.S. web-based infrastructure. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of the information resources of the Company. These incidents may be an intentional attack or an unintentional event and could involve blocking the Company from accessing its own systems or remote servers in exchange for a ransom payment, gaining unauthorized access directly to our information systems, or indirectly through our vendors and customers systems or servers, for purposes of misappropriating assets, stealing confidential corporate information or customers' Personally Identifiable Information, corrupting data, denying access or causing operational disruption. The Company's independent third-party service providers or their subcontractors may also expose the Company to cybersecurity risk. The Company's independent third-party service providers or their subcontractors may also have access to customers' personal information and therefore also expose the Company to cybersecurity risk. Additionally, vendors' and customers' home, business or mobile information systems and the servers they rely on, are at risk of fraudulent corporate account takeovers which the Company may not be able to detect, and may impact the Company's ability to service its customers. Additionally, vendors' and customers' home, business or mobile information systems and the servers they rely on, are at risk of fraudulent corporate account takeovers which the Company may not be able to detect. There is no guarantee the Company's counteractions will be successful or that the Company will have the resources or technical expertise to anticipate, detect or prevent rapidly evolving types of cyber-attacks.
The occurrence of any failures or disruptions as noted above, or the Company's inability to detect, respond, disclose and correct such occurrence or compromise in a timely manner, could subject the Company to increased operational costs to detect and rectify the situation, damage the Company's reputation and deter customers from using the Company's services, increase the Company insurance cost or the ability to obtain adequate cyber insurance coverage, subject the Company to additional regulatory scrutiny, and expose the Company to civil litigation and possible financial liability.
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RISKS RELATED TO OPERATIONS
The Company Operates in a Competitive Industry and Market Area
The Company faces substantial competition in all areas of its operations from a variety of different competitors within its market area and beyond. Some of these competitors are larger and have more financial resources than the Company; some are not subject to the same degree of government regulation as the Company and thus may have a competitive advantage. If the Company encounters difficulties attracting and retaining customers, it would have a material adverse effect on the Company's growth and profitability.
The Company May Experience a Prolonged Interruption in its Ability to Conduct Business
The Company relies heavily on its personnel and facilities to conduct its business. A material loss of people or physical damage, destruction, or denial of access to our core operating facilities, for any number of reasons including localized natural disasters, global pandemics and government's reaction thereto, demonstrations/pickets at or near facilities, or the local impact of geopolitical tensions, could result in prolonged business interruptions impacting customer services and our ability to conduct transactions. A material loss of people or physical damage, destruction, or denial of access to our core operating facilities, for any number of reasons including localized natural disasters, global pandemics, demonstrations/pickets at facilities, or the local impact of geopolitical tensions, could result in prolonged business interruptions impacting customer services and our ability to conduct transactions.
The Company Relies on External Service Providers
The Company relies on independent third-party firms, including indirect vendors utilized by such third parties, to provide critical services necessary to conducting its business. These services include but are not limited to electronic funds delivery networks, check clearing houses, electronic banking services, wealth advisory, management and custodial services, correspondent banking services, information security assessments and technology support services, and loan underwriting and review services, among others. The occurrence of any failures or interruptions of the independent firms' systems or in their delivery of services, or failure to perform in accordance with contracted service level agreements, for any number of reasons could in turn impact the Company's ability to conduct business and process transactions.
The Company Relies on Financial Counterparty Relationships
The Company routinely executes transactions with counterparties in the financial services industry, in order to maintain correspondent bank relationships, liquidity, manage certain loan participations, mortgage sales activities, interest-rate swaps, engage in securities transactions, and engage in other financial activities with counterparties that are customary to our industry. Many of these transactions expose the Company to counterparty credit, liquidity and/or reputation risk in the event of default by the counterparty, or negative publicity or public complaints, whether real or perceived, about one or more of the Company's financial counterparties, or the financial services industry in general. Although the Company seeks to manage these risks through internal controls and procedures, the Company may experience loss or interruption of business as a result of unforeseen events with these counterparties.
Wealth Management and Wealth Services Expose the Company to Financial, Operational and Legal Risk
The Company's Wealth Management and Wealth Services channels derive their revenues primarily from investment management fees based on the market value of assets under management. The Company's ability to maintain or increase investment assets under management is subject to a number of factors, including changes in client investment preferences, investment decisions by us or our third-party service provider partners, and various economic conditions, among other factors. Clients can terminate their relationships with us, reduce their aggregate assets under management, or shift their funds to other types of accounts with different rate structures for any number of reasons. Wealth management services clients can terminate their relationships with us, reduce their aggregate assets under management, or shift their funds to other types of accounts with different rate structures for any number of reasons.
Investment performance is one of the most important factors in retaining existing clients and competing for new wealth management clients. Financial markets are affected by many factors, any of which could adversely impact the fair value of customer portfolios. Even when market conditions are generally favorable, our investment performance may be adversely affected by the investment style of our wealth management and investment advisors and the investment decisions that they make. Poor investment performance, whether real or perceived, in either relative or absolute terms, could impair our ability to attract and retain investment assets under management from existing and new clients.
The Company's Insurance Coverage May Not be Adequate to Prevent Additional Liabilities or Expenses
The Company works with an independent third-party insurance advisor to obtain insurance policies that provide coverage for a variety of business and cyber risks at coverage levels that compare favorably to bench-marked coverage for loss exposures that are faced by similarly sized financial institutions. However, there are no guarantees that the Company will be able to obtain or maintain comparable or adequate coverage levels in the future. In addition, there is no guarantee that the circumstances of an incident will meet the criteria for insurance coverage under a specific policy, and despite the insurance policies in place the Company may experience a material loss incident or event.
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Lack of or Slower than Expected Growth Could Adversely Affect the Company's Profitability and its Ability to Pay Dividends
The Company relies on its deposit and lending activities to generate the cash flow to conduct operations, expand service and product offerings, expand the branch network, and pay dividends to shareholders. Contraction or slower than expected loan and/or deposit growth and/or lower than expected fee or other income generated from these and other products and services could lower our profitability and net cash flow available for funding our growth strategies and paying dividends to shareholders.
The Company May Not be Able to Retain and/or Develop Key Personnel
The Company's success depends, in large part, on its ability to retain and develop top performing banking professionals within our markets, and its ability to successfully identify and develop personnel for succession to key executive management positions and to the board of directors. The inability to do so could have a material adverse impact on the Company’s business because of the loss of their skills, knowledge of the Company's market, years of industry or business experience and the difficulty of promptly hiring qualified replacements.
RISKS RELATED TO REGULATION / POLICY
The Company is Subject to Extensive Government Regulation and Supervision
The Company and the Bank are subject to a variety of federal and state laws and regulations that are primarily intended to protect consumers in the financial marketplace, provide fair and equal availability of products and services, preserve depositors' funds and the FDIC insurance fund, and to safeguard the banking system as a whole, and not necessarily the interests of shareholders. These regulations affect the Company's lending practices, capital structure, investment practices, dividend policy, growth, and net income, among other things. Federal and state laws and regulations may not always align in principle or statue, and preemptive federal laws may be more or less restrictive than those of a state. Future legislation could increase or decrease the cost of doing business, negatively impact consumers' faith in the banking system leading them to seek out non-banking alternatives, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions.
Commercial Developers may be Impacted by International Trade and Tariff Policies
Our commercial construction borrowers may experience greater difficulties meeting their obligations if internation trade policies and tariffs on construction material negatively impact inventory levels or costs to complete projects, delaying anticipated construction/occupancy timelines and customer cash flow. Instability and uncertainty in commercial construction costs and elevated level of interest rates due to administrative policies could have a material adverse effect on our financial condition and results of operations.
Climate Change and Related Legislative and Regulatory Initiatives May Materially Affect the Company’s Business
Climate change, which is having a dramatic effect on weather patterns and causing more frequent and severe weather events, may negatively impact the regional and local economy, increasing credit and other financial risks for the Company and our customers. The physical effects of climate change may adversely impact the value of real property securing the loans in our portfolios and our customers' ability to continue to conduct operations at their business locations. The physical effects of climate change may adversely impact the value of real property securing the loans in our portfolios. Additionally, if insurance obtained by our borrowers is insufficient to cover any losses sustained to the collateral, or if insurance coverage is otherwise unavailable to our borrowers, the collateral securing our loans may be negatively impacted.
Further, the U.S. Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives to supplement the global effort to combat climate change. The Company cannot predict what legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations, would have on the Company's business.
RISKS RELATED TO ESTIMATES & ASSUMPTIONS
The Company's Financial Condition and Results of Operation Rely in Part on Management Estimates and Assumptions
In preparing the financial statements in conformity with GAAP, management is required to exercise judgment in determining many of the methodologies, estimates and assumptions to be utilized. These estimates and assumptions affect the reported values of assets and liabilities at the balance sheet date and income and expenses for the years then ended. Changes in those estimates resulting from continuing change in the economic environment and other factors will be reflected in the financial statements and results of operations in future periods. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates and be adversely affected should the assumptions and estimates used be incorrect or change over time. The most significant areas in which management
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applies critical assumptions and estimates are: the estimates of the allowance for credit losses for loans, and available-for-sale securities, the reserve for unfunded commitments and the impairment review of goodwill.
The Net Deferred Tax Assets May be Determined to be Unrealizable in Future Periods
In making its assessment on the future realizability of net DTAs, management considers all available relevant information, including recent financial operations, projected future taxable income, and recoverable past income tax paid. If in the future, management believes based upon historical and expected future earnings that it is more likely than not that the Company will not generate sufficient taxable income to utilize the DTA balance, then a valuation allowance would be booked against the DTA, with the write down offset to current earnings. Factors beyond management's control can affect future levels of taxable income and there can be no assurances that sufficient taxable income will be generated to fully realize the DTAs in the future.
REPUTATION & LEGAL RISKS
Damage to the Company's Reputation Could Affect the Company's Profitability and Shareholders' Value
The Company is dependent on its reputation within its market area as a trusted and responsible financial company for all aspects of its business with customers, employees, vendors, third-party service providers, and others with whom the Company conducts business or potential future business. Any negative publicity or public complaints, whether real or perceived, disseminated by word of mouth, by the general media, by electronic or social networking means, or by other methods, could harm the Company's reputation.
Environmental, Social and Governance Oversight May Influence Stock Price and Increase Compliance Costs
Investors have begun to consider how corporations are addressing environmental, social and governance matters, commonly known as "ESG matters" when making investment decisions. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, executive compensation, labor conditions and human rights. Investor advocacy groups, investment funds and 32Table of Contentsinfluential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, executive compensation, labor conditions and human rights. These shifts in investing priorities may result in adverse effects on the trading price of the Company’s common stock if investors determine, whether real or perceived, that the Company's ESG actions are not satisfactory. In addition, new government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. Increased ESG related compliance costs could result in increases to our overall operational costs.
The Company is Exposed to Legal Claims and Litigation
The Company is subject to legal challenges under a variety of circumstances in the course of its normal business practices. Regardless of the scope or the merits of any claims by potential or actual litigants, the Company may have to engage in litigation that could be expensive, time-consuming, disruptive to the Company's operations, and distracting to management. Whether claims or legal action are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to the Company, they may result in significant financial liability, damage the Company's reputation, subject the Company to additional regulatory scrutiny and restrictions, and/or adversely affect the market perception of our products and services, as well as impact customer demand for those products and services.
RISKS RELATED TO COMMON STOCK, SHAREHOLDER’S EQUITY, CAPITAL
The Trading Volume in the Company's Common Stock is Less Than That of Larger Companies
Although the Company's common stock is listed for trading on the NASDAQ Global Market, the trading volume in the Company's common stock is substantially less than that of larger companies. Given the lower trading volume of the Company's common stock, significant purchases or sales of the Company's common stock, or the expectation of such purchases or sales, could cause significant movement in the Company's stock price.
The Company's Capital Levels Could Fall Below Regulatory Minimums
If the Company's regulatory capital levels decline, or if regulatory requirements increase, and the Company is unable to raise additional capital to offset that decline or meet the increased requirements, then its regulatory capital ratios may fall below regulatory minimum capital adequacy levels.
The Company's failure to remain "well-capitalized" for bank regulatory purposes could affect customer confidence, restrict the Company's ability to grow (both assets and branching activity), increase the Company's costs of funds and FDIC insurance expense, prohibit the Company's ability to pay dividends on common shares, and restrict its ability to make acquisitions, among other impacts. Under FDIC rules, if the Bank ceases to be a "well-capitalized" institution, its ability to
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accept brokered deposits and the interest rates that it pays may be restricted. The Basel III Rules establish, among other rules, a "capital conservation buffer" of 2.5% above the regulatory minimum risk-based capital requirements. An institution will be subject to limitations on certain activities, including payment of dividends, share repurchases and discretionary bonuses to executive officers, if its capital level is below the buffered ratio.
The Company's Articles of Organization and By-Laws as Well as Certain Banking and Corporate Laws Could Have an Anti-Takeover Effect
Although management believes that certain anti-takeover strategies are in the best interest of the Company and its shareholders, provisions of the Company's articles of organization, by-laws, and certain federal and state banking laws and state corporate laws, including regulatory approval requirements for any acquisition of control of the Company, could make it more difficult for a third-party to acquire the Company, even if doing so would be perceived to be beneficial to the Company's shareholders. The combination of these provisions is intended to prohibit a non-negotiated merger, or other business combination involving an acquisition of the Company, which, in turn, could adversely affect the market price of the Company's common stock.
Directors and Executive Officers Own a Significant Portion of Common Stock
The Company's directors and executive officers, as a group, beneficially own approximately 20% of the Company's outstanding common stock as of December 31, 2024. The directors and executive officers have the ability, if they vote their shares in a like manner, to significantly influence the outcome of all matters submitted to shareholders for approval, including the election of directors, and potential Merger opportunities.
The Company Relies on Dividends from the Bank for Substantially All of its Revenue
Holders of the Company’s common stock are entitled to receive dividends only when, and if declared by our Board. Although the Company has historically declared cash dividends on our common stock, we are not required to do so, and our Board may reduce or eliminate our common stock dividend in the future.
The Company is a separate and distinct legal entity from the Bank. It receives substantially all its revenue from dividends paid by the Bank. These dividends are the principal source of funds used to pay dividends on the Company’s common stock and interest and principal on the Company’s subordinated debt. Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to the Company, and certain regulators may prohibit the Bank or the Company from paying future dividends if deemed an unsafe or unsound practice. If the Bank, due to its capital position, inadequate net income levels, or otherwise, is unable to pay dividends to the Company, then the Company will be unable to service its debt, pay obligations or pay dividends on the Company’s common stock, which could have a material adverse effect on the market price of the Company’s common stock.
Item 1B.Unresolved Staff Comments
None.
Item 1C.Item 1A. Cybersecurity
Overall Process
We have developed and implemented a comprehensive multi-layered cybersecurity risk management program, consisting of a dedicated cybersecurity function, risk assessments, policies and procedures managed by internal and external resources, that we believe is reasonably designed to prevent, detect and respond to cyber risks and incidents. We utilize a set of tools and services, including regular network, endpoint and cloud monitoring, vulnerability assessments, penetration testing, a Security Information and Event Management system, and tabletop exercises to identify and assess material risks from cybersecurity threats and to evaluate our cyber defense capabilities.
Internal security controls are designed to align with standards set by the National Institute of Standard and Technology. We monitor emerging data protection laws, conduct background checks of our employees in specific technology and cybersecurity roles, apply least privilege access to users, test the maturity and readiness of our cybersecurity program, conduct table top exercises based on current threat scenarios to increase awareness, conduct phishing testing, provide cybersecurity training to our Board and employees, and provide cybersecurity alerts to our customers on ongoing threats. We monitor notifications and alerts from the Financial Services Information and Analysis Center and other industry cybersecurity sites to stay abreast of the most recent cybersecurity alerts.
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The Company has implemented layered security approaches for all electronic delivery channels to detect, prevent and respond to rising cybersecurity risks. Management utilizes a combination of third-party information security assessments , key technologies, and ongoing internal and external evaluations to provide a level of protection of non-public personal information, to continually monitor and attempt to safeguard information on its operating systems, in cloud-based solutions, and those of third-party service providers, and to prevent, quickly detect and respond to attacks. The Company also utilizes firewall technology, multi-factor authentication, complex password construction, and a combination of software and third-party monitoring to detect and prevent intrusion, and cybersecurity threats, guard against unauthorized access, and continuously identify and prevent computer viruses on the Company's information solutions. To minimize debit card losses, the Company works with a third-party provider to establish parameters for allowable transaction activity, monitor transactions, and alert customers of potentially fraudulent activity.
The Company has a fully integrated third-party risk management program to identify, assess, monitor and mitigate risks associated with third-party relationships, including cybersecurity risks. Under the program, risk ratings are assigned to each of the vendors based on an assessment of the vendor, for a variety of factors, including its access to networks, systems, and confidential information. An assessment is conducted on each vendor to identify and measure the risks from cybersecurity threats that could impact our customer’s data and our environment. Third parties that have access to our systems or customer data must have appropriate technical and organizational security measures and security control principles based on commercially acceptable security standards, and we require third parties in this class to agree by contract to manage their cybersecurity risks.
In our Risk Factors, we describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Material Incidents
Incidents and Risks
The Company has developed an Incident Response Plan to guide its actions in responding to real and suspected information security incidents. This includes unlawful, unauthorized, or unacceptable actions that involve a computer system or a computer network such as Distributed Denial of Service attacks, Corporate Account Takeover schemes, or ransomware. Additionally, an event that disrupts one of the Bank's service channels, whether from a security incident or not, is also considered an incident requiring a response under this program. These disclosure controls and procedures compel the Company to make accurate and timely disclosures of material events and incidents to both customers and regulatory authorities. These disclosure controls and procedures compel the Company to make appropriate accurate and timely disclosures of material events and incidents to both customers and regulatory authorities. The reaction to an incident aims to reduce potential damage and loss and to protect and restore confidence through timely communication and the restoration of normal operating conditions for computers, services, and information. Management will work closely with its cybersecurity insurance provider, cybersecurity legal counsel, and forensic experts when investigating and responding to cyber or ransomware attacks. Management will work closely with its cybersecurity insurance provider when investigating and responding to cyber or ransomware attacks.
Cybersecurity Governance
Cybersecurity risk management processes are an integral part of our enterprise risk management which is overseen by the Board and the Technology & Information Security Committee of the Board. The Board oversees the risk management policies of the Company and is responsible for the periodic review and approval of the risk management policies of the company and
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