Commercial Bancgroup, Inc. (CBK) Risk Factors

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. Before
you decide to invest in our common stock, you should carefully consider the risks described below, together with all other information
included in this Report, including our consolidated financial statements and related notes appearing elsewhere in this Report. We believe
the risks described below are the risks that are material to us as of the date of this Report. If any of the following risks actually
materialize, our business, financial condition or results of operations could be materially and adversely affected. In that case, you
could experience a partial or complete loss of your investment. Further, to the extent that any of the information in this Report constitutes
forward-looking statements, the risk factors below also are cautionary statements identifying important factors that could cause actual
results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. See “Cautionary
Note Regarding Forward-Looking Statements.”

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Summary of Risk Factors

Risks Related to Our Business

Risks Related to Acquisition and other Expansionary Activity

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Risks Related to Technology and Cybersecurity

Legal, Regulatory and Compliance Risks

Risks Related to Our Common Stock

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Risks Related to Our Business

Interest Rate Risks

Changes in interest rates may adversely affect our earnings and
financial condition.

Changes in interest rates may adversely affect our earnings and financial
condition. Interest rates are highly sensitive to many factors beyond our control, including inflation, unemployment, changes in the money
supply, international events, events in world financial markets, competition, general economic conditions, trade policies and tariffs,
and monetary and fiscal policies of various governmental and regulatory authorities, including the Federal Reserve.

Our operating income and net income depend to a great extent on net
interest margin (i.e., the difference between the interest yields earned on cash, loans, securities and other interest-bearing assets
and the interest rates paid on interest-bearing deposits, borrowings and other liabilities). Net interest margin is affected by changes
in market interest rates because different types of assets and liabilities may react differently, and at different times, to market interest
rate changes. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period, an increase in
market rates of interest could reduce net interest income. Similarly, when interest-earning assets mature or reprice more quickly than
interest-bearing liabilities, falling interest rates could reduce net interest income. While we have recently benefitted from high short-term
rates, the Federal Reserve began reducing its target federal funds rate in September 2024. Any of these conditions would be expected
to adversely affect our business, results of operations and financial condition.

Increases in interest rates will likely also adversely affect the market
value of our investment and loan portfolios. If we are required to sell securities at a discount prior to their maturity, our unrealized
losses would then turn into realized losses. See “Increases in interest rates have in the past resulted in, and could in the future
result in, unrealized losses in our investment securities portfolio.” Decreases in the market value of our loan portfolio could
become realized losses if we were to sell loans or if the Bank were to be acquired. See “Increases in interest rates could result
in a decrease in the market value of our loans.”

We attempt to manage risk from changes in market interest rates by
adjusting the rates, maturity, repricing, and balances of our different types of interest-earning assets and interest-bearing liabilities,
but interest rate risk management techniques are not exact. As a result, a rapid increase or decrease in interest rates could have an
adverse effect on our net interest margin and results of operations. Market interest rates for the types of products and services in our
markets also may vary significantly over time based upon competition and local or regional economic factors. Our interest rate risk management
process depends upon a number of assumptions which may prove to be inaccurate. There can be no assurance that we will be able to successfully
manage our interest rate risk.

Increases in interest rates have in the past resulted in, and
could in the future result in, unrealized losses in our investment securities portfolio.

We invest a portion of assets in investment securities. As of December
31, 2025, we held approximately 6.1% of our assets in an investment securities portfolio containing primarily U.S. government, municipal,
and corporate bonds that are sensitive to broad economic conditions, especially interest rates. Interest rate increases have recently
resulted in, and could in the future result in, unrealized losses in our investment securities portfolio, as increases in interest rates
ordinarily decrease the estimated fair value of fixed income securities and result in decreased unrealized gains or increased unrealized
losses on fixed income securities. We recognize the accumulated change in estimated fair value of these fixed income securities in net
income when we realize a gain or loss upon the sale of a security. As of December 31, 2025, our net unrealized losses on securities available
for sale, net of tax, totaled $1.0 million and our net unrealized losses on securities held-to-maturity, net of tax, totaled $3.3 million,
which collectively equaled 1.4% of our Tier 1 capital. If we were required to sell all or a material portion of our investment securities
portfolio, we may recognize significant losses that would adversely affect our business, results of operations or financial condition
and reduce our regulatory capital ratios.

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If the average interest rate we pay on our deposits increases,
our cost of funds would rise.

A significant majority of our funding consists of interest-bearing deposits.
As of December 31, 2025, 78.1% of our deposits consisted of interest-bearing deposits. During periods of rising interest rates, the
rate of interest we pay on these deposits generally increases, which in turn increases our overall cost of funds. Additionally, during
periods of higher interest rates, our customers have in the past shifted, and may in the future shift, their funds to accounts or financial
institutions that offer higher interest rates. Such shifts also increase our cost of funds. If interest rates rise and our cost of funding
increases, it could adversely affect our business, financial condition and results of operations and could cause our current business
strategy to become unprofitable. Further, to the extent our customers withdraw their deposits and move their funds to competitors or alternative
investments, we would lose a lower-cost source of funding, which would be expected to adversely affect our business, financial condition
and results of operations.

Increases in interest rates could result in a decrease in the
market value of our loans.

As of December 31, 2025, variable rate loans, which include floating
and adjustable rate structures, comprised 60.6% of our loan portfolio. Our variable rate loans primarily consist of (i) adjustable-rate
residential real estate loans with initial fixed-rate periods of three, five, 10, 15 or 20 years, which, depending on the loan
program, generally reprice every year after the initial fixed-rate period ends and (ii) non-owner and owner-occupied CRE loans, which,
depending on the loan program, generally reprice every two years. Accordingly, a substantial part of our loan portfolio remains sensitive
to interest rate changes for extended periods.

When interest rates rise, the market value of loans with longer fixed-rate
periods decreases. Unlike our available-for-sale securities, our loans are carried at amortized cost on our balance sheet. As a result,
increases in interest rates create unrealized losses in our loan portfolio that are not immediately reflected in our financial statements.
These unrealized losses could become realized if we were to sell loans or if the Bank were to be acquired. Additionally, the reduced market
value of our loan portfolio in a rising rate environment could negatively impact the economic value of our equity, even if not immediately
apparent from our reported financial results. This could potentially affect our ability to raise capital or impact our valuation in a
merger or acquisition.

Credit and Lending Risks

We have a concentration of credit exposure to borrowers in certain
industries, and we also target small to medium-sized businesses and make other loans that may carry increased levels of credit risk.

We have meaningful credit exposures to borrowers in certain industries,
including commercial and residential building lessors. Economic conditions were challenging throughout 2025. If the economic environment
in our markets further weakens, including as a result of high inflation, elevated short-term interest rates, and increased geopolitical
tensions around the world, including hostilities in the Middle East, the ongoing conflict in Ukraine and the evolving crisis in Venezuela,
our exposure to these certain industries or other concentrations could result in increased deterioration in credit quality, past dues,
loan charge offs and collateral value declines, which could cause our results of operations and financial condition to be negatively impacted.
Changes in trade policies by the United States or other countries, such as tariffs or retaliatory tariffs, may also cause and/or
exacerbate inflation and impact the ability of our borrowers to repay their loans. Furthermore, any of our large credit exposures that
deteriorate unexpectedly could cause us to have to make significant additional credit loss provisions, negatively impacting our results
of operations and financial condition.

A substantial focus of our marketing and business strategy is to serve
small to medium-sized businesses in our market areas. As a result, a relatively high percentage of our loan portfolio consists of commercial
loans primarily to small to medium-sized businesses. At December 31, 2025, our commercial loans accounted for approximately 79.1% of our
total loans. Additionally, approximately 24.8% of our CRE loans at December 31, 2025 were owner-occupied CRE loans, which are loans to
businesses secured by the businesses’ real estate. We expect to seek to expand the amount of these two types of loans in our portfolio
in 2026. The concentration within our loan portfolio of loans within certain industries, including the hotels/motels category (which has
occasionally exceeded our internal limit of 50% of total risk-based capital), and loans within certain geographic markets makes us vulnerable
to adverse conditions in these specific industries and markets. Small to medium-sized businesses frequently have smaller market shares
than their competition, may be more vulnerable to economic downturns, or other operational challenges like those resulting from supply
chain disruption, labor shortages or inflationary pressures on their costs, often need substantial additional capital to expand or compete
and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan. In
addition, the success of a small or medium-sized business often depends on the management skills, talents and efforts of one or two people
or a small group of people, and the death, disability or resignation of one or more of these people could have an adverse impact on the
business and its ability to repay its obligations to us. If general economic conditions negatively impact the markets in which we operate
and small to medium-sized businesses are adversely affected or our borrowers are otherwise harmed by adverse business developments, the
ability of such businesses to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely
impact our results of operations and financial condition.

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Real estate C&D loans are also an important part of our business.
This type of lending is generally considered to have relatively high credit risks because the principal is concentrated in a limited number
of loans with repayment dependent on the successful completion and operation of the related real estate project. Real estate industry
pricing dynamics in the geographical markets in which we operate can vary from year to year and, with respect to construction, can vary
between project funding and project completion. Asset values to which we underwrite loans can fluctuate from year to year and impact collateral
values and the ability of our borrowers to repay their loans. Like regulatory guidelines on CRE loans, federal regulators have issued
guidance that imposes additional restrictions on banks with C&D loans in excess of 100% of total risk-based capital. If our level
of these loans was to exceed these guidelines, our ability to make additional loans in this segment would be limited.

Weakness in residential real estate market prices as well as demand
could result in price reductions in home and land values adversely affecting the value of collateral securing some of the C&D loans
that we hold. Reduced demand for new residential mortgage loans as we have experienced in recent years, whether the result of higher
mortgage interest rates, inflationary pressures on building costs, depressed inventory levels or other factors, could also continue to
cause reduced demand for mortgage loans, which would reduce our net interest income and noninterest income levels. If economic and real
estate market conditions further deteriorate in our markets, we may experience increases in non-performing loans and other real estate
owned, increased losses and expenses from the management and disposition of non-performing assets, increases in provisions for credit
losses, and increases in operating expenses as a result of the allocation of management time and resources to the collection and work
out of loans, all of which would negatively impact our financial condition and results of operations.

We could suffer losses from a decline in the credit quality of
the assets that we hold.

We could sustain losses if borrowers, guarantors, and related parties
fail to perform in accordance with the terms of their loans. We have adopted underwriting and credit monitoring procedures and policies
that we believe are appropriate to manage these risks, including centralized control of the loan approval process, the establishment and
review of the allowance for credit losses, periodic assessment of the likelihood of nonperformance, tracking loan performance, and diversifying
our credit portfolio. These policies and procedures, however, may not prevent unexpected losses that could materially adversely affect
our financial condition and results of operations. In particular, with respect to our CRE loans, we could face credit quality risks presented
by past, current, and potential economic and real estate market conditions.

We may not be able to adequately measure and limit the credit
risks associated with our loan portfolio, which could adversely affect our profitability.

As a part of the products and services that we offer, we make commercial
and CRE loans. The principal economic risk associated with each class of loans is the creditworthiness of the borrower, which is affected
by the strength of the relevant business market segment, local market conditions, and general economic conditions. Additional factors
related to the credit quality of commercial loans include the quality of the management of the business and the borrower’s ability
both to properly evaluate changes in the supply and demand characteristics affecting its market for products and services and to effectively
respond to those changes. Additional factors related to the credit quality of CRE loans include tenant occupancy rates and the quality
of management of the property. A failure to effectively measure and limit the credit risks associated with our loan portfolio could have
an adverse effect on our business, financial condition, and results of operations.

CRE lending may expose us to increased lending risks.

As of December 31, 2025, approximately 59% of our loan portfolio consisted
of CRE loans. CRE loans are generally viewed as having more inherent risk of default than residential mortgage loans or other consumer
loans. Because payments on loans secured by CRE often depend on the successful operation and management of the properties and the businesses
which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse
conditions in the real estate market or the economy or changes in government regulation. Further, the CRE loan balance per borrower is
typically larger than that for residential mortgage loans and other consumer loans, implying higher potential losses on an individual
loan basis. Because our loan portfolio contains a number of CRE loans with balances over $10 million, the deterioration of one or
a few of these loans could cause a significant increase in nonaccrual loans, which could have a material adverse effect on our financial
condition and results of operations.

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We are subject to environmental risks associated with owning
real estate or collateral.

The cost of cleaning up or paying damages and penalties associated
with environmental problems could increase our operating expenses and result in a decline in the value of underlying collateral. When
a borrower defaults on a loan secured by real property, we may purchase the property in foreclosure or accept a deed to the property surrendered
by the borrower. We may also take over the management of commercial properties whose owners have defaulted on loans. We also own and lease
premises where banking and other facilities are located. While our 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 we may
own, acquire, manage or occupy. Environmental laws could force us to clean up the properties at our expense. It may cost much more to
clean up a property than the property is worth, and it may be difficult or impossible to sell contaminated properties. We could also be
liable for pollution generated by a borrower’s operations if we take a role in managing those operations after a default.

Our allowance for estimated loan losses may not be adequate to
cover actual loan losses, which may require us to take a charge to earnings and adversely impact our financial condition and results of
operations.

We maintain an allowance for estimated loan losses that we believe
is adequate to absorb any probable losses in our loan portfolio. Management determines the amount of the allowance based upon an analysis
of general market conditions, the credit quality of our loan portfolio and the performance of our customers relative to their financial
obligations with us. We periodically evaluate the loan portfolio and assign risk gradings to our loans, which can result in changes in
the allowance for loan losses. The amount of future losses is affected by changes in economic, operating, and other conditions, including
changes in interest rates, which may be beyond our control, and such losses may exceed the allowance for loan losses. Although we believe
that our allowance for estimated loan losses is adequate to absorb probable losses on existing loans that may become uncollectible, there
can be no assurance that the allowance will prove sufficient to cover actual loan losses in the future. If actual losses exceed the allowance,
the excess losses could adversely affect our net income and capital. Any such excess could also lead to larger allowances for loan losses
in future periods, which could in turn adversely affect net income and capital in those periods. If economic conditions differ substantially
from the assumptions used in the estimate, or if the performance of our loan portfolio deteriorates, future losses may occur, and increases
in the allowance may be necessary, either of which would have a negative effect on our financial condition and results of operations.

Additionally, federal and state banking regulators, as part of their
supervisory function, periodically review the adequacy of our allowance for estimated loan losses. These regulators may require us to
establish additional allowances based on their judgment of the information available at the time of their examinations. If these regulatory
agencies require us to increase our allowance for estimated loan losses, it will have a negative effect on our financial condition and
results of operations.

We depend on the accuracy and completeness of information about
customers and counterparties.

In deciding whether to extend credit or enter into other transactions
with customers and counterparties, we may rely on information furnished by or on behalf of customers and counterparties, including financial
statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and
completeness of that information and, with respect to financial statements, on reports of independent auditors. In deciding whether to
extend credit, we may depend upon our customers’ representations that their financial statements conform to accounting principles
generally accepted in the United States (“GAAP”) and present fairly, in all material respects, the financial condition, results
of operations, and cash flows of the customer. We also may rely on customer representations and certifications, or other audit or accountant
reports, with respect to the businesses and financial condition of our customers. Our financial condition, results of operations, financial
reporting, and reputation could be negatively affected if we rely on materially misleading, false, inaccurate, or fraudulent information.

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Liquidity and Capital Risks

Our liquidity needs might adversely affect our financial condition
and results of operations.

Our primary sources of liquidity are customer deposits, loan repayments
and the sale or maturity of investment securities. Loan repayments are subject to credit risks. In addition, deposit levels may be affected
by a number of factors, including interest rates paid by competitors, general interest rate levels, returns available to customers on
alternative investments, and general economic conditions. If market interest rates rise or our competitors raise the rates they pay on
deposits, our funding costs may increase, either because we raise our rates to avoid losing deposits or because we lose deposits and must
rely on more expensive sources of funding. Higher funding costs could reduce our net interest margin and net interest income and could
have a material adverse effect on our business, financial condition, results of operations and cash flows from operations.

We may be required to rely, from time to time, on secondary sources
of liquidity to meet withdrawal demands or otherwise fund operations or support growth. We have a line of credit in place with the Federal
Home Loan Bank (“FHLB”) of Cincinnati that we believe, when combined with our correspondent bank lines of credit, access to
the brokered certificate of deposit market, and our cash and cash equivalents, is adequate to meet our liquidity needs for the foreseeable
future. However, there can be no assurance that these arrangements will be sufficient to meet future liquidity needs, particularly if
loan demand grows faster than anticipated.

The Company is an entity separate and distinct from the Bank and depends
on the issuance of capital stock and borrowings, as well as dividends from the Bank, for liquidity.

We may be materially and adversely affected by the creditworthiness
and liquidity of other financial institutions.

Financial services institutions are interrelated as a result of trading,
clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute
transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks,
and other institutional customers. Many of these transactions expose us to credit risk in the event of a default by, or questions or concerns
about the creditworthiness of, a counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us
cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due
to us. Any such losses could have a material adverse effect on us.

Our ability to maintain required capital levels and adequate
sources of funding and liquidity could be impacted by changes in the capital markets and deteriorating economic and market conditions.

While the Company, as a bank holding company with less than $3 billion
in total consolidated assets, is currently treated as a “small bank holding company” under Federal Reserve policy and is not
subject to the Federal Reserve’s consolidated risk-based capital and leverage rules at the holding company level, federal and state
bank regulators require the Bank to maintain certain levels of capital to support operations. As of December 31, 2025, the Bank’s
regulatory capital ratios were at “well-capitalized” levels under applicable regulatory guidelines. Growth in Bank assets
(either organically or as a result of acquisitions) at rates in excess of the rate at which Bank capital is increased through retained
earnings, or significant losses, including as a result of selling investment securities that are in a loss position at the time of sale,
will reduce the Bank’s capital ratios unless we continue to increase capital. Additionally, if the Company reaches $3 billion
in total consolidated assets, we will become subject to the Federal Reserve’s consolidated risk-based capital and leverage rules
at the holding company level. Our failure to meet applicable capital guidelines or to satisfy certain other regulatory requirements could
subject us to a variety of enforcement remedies available to federal and state regulatory authorities and would negatively impact our
ability to pursue acquisitions or other expansionary activities, including the opening of new branch locations.

We may need to raise additional capital (including through the issuance
of common or preferred stock or additional Tier 2 capital instruments) in the future to provide us with sufficient capital resources (or
replace expiring capital instruments) and liquidity to meet our commitments and business needs or in connection with our growth or as
a result of deterioration in our asset quality. Our ability to maintain capital levels, sources of funding and liquidity could be impacted
by negative perceptions of our business or prospects, changes in the capital markets and deteriorating economic and market conditions.
The Bank generally is required to obtain regulatory approval in order to pay dividends to the Company unless the amount of such dividends
does not exceed its net income for the calendar year in which the dividends are paid plus retained net income for the preceding two years.
Any restriction on the ability of the Bank to pay dividends to the Company could impact the Company’s ability to pay dividends on
its capital stock or its ability to pay principal or interest on its indebtedness.

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Unexpected changes in capital requirements resulting from regulatory
actions could require us to raise capital at a time, and at a price, that might be unfavorable or could require that we forego continuing
growth or reduce our current loan portfolio. We cannot assure you that access to capital will be available to us in needed amounts or
on acceptable terms or at all. Any occurrence that may limit our access to the capital markets may materially and adversely affect our
capital costs and our ability to raise capital and/or debt and, in turn, our liquidity. If we cannot raise additional capital when needed,
our ability to expand through internal growth or acquisitions or to continue operations at then-current levels could be impaired. Factors
that could adversely affect our ability to raise additional capital or other necessary funding include conditions in the capital markets,
our financial performance, our credit ratings, regulatory actions and general economic conditions. Increases in our cost of capital, including
increased interest or dividend requirements, could have a direct adverse impact on our operating performance and our ability to achieve
our growth objectives.

Operational and Market Risks

Our business is concentrated in, and largely dependent upon,
the continued growth of, and economic conditions in, the markets where we operate.

Our operations are primarily in Tennessee and Kentucky, with a recent
expansion into North Carolina. Our success depends to a significant extent upon the business activity, population, income levels, deposits,
and real estate activity in these areas. Although customers’ business and financial interests may extend outside of these areas,
adverse economic conditions in these areas could reduce our growth rate, affect the ability of our customers to repay their loans, affect
the value of collateral underlying loans and affect our ability to attract deposits. Adverse changes in the economic conditions in one
or more of our local markets could negatively affect our results of operations and our profitability, could affect consumer confidence
levels and may cause adverse changes in payment patterns, causing increases in delinquencies and default rates, which may impact our charge-offs
and provisions for credit losses. Economic deterioration that affects household and/or corporate incomes could also result in reduced
demand for credit or fee-based products and services. Any of these factors could adversely affect our financial condition, results of
operations and cash flows. Because of our geographic concentration, we may be less able than other regional or national financial institutions
to diversify our credit risks across multiple markets.

Negative developments in the U.S. economy and local economies
in our primary markets may adversely impact our results in the future.

Our financial performance is highly dependent on the business environment
in the markets where we operate and in the U.S. as a whole. Unfavorable or uncertain economic and market conditions can be caused
by numerous factors including declines in economic growth, business activity, investor or business confidence, or consumer sentiment,
limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, natural disasters,
international trade disputes and retaliatory tariffs, supply chain disruptions, labor shortages, terrorist attacks, global pandemics,
acts of war, or a combination of these or other factors. Inflation rose sharply at the end of 2021 and continued at heightened levels
throughout 2022 and much of 2023, and while inflation started to ease at the end of 2023 and throughout much of 2024 and 2025, inflationary
pressures remain and prices are currently expected to remain elevated for many goods and services in the near term. We believe that it
is possible that we will, along with our customers, continue to experience an uneven or declining economic environment in 2026 for many
of the same reasons. A worsening of business and economic conditions (including as a result of escalating geopolitical tensions around
the world, including hostilities in the Middle East, the ongoing conflict in Ukraine and the evolving crisis in Venezuela), or persistent
inflationary pressures, and actions taken by the Federal Reserve in response thereto, or supply chain disruptions or labor shortages,
generally or specifically in the principal markets in which we conduct business, could have adverse effects, including the following:

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There can be no assurance that economic conditions will improve in
the near term or that economic conditions will not worsen. Deteriorating economic conditions could adversely affect our business, financial
condition, and results of operations.

In addition, over the last several years, the federal government
has shut down periodically, in some cases for prolonged periods. It is possible that the federal government may shut down again in the
future, particularly in light of the country’s political climate. If a prolonged government shutdown occurs, it could significantly
impact business and economic conditions generally or specifically in our principal markets, which could have a material adverse effect
on our results of operations and financial condition.

As a community bank, our ability to maintain our reputation is
critical to the success of our business, and our failure to do so may materially adversely affect our performance.

Our reputation is one of the most valuable components of our business.
As such, we strive to conduct business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring, and retaining
employees who share our core values of being an integral part of the communities we serve, delivering superior service to customers, and
caring about customers and associates and maintaining our credit culture. Any damage to our reputation, whether arising from regulatory,
supervisory or enforcement actions, matters affecting our financial reporting or compliance with SEC and exchange listing requirements,
negative publicity, the way in which we conduct our business or other factors, could strain our existing relationships and make it difficult
for us to develop new relationships. If our reputation is negatively affected, by the actions of our employees or otherwise, our business
and, therefore, our operating results may be materially and adversely affected.

As a community banking institution, we have smaller lending limits
and different lending risks than certain of our larger, more diversified competitors.

We are a community banking institution that provides banking services
to the local communities in the market areas in which we operate. Our ability to diversify economic risks is limited by our local markets
and economies. We lend primarily to individuals and small to medium-sized businesses, which may expose us to greater lending risks than
those of banks that lend to larger, better-capitalized businesses with longer operating histories. These small to medium-sized businesses
and entrepreneurs may have fewer financial resources in terms of capital or borrowing capacity and less developed internal controls and
financial reporting than larger entities. If economic conditions negatively impact our markets generally and small to medium-sized businesses
are adversely affected, our financial condition and results of operations may be negatively affected. In addition, our legally mandated
lending limits are lower than those of certain of our competitors that have more capital than we have. These lower lending limits may
discourage borrowers with lending needs that exceed our limits from doing business with us.

Our business success and growth depend significantly on key management
personnel and our ability to attract and retain key people.

We depend heavily upon our senior management team. Our success and
growth depend, in large part, on our ability to attract and retain key people with customer relationships. We compete with other financial
services companies for personnel primarily on the basis of compensation and benefits, support services and financial position. Intense
competition exists for key employees with demonstrated ability, and we may be unable to hire or retain such employees. Further, our principal
executive offices are located in a small city in a relatively rural part of the country, making it difficult to recruit employees from
larger metropolitan areas. The loss of the services of a member of our senior management team, or an inability to attract other experienced
banking personnel, could adversely affect our business. Some of these adverse effects could include the loss of personal contacts with
existing or potential customers and the loss of special technical knowledge, experience, and skills of individuals who are responsible
for our operations.

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Additionally, any failure to adequately plan for and manage succession of
key management roles or the failure of key employees to successfully transition into new roles could have a material adverse effect on
our business and results of operations. While we have succession plans in place and employment arrangements with certain key executives,
these do not guarantee the services of these executives will continue to be available to us.

We operate in a highly competitive industry and face significant
competition from other financial institutions and financial services providers, which may impair our growth or profits.

Consumer and commercial banking are highly competitive industries.
Our market areas contain not only a large number of community and regional banks, but also a significant presence of the country’s
largest commercial banks. We compete with other state and national financial institutions, as well as savings and loan associations, savings
banks, and credit unions, for deposits and loans. In addition, we compete with financial intermediaries, such as consumer finance companies,
commercial finance companies, mortgage banking companies, insurance companies, securities firms, mutual funds, and several government
agencies, as well as major retailers, all actively engaged in providing various types of loans and other financial services. Some of these
competitors may have a longer history of successful operations in our market areas and greater ties to local businesses and more expansive
banking relationships, as well as more established depositor bases, fewer regulatory constraints, and lower cost structures than us. Competitors
with greater resources may possess an advantage through their ability to maintain numerous banking locations at more convenient sites,
to conduct more extensive promotional and advertising campaigns, or to operate a more developed technology platform. Due to their size,
many competitors may offer a broader range of products and services, as well as better pricing for certain products and services, than
we can offer. For example, competitors with lower costs of capital may solicit our customers to refinance their loans with lower interest
rates. Larger institutions may also have the advantage of being perceived by the public as more secure in times of financial uncertainty.
Further, increased competition among financial services companies, due to the recent consolidation of certain competing financial institutions,
may adversely affect our ability to market products and services. Technology has lowered barriers to entry and made it possible for banks
to compete in our market areas without a retail footprint by offering competitive rates and for non-banks to offer products and services
traditionally provided by banks.

The financial services industry could become even more competitive
as a result of legislative, regulatory, and technological changes and continued consolidation. Banks, securities firms, and insurance
companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including
banking, securities underwriting, insurance (both agency and underwriting), and merchant banking.

Our ability to compete successfully depends on a number of factors,
including:

Failure to perform in any of these areas could significantly weaken
our competitive position, which could adversely affect our growth and profitability, which, in turn, could harm our business, financial
condition, and results of operations.

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Our business may suffer if there are significant declines in
the value of real estate.

The market value of real estate can fluctuate significantly in a short
period of time, including as a result of market conditions in the geographic area in which the real estate is located. If the value of
the real estate serving as collateral for our loan portfolio were to decline materially, a significant part of our loan portfolio could
become under-collateralized. If the loans that are collateralized by real estate become troubled during a time when market conditions
are declining or have declined, we may not be able to realize the value of the security anticipated when we originated the loan, which
in turn could have an adverse effect on our allowance and provision for credit losses and our financial condition, results of operations
and liquidity.

Most of our foreclosed assets are comprised of real estate properties.
We carry these properties at their estimated fair values less estimated selling costs. While we believe the carrying values for such assets
are reasonable and appropriately reflect current market conditions, there can be no assurance that the values of such assets will not
further decline prior to sale or that the amount of proceeds realized upon disposition of foreclosed assets will approximate the carrying
value of such assets. If the proceeds from any such dispositions are less than the carrying value of foreclosed assets, we will record
a loss on the disposition of such assets, which in turn could have an adverse effect on our results of operations.

Compared to national financial institutions, we are less able to spread
the risks of unfavorable local economic conditions across a large number of diversified economies. Moreover, we cannot give any assurance
that we will benefit from any market growth or the return of more favorable economic conditions in our primary market areas if the same
do occur.

Our selection of accounting policies and methods may affect our
reported financial results.

Our accounting policies and methods are fundamental to how we record
and report our financial condition and results of operations. Our management must exercise judgment in selecting and applying many of
these accounting policies and methods so they comply with GAAP and reflect management’s judgment of the most appropriate manner
to report our financial condition and results of operations. In some cases, management must select the accounting policy or method to
apply from two or more alternatives, any of which may be reasonable under the circumstances, which may result in us reporting materially
different results than would have been reported under a different alternative.

Certain accounting policies are critical to presenting our financial
condition and results of operations. They require management to make difficult, subjective or complex judgments about matters that are
uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. Because
of the uncertainty of estimates involved in these matters, we may be required to do one or more of the following: significantly increase
our allowance for credit losses or sustain loan losses that are significantly higher than the reserve provided; recognize significant
impairment on goodwill and other intangible asset balances; reduce the carrying value of an asset measured at fair value; or significantly
increase our accrued tax liability. Any of these could have a material adverse effect on our business, financial condition or results
of operations.

We currently invest in BOLI and may continue to do so in the
future.

Our BOLI policies totaled $46.6 million at December 31, 2025.
BOLI is an illiquid long-term asset that provides tax savings because cash value growth and life insurance proceeds are not taxable, subject
to certain exceptions. However, if we needed additional liquidity and converted the BOLI to cash, such transaction would be subject to
ordinary income tax and applicable penalties. We are also exposed to the credit risk of the underlying securities in the investment portfolio
and to the insurance carrier’s credit risk (in a general account contract). If BOLI was exchanged to another carrier, additional
fees would be incurred and a tax-free exchange could only be done for insureds that were still actively employed by us at that time. There
is interest rate risk relating to the market value of the underlying investment securities associated with the BOLI in that there is no
assurance that the market value of these securities will not decline. If the market value of these securities did decline, and we restructured
them to obtain securities with improved yields, we may incur losses and penalties in connection with such restructuring. Investing in
BOLI exposes us to liquidity, credit and interest rate risk, which could adversely affect our results of operations, financial condition,
and liquidity.

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The internal controls that we have implemented in order to mitigate
risks inherent to the business of banking might fail or be circumvented.

Management regularly reviews and updates our internal controls and
procedures that are designed to manage the various risks in our business, including among others, credit, market, liquidity, fraud, operational,
capital, cybersecurity, compliance, strategic and reputational risk. No system of controls, however well-designed, implemented and operated,
can provide absolute assurance that the objectives of the system will be met. If there were a failure of such a system, or if a system
were circumvented, we could suffer unexpected losses and become subject to regulatory consequences, as a result of which our business,
financial condition, results of operations or prospects could be materially and adversely affected.

Changes in accounting standards could materially impact our financial
statements.

From time to time, the Financial Accounting Standards Board or the
SEC may change the financial accounting and reporting standards that govern the preparation of our financial statements. Such changes
may result in us being subject to new or changing accounting and reporting standards. In addition, the bodies that interpret the accounting
standards (such as banking regulators or outside auditors) may change their interpretations or positions on how these standards should
be applied. These changes may be beyond our control, can be hard to predict, and can materially impact how we record and report our financial
condition and results of operations. In some cases, we could be required to apply a new or revised standard retrospectively, or apply
an existing standard differently, also retrospectively, in each case resulting in a need to revise or restate prior period financial statements.

Severe weather, natural disasters, pandemics, epidemics, acts
of war or terrorism or other external events could have significant effects on our business.

Severe weather and natural disasters, including hurricanes, tornados,
droughts and floods, wildfires, epidemics and pandemics, acts of war or terrorism or other external events could have a significant effect
on our ability to conduct business. Such disasters could disrupt our operations or the operations of customers or third parties on which
we rely. Such disasters could result in market volatility or negatively impact our customers’ ability to repay outstanding loans,
result in rapid deposit outflows, cause supply chain and/or distribution network disruptions, cause technology interruptions or outages,
damage collateral or result in the deterioration of the value of collateral or insurance shortfalls. Although management has established
disaster recovery and business continuity policies and procedures, the occurrence of any such event could have a material adverse effect
on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.

Additionally, climate change concerns could result in transition risk.
Changes in consumer preferences or technology and additional legislation and other legal requirements, including those associated with
the transition to a low-carbon economy, could restrict the scope of our or our customers’ existing businesses, amplify credit and
market risks, disproportionately impact certain of our customers, like those that own and/or operate trucking companies, negatively impact
asset values, increase expenses, including as a result of strategic planning and technology and market changes, and/or otherwise adversely
impact us, our business or our customers.

Our response to climate change, our climate change strategies, policies
and disclosure, and/or our ability to achieve any climate-related goals or commitments that we may make (which are subject to risks and
uncertainties, many of which are outside of our control) could result in reputational harm as a result of negative public sentiment, regulatory
scrutiny, litigation and reduced investor and stakeholder confidence.

The implementation of other new lines of business or new products
and services may subject us to additional risk.

We continuously evaluate our service offerings and may implement new
lines of business or offer new products and services within existing lines of business in the future. There are substantial risks and
uncertainties associated with these efforts. In developing and marketing new lines of business and/or new products and services, we undergo
a new product process to assess the risks of the initiative and invest significant time and resources to build internal controls, policies
and procedures to mitigate those risks, including, as necessary, hiring experienced management to oversee the implementation of the initiative.
Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and
price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives,
and shifting market preferences, may also impact the successful implementation of a new line of business and/or a new product or service
offering. Furthermore, any new line of business and/or new product or service could require the establishment of new key and other controls
and have a significant impact on our existing system of internal controls. Failure to successfully manage these risks in the development
and implementation of new lines of business and/or new products or services could have a material adverse effect on our business and,
in turn, our financial condition and results of operations.

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Risks Related to Acquisition and Other Expansionary Activity

We may grow through mergers or acquisitions and other future
expansionary activity, which strategy may not be successful or, if successful, may result in additional risks.

As part of our ongoing strategic plan, we may consider expansion into
adjacent markets. Such expansion might take the form of the establishment of de novo branches or the acquisition of existing banks or
bank branches. We face significant competition from numerous other financial services institutions, many of which will have greater financial
resources or more liquid securities than we do, when considering acquisition opportunities. Accordingly, attractive acquisition opportunities
may not be available to us. There can be no assurance that we will be successful in identifying or completing any future acquisitions.

There are considerable costs associated with opening new branches,
and new branches generally do not generate sufficient revenues to offset costs until they have been in operation for some time. These
types of expansions, including de novo expansions, involve various substantial risks, including:

Management of Growth. We may be unable
to successfully:

Results of Operations. There is no assurance
that existing banking offices or future offices will maintain or achieve deposit levels, loan balances or other operating results necessary
to avoid losses or produce profits. If we are unable to grow our revenues in amounts necessary to support a higher expense base, our results
of operations will be negatively impacted. Our growth strategy necessarily entails growth in overhead expenses as we add new offices and
staff. Our historical results may not be indicative of future results or results that may be achieved as we continue to evaluate opportunities
to increase the number and concentration of our offices, particularly in our newer markets.

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Development of Offices. There are considerable
costs involved in opening banking offices (particularly those in new markets), and new offices generally do not generate sufficient revenues
to offset their costs until they have been in operation for at least a year or more. Accordingly, any new banking offices we establish,
including those we plan to establish in the markets to which we have expanded or announced plans to expand, can be expected to negatively
impact our earnings for some period of time until they reach certain economies of scale. The same is true for our efforts to expand in
these markets with the hiring of additional seasoned professionals with significant experience in the markets. Our expenses could be further
increased if we encounter delays in opening any of our new banking offices, including as a result of per mitting challenges, supply chain
disruptions and labor challenges like those affecting the construction industry over the last few years, or regulatory actions or
delays. We may be unable to accomplish future office expansion plans due to a lack of available satisfactory sites, difficulties in acquiring
such sites, failure or inability to receive any required regulatory approvals, increased expenses or loss of potential sites due to complexities
associated with zoning and permitting processes, higher than anticipated construction or merger and acquisition costs or other factors.
Finally, we have no assurance any office will be successful even after it has been established or acquired, as the case may be.

Regulatory and Economic Factors. Our
growth and expansion plans may be adversely affected by a number of regulatory or economic developments or other events. Failure or inability
to obtain required regulatory approvals, changes in laws and regulations or other regulatory developments and changes in prevailing economic
conditions or other unanticipated events may prevent or adversely affect our continued growth and expansion. Such factors may cause us
to alter our growth and expansion plans or slow or halt the growth and expansion process, which may prevent us from entering into new,
or expanding in our existing, markets or allow competitors to gain or retain market share in our existing markets.

Infrastructure and Controls. We may not
successfully implement improvements to, or integrate, our information and control systems, procedures and processes in an efficient or
timely manner and may discover deficiencies in existing systems and controls. In particular, our systems, controls and procedures must
be able to accommodate an increase in transaction volume and the infrastructure that comes with new products, offices, markets or any
combination thereof. Thus, our growth strategy may divert management from our existing operations and may require us to incur additional
expenditures to expand our administrative and operational infrastructure, which may adversely affect earnings, shareholder returns, and
our efficiency ratio.

Failure to successfully address these and other issues related to our
recent expansions or future expansionary activity could have a material adverse effect on our financial condition and results of operations
and could adversely affect our ability to successfully implement our business strategy. Also, if our growth occurs more slowly than anticipated
or declines, our results of operations and financial condition could be materially and adversely affected.

If we cannot maintain our “satisfactory” rating under
the CRA, we may face restrictions on our operations and limitations on our ability to pursue certain strategic opportunities.

Financial institutions are periodically reviewed pursuant to the CRA
and its implementing regulations and receive a rating based on their performance in helping to meet the credit needs of the communities
they serve, including low- and moderate-income neighborhoods. During our most recent CRA examination, we received a “satisfactory”
CRA rating. If we are unable to maintain at least a “satisfactory” CRA rating, we could be subject to restrictions on certain
expansionary activities, including certain mergers and acquisitions and the establishment and relocation of bank branches, and lose access
to expedited processing of applications to undertake certain activities.

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A less than “satisfactory” CRA rating could also have an
impact on our relationships with certain states, counties, municipalities or other public agencies to the extent applicable law, regulation
or policy limits whether such entities may do business with a bank that has a less than “satisfactory” CRA rating and, in
general, could negatively affect our reputation, business, financial condition and results of operations. Further, if we fail to satisfactorily
comply with the CRA, the Federal Reserve could take certain actions against us, including the issuance of an informal or formal enforcement
action or the assessment of civil money penalties.

Acquisitions may disrupt our business and dilute shareholder
value, and integrating acquired companies may be more difficult, costly, or time-consuming than we expect.

Our business strategy focuses on organic growth, including new hires
and facilities, and growth through acquisitions of other financial institutions. Our pursuit of acquisitions may disrupt our business,
and common stock that we may potentially issue as consideration in such acquisitions may dilute the book value or market value of your
investment, especially since an acquisition frequently involves the payment of a premium over book and market values. In addition, we
may fail to realize some or all of the anticipated benefits of completed acquisitions.

In addition, our acquisition activities could be material to our business
and involve a number of significant risks, including the following:

If difficulties arise with respect to the integration process for acquisitions,
the economic benefits expected to result from those acquisitions might not occur during the timeframes we expect, or at all. As with any
merger of financial institutions, there also may be business disruptions that cause us to lose customers or cause customers to move their
business to other financial institutions. Failure to successfully integrate financial institutions and other businesses that we acquire
could have an adverse effect on our profitability, return on equity, or return on assets or our ability to implement our strategy, any
of which in turn could have a material adverse effect on our business, financial condition, and results of operation.

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Our financial performance will be negatively impacted if we are
unable to execute our growth strategy.

Our current growth strategy is to grow organically, including through
new hires and facilities, supplemented with select acquisitions. Our ability to grow organically depends primarily on generating loans
and deposits of acceptable risk and expense, and we may not be successful in continuing this organic growth. Our ability to identify appropriate
markets for expansion, recruit and retain qualified personnel, and fund growth at a reasonable cost depends upon prevailing economic conditions,
maintenance of sufficient capital, competitive factors, and changes in banking laws and regulations, among other factors. Conversely,
if we grow too quickly and are unable to control costs and maintain asset quality, such growth, whether organic or through select acquisitions,
could materially and adversely affect our financial condition and results of operations.

Our historical growth rate and performance may not be indicative
of our future growth or financial results.

We may not be able to sustain our past rate of growth or grow our business
at all. Consequently, our past operating results will not necessarily be indicative of our future operations.

If the communities in which we operate do not grow, or if the prevailing
economic conditions locally or nationally are less favorable than we have historically realized, then our ability to implement our business
strategies may be adversely affected and our actual growth and financial performance may materially change.

Moreover, we cannot give any assurance that we will benefit from any
market growth or favorable economic conditions in our market areas even if they do occur. If our senior management team is unable to provide
the effective leadership necessary to implement our strategic plans, including the successful integration of any acquired financial institutions,
our actual financial performance may be materially and adversely different from our expectations and goals. Additionally, to the extent
that any component of our strategic plan requires regulatory approval, if we are unable to obtain necessary approvals without material
adverse conditions, or at all, we will be unable to completely implement our strategy, which may adversely affect our actual growth and
results of operations and financial condition. The inability to successfully implement our strategic plan could adversely affect the price
of our common stock.

Risks Related to Technology and Cybersecurity

We are dependent on our information technology and telecommunications
systems and third-party servicers, and systems failures or interruptions or breaches of security could have a material adverse effect
on our financial condition and results of operations, as well as cause legal or reputational harm.

We are dependent upon information technologies, computer systems and
networks, including those we maintain and those maintained and provided to us by third parties, to conduct operations and are reliant
on technology to help increase efficiency in our business. Any of these could become unavailable or impaired due to a variety of causes,
including storms and other natural disasters, terrorist attacks, fires, phishing schemes, social engineering, utility outages, internal
or external theft or fraud, design defects, human error, misconduct or complications or failures encountered as existing systems are maintained,
replaced or upgraded. For example, our financial, accounting, data processing, or other operating or security systems or infrastructure
or those of third parties upon which we rely may fail to operate properly or become compromised, disabled or damaged, which could adversely
affect our ability to process transactions or provide services. In the event that backup systems are utilized, they may not process data
as quickly as our primary systems and we may experience data losses in the course of recovery. We continuously update the systems on which
we rely to support our operations and growth and to remain compliant with all applicable laws, rules and regulations. This updating entails
significant costs and creates risks associated with implementing new systems and integrating them with existing ones, including business
interruptions that may occur in the course of implementation or integration. We maintain a system of internal controls and security to
mitigate the risks of many of these occurrences and maintain insurance coverage for certain risks; however, should an event, including
a cyberattack (including a ransomware attack), occur that is not prevented or detected by our internal controls, causes an interruption,
degradation or outage in service, causes us to pay a ransom fee, or is uninsured against or in excess of applicable insurance limits,
such occurrence could have an adverse effect on our business and our reputation, which, in turn, could have a material adverse effect
on our financial condition, results of operations and liquidity.

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Our operations rely on the secure processing, storage and transmission
of confidential, proprietary, personal and other information in our computer systems and networks. Although we take protective measures
and endeavor to modify these systems as circumstances warrant, the security of our computer systems, software and networks may be vulnerable
to breaches, unauthorized access, misuse, computer viruses or other malicious code and other events that could have a security impact.
We provide our customers the ability to bank remotely, including over the Internet and through their mobile devices. The secure transmission
of confidential information is a critical element of remote and mobile banking. Our network, and the systems of parties with whom we contract
or on which we rely, as well as those of our customers and regulators, could be vulnerable to unauthorized access, computer viruses, phishing
schemes, social engineering, spam attacks, ransomware attacks, human error, natural disasters, power loss and other security breaches.
Sources of attacks vary and may include hackers, disgruntled employees or vendors, organized crime, terrorists, foreign governments, corporate
espionage and activists. In recent periods, there continues to be a rise in electronic fraudulent activity (including wire fraud), security
breaches and cyberattacks within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting
commercial bank accounts or seeking to infiltrate legitimate transactions. We believe these types of efforts will continue to increase
in frequency and in their level of sophistication. We have established policies, processes, and procedures to identify, measure, monitor,
mitigate, report, and analyze risks associated with fraud, and we continue to invest in systems, resources, and controls to detect and
prevent it. There are inherent limitations, however, to our risk management strategies, systems, and controls as they currently exist
or may develop in the future. We may not appropriately anticipate, monitor, or identify these risks. If our risk management framework
proves ineffective in connection with any fraudulent activity, we could suffer unexpected losses, we may have to expend resources detecting
and correcting failures in our systems, and we may be subject to potential claims from third parties and government agencies. We may also
suffer reputational damage. Any of these consequences could adversely affect our business, financial condition, or results of operations.

Cybersecurity risks for banking organizations have significantly increased
in recent years in part because of the proliferation of new technologies and the widespread use of the internet and telecommunications
technologies to conduct financial transactions. Cybersecurity risks may increase in the future as we continue to increase our mobile-payment
and other internet-based product offerings and expand our internal use of web-based and cloud-based products and applications. Even the
most advanced internal control environment may be vulnerable to compromise. Targeted social engineering attacks are becoming more prevalent
and sophisticated and are extremely difficult to prevent. AI, including generative AI machine learning and similar tools and technologies
that collect, aggregate, analyze or generate data or other materials or content, is further increasing risks in this area, including by
making fraud detection more difficult, particularly with detection devices that use voice recognition or authentication. The techniques
used by bad actors change frequently, may not be recognized until launched and may not be recognized until well after a breach has occurred.
Additionally, the existence of cyberattacks or security breaches at third parties with access to our data, such as vendors, may not be
disclosed to us in a timely manner. Consistent with industry trends, we remain at risk for attempted electronic fraudulent activity, as
well as attempts at security breaches and cybersecurity-related incidents. Cloud technologies are also critical to the operation of our
systems, and our reliance on cloud technologies is growing. Service disruptions in cloud technologies or intrusion into those of our systems
hosted on cloud-based technologies may lead to unauthorized access of, delays in accessing, or the loss of data that is important to our
businesses and may hinder our customers’ access to our products and services, which would negatively impact our operations which
in turn could have a material adverse effect on our financial condition, results of operations and liquidity.

We spend significant capital and other resources to protect against
the threat of security breaches and computer viruses, and we may be required to spend significant capital and other resources to alleviate
problems caused by security breaches or viruses. To the extent that our activities or the activities of our vendors, regulators or customers
involve the storage and transmission of confidential information, security breaches (including breaches of security of customer, vendor
or regulatory systems and networks) and viruses could expose us to claims, litigation and other possible liabilities. Any inability to
prevent or promptly detect security breaches or computer viruses could also cause existing customers to lose confidence in our systems
and could adversely affect our reputation, results of operations and ability to attract and retain customers. In addition, a security
breach could also subject us to additional regulatory scrutiny, expose us to civil litigation and possible financial liability and cause
reputational damage.

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We utilize both internally hosted and outsourced external vendor managed
systems for our data processing needs. The failure of these systems, or the termination of a third-party software license or service agreement
on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems
interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or
such third-party systems fail or experience interruptions, including as a result of viruses or other attacks. If sustained or repeated,
a system failure or service denial could result in a deterioration of our ability to process new and renewal loans, gather deposits and
generally provide customer service, compromise our ability to operate effectively, damage our reputation, result in a loss of customer
business and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse
effect on our financial condition, results of operations and liquidity.

We also face the risk of operational disruption, system failures, or
capacity constraints of any of the third parties that facilitate our business activities, including vendors, exchanges, and other financial
intermediaries. Such parties could also be the source or cause of an attack on, or breach of, our operational systems, data or infrastructure,
and could disclose such attack or breach to us in a delayed manner or not at all. In addition, we may be at risk of an operational failure
with respect to our customers’ systems. Our risk and exposure to these matters remains heightened because of, among other things,
the evolving nature of these threats and the continued uncertain global and political economic environment.

As cybersecurity threats continue to evolve, we will likely expend
significant additional resources to continue to modify or enhance our protective measures, investigate and remediate any information security
vulnerabilities, or respond to any changes to state or federal regulations, policy statements or laws concerning data breaches, information
systems or security. Any failure to maintain adequate security over our information systems, our technology-driven products and services
or our customers’ personal and transactional information could negatively affect our business and our reputation and result in fines,
penalties, or other costs, including litigation expenses and/or additional compliance costs, all of which could have a material adverse
effect on our financial condition, results of operations and liquidity. Furthermore, the public perception that a cyber-attack on our
systems has been successful, whether or not this perception is correct, may damage our reputation with customers and third parties with
whom we do business. A successful penetration or circumvention of system security could result in negative consequences for us, including
loss of customers and business opportunities, disruption to our operations and business, misappropriation or destruction of our confidential
information and/or that of our customers, or damage to our customers’ and/or third parties’ computers or systems, and could
result in a violation of applicable privacy laws and other laws, litigation exposure, regulatory fines, penalties or intervention, loss
of confidence in our security measures, reputational damage, reimbursement or other compensatory costs, and additional compliance costs,
and could adversely impact our financial condition, results of operations and liquidity.

We continually encounter technological change and may have fewer
resources than our competitors to continue to invest in technological improvements.

The banking and financial services industries are undergoing rapid
technological changes with frequent introductions of new technology-driven products and services. In addition to enhancing the level of
service provided to customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs.
Our future success will depend, in part, on our ability to address the needs of customers by using technology to provide products and
services that enhance customer convenience and satisfaction and create additional efficiencies in operations. In connection with implementing
new technology enhancements or products in the future, we may experience certain operational challenges (e.g., human error, system error,
incompatibility, etc.) which could result in us not fully realizing the anticipated benefits from such new technology enhancements or
products or require us to incur significant costs to remedy any such challenges in a timely manner.

Many of our larger competitors have substantially greater resources
to invest in technological improvements and have invested significantly more than us in technological improvements. As a result, they
may be able to offer additional or more convenient products or services compared to those that we will be able to provide, which would
put us at a competitive disadvantage. Accordingly, we may not be able to effectively implement new technology-driven products and services
or be successful in marketing such products and services to our customers, which could impair our growth and profitability.

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The adoption of AI tools by us and our third-party vendors and
service providers may increase the risk of errors, omissions, unfair treatment or fraudulent behavior by our employees, customers or counterparties,
or other third parties.

Our adoption of AI for limited internal use has increased our efficiency,
and we expect to continue to adopt such tools as appropriate. In addition, we expect our third-party vendors and service providers to
increasingly develop and incorporate AI into their product offerings faster than we are able to do so independently. There are significant
risks involved in utilizing AI and no assurance can be provided that our or our third-party vendors’ or service providers’
use of AI will enhance our or our third-party vendors’ or service providers’ products or services or produce the intended
results. The adoption and incorporation of such tools can lead to concerns around safety and soundness, fair access to financial services,
fair treatment of consumers and compliance with applicable laws and regulations. Such risk can result from models being poorly designed
or faulty data being used, inadequate model testing or validation, narrow or limited human oversight, inadequate planning or due diligence,
inappropriate or controversial data practices by developers or end-users, and other factors adversely affecting public opinion of AI and
the acceptance of AI solutions. Furthermore, given the pace of rapid adoption of such tools by vendors and service providers, we may not
be aware of the addition of AI solutions prior to such tools being introduced into our environment. Failure to adequately manage AI risks,
particularly generative AI, can result in erroneous results and decisions made by misinformation, unwanted forms of bias, unauthorized
access to sensitive, confidential, proprietary or personal information and violations of applicable laws and regulations, leading to operational
inefficiencies, competitive harm, reputational harm, ethical challenges, legal liability, losses, fines and other adverse impacts on our
business and financial results. If we do not have sufficient rights to use the data or other material or content on which the AI tools
we use rely, or to use the output of such AI tools, we also may incur liability through the violation of applicable laws and regulations,
third-party intellectual property, privacy or other rights or contracts to which we are a party.

In addition, regulation of AI is rapidly evolving as federal and state
legislators and regulators are increasingly focused on these powerful emerging technologies. The technologies underlying AI and its uses
are subject to a variety of laws and regulations, including intellectual property, data privacy and cybersecurity, consumer protection,
competition, equal opportunity and fair lending laws, and are expected to be subject to increased regulation and new laws or new applications
of existing laws and regulations. AI is the subject of ongoing review by various U.S. governmental and regulatory agencies, and various
U.S. states are applying, or are considering applying, existing laws and regulations to AI or are considering general legal frameworks
for AI. For example, in December 2025, President Trump signed an executive order aimed at preventing varied state AI regulations
and calling for a legislative proposal for a uniform federal AI framework to preempt state AI laws. The executive order directed the U.S.
Attorney General to establish an AI Litigation Taken Force within the U.S. Department of Justice (the“DOJ”) to challenge state
AI laws, required the Secretary of Commerce to evaluate restricting funding for states with onerous AI regulations and directed certain
federal agencies to consider preemption of existing state AI laws. While the content and impact of any future federal or state AI laws
or regulations are unclear, such future AI laws and regulations may pertain to data privacy, data protection, and the ethical use of AI,
as well as clarifying intellectual property considerations. We may not be able to anticipate how to respond to these rapidly evolving
frameworks, and we may need to expend resources to adjust our operations or offerings in certain jurisdictions if the legal frameworks
are inconsistent across jurisdictions. Moreover, because AI technology itself is highly complex and rapidly developing, it is not possible
to predict all of the legal, operational or technological risks that may arise relating to the use of AI. Our use of AI could give rise
to legal or regulatory action, increased scrutiny or liability, damage our reputation or otherwise materially harm our business. Additionally,
if we fail to keep pace with rapidly evolving AI technological developments, our competitive position and business results may be negatively
impacted.

Legal, Regulatory and Compliance Risks

We are subject to extensive regulation in the conduct of our
business, which imposes additional costs on us and adversely affects our profitability.

The Company and the Bank are subject to extensive federal and state
regulation and supervision. As a bank holding company, the Company is subject to federal regulation under the BHC Act, and the examination
and reporting requirements of the Federal Reserve. Federal regulation of the banking industry, along with tax and accounting laws, regulations,
rules, and standards, may limit our operations significantly and control the methods by which we conduct business, as they limit those
of other banking organizations. Banking regulations are primarily intended to protect depositors, the deposit insurance fund, and the
banking system as a whole, and not shareholders or creditors. These regulations affect lending practices, capital structure, capital levels,
investment practices, dividend policy, and overall growth, among other things. For example, federal and state consumer protection laws
and regulations limit the manner in which we may offer and extend credit. In addition, the laws governing bankruptcy generally favor debtors,
making it more expensive and more difficult to collect from customers who become subject to bankruptcy proceedings.

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Legislation and regulation with respect to our industry has increased
in recent years, and supervision and regulation may continue to expand in scope and complexity, even though the Trump administration
has indicated a willingness to reduce the regulatory burden for financial institutions, particularly small institutions such as ours.
Changes to statutes, regulations or regulatory policies, including changes in the interpretation or implementation of statutes, regulations
or regulatory policies, or the issuance of new supervisory guidance, could affect us in substantial and unpredictable ways and could subject
us to additional costs, restrict our growth, limit the products and services we may offer or limit the pricing for banking products or
services. Establishing systems and processes to achieve compliance with applicable laws and regulations increases our costs and could
limit our ability to pursue business opportunities. We also may be required to invest significant management attention and resources to
evaluate and make any changes necessary to comply with new or additional laws or regulations impacting our business or that of the Bank.
This allocation of resources, as well as any failure to comply with applicable requirements, may negatively impact our financial condition
and results of operations.

Federal and state banking agencies periodically conduct examinations
of our business, including our compliance with laws and regulations, and our failure to comply with any supervisory actions to which we
become subject as a result of such examinations could materially and adversely affect us.

We are subject to supervision and regulation by banking agencies that
periodically conduct examinations of our businesses, including our compliance with applicable laws and regulations. We and any of our
nonbanking subsidiaries are subject to supervision and periodic examination by the Federal Reserve. The Bank is subject to supervision
and periodic examination by the Federal Reserve and the TDFI. Accommodating such examinations may require management to reallocate resources,
which would otherwise be used in the day-to-day operation of other aspects of our business. If, as a result of an examination, any
such banking agency was to determine that the financial condition, capital resources, allowance for loan losses, asset quality, earnings
prospects, management, liquidity, or other aspects of our operations had become unsatisfactory, or that we or our management were in violation
of any applicable law or regulation, such banking agency may take a number of different remedial actions as it deems appropriate. These
actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions
resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our
capital, to restrict our growth, to change the asset composition of our portfolio or balance sheet, to assess civil monetary penalties
against us or our officers or directors, to restrict or limit our branching or acquisition activity, to remove officers and directors,
and, if it is concluded that existing conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate
our deposit insurance. If we become subject to any such regulatory action, it could have a material adverse effect on our business, financial
condition, and results of operations. See “Supervision and Regulation.”

Federal, state and local consumer lending laws may restrict our
ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of
doing business.

Federal, state and local laws have been adopted that are intended to
eliminate certain lending practices considered “predatory.” These laws prohibit practices such as steering borrowers away
from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans and making loans without a reasonable
expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property. Loans with certain
terms and conditions and that otherwise meet the definition of a “qualified mortgage” may be protected from liability to a
borrower for failing to make the necessary determinations. In either case, we may find it necessary to tighten our mortgage loan underwriting
standards in response to CFPB rules, which may constrain our ability to make loans consistent with our business strategies. It is our
policy not to make predatory loans and to determine borrowers’ ability to repay, but applicable laws and related rules create the
potential for increased liability with respect to our lending and loan investment activities, increase our cost of doing business and,
ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans
that we do make.

38

We are subject to federal and state fair lending laws, and our
failure to comply with these laws could lead to material penalties.

Federal and state fair lending laws and regulations, such as the Equal
Credit Opportunity Act and the Fair Housing Act, impose nondiscriminatory lending requirements on financial institutions. The DOJ, CFPB
and other federal and state agencies are responsible for enforcing these laws and regulations. Private parties may also have the ability
to challenge an institution’s performance under fair lending laws in private class action litigation. A successful challenge to
our performance under the fair lending laws and regulations could adversely impact our rating under the CRA and result in a wide variety
of sanctions, including the payment of damages and civil money penalties, injunctive relief, and the imposition of restrictions on merger
and acquisition and other expansionary activity, which could negatively impact our reputation, business, financial condition and results
of operations.

We have a concentration in CRE lending that could cause our regulators
to restrict our ability to grow.

We have a concentration in CRE loans that could cause our regulators
to restrict our ability to grow. As a part of their regulatory oversight, the federal bank regulators have issued guidance with respect
to a financial institution’s concentrations in CRE lending activities. This guidance was issued in response to the regulators’
concerns that rising CRE concentrations might expose institutions to unanticipated earnings and capital volatility in the event of adverse
changes in the CRE market. This guidance provides supervisory criteria, including numerical indicators, to assist in identifying institutions
with potentially significant CRE loan concentrations that may warrant greater supervisory scrutiny, and also identifies certain concentration
levels that, if exceeded, will expose an institution to additional supervisory analysis with regard to the institution’s CRE concentration
risk. The guidance is designed to promote appropriate levels of capital and sound loan and risk management practices for institutions
with a concentration of CRE loans, but the guidance does not limit CRE lending. In general, the guidance establishes the following supervisory
criteria as preliminary indications of possible CRE concentration risk: (i) an institution’s total C&D and other land loans
represent 100% or more of total capital or (ii) the institution’s total CRE loans represent 300% or more of the institution’s
capital, and the institution’s CRE portfolio has increased by 50% or more during the prior 36 months. Pursuant to the guidance,
loans secured by owner-occupied CRE are not included for purposes of the CRE concentration calculation. At December 31, 2025 and December 31,
2024, the Bank’s ratios of C&D and other land loans to total risk-based capital were 81.9% and 78.7%, respectively, and its
ratios of total CRE loans excluding owner-occupied CRE loans (as defined in the guidance) to total risk-based capital were 322% and 304%,
respectively. The three-year growth rates for the Bank’s CRE portfolio as of December 31, 2025 and December 31, 2024 were 60.5%
and 75.4%, respectively. Given the level of, and recent growth in, CRE loans in our loan portfolio, our CRE loan portfolio, risk management
practices, and capital levels may be subject to enhanced regulatory scrutiny. If our risk management practices relative to CRE lending
or our capital levels are determined to be inadequate in light of the risks associated with our CRE loan portfolio, we may have to reduce
our level of CRE lending and/or seek to increase capital to support our CRE lending function or undertake other remedial actions, any
of which could have a material adverse effect on our business, financial condition and results of operations.

We face the risk of noncompliance with and enforcement actions
related to the Bank Secrecy Act and other anti-money laundering laws and regulations.

The Bank Secrecy Act of 1970, the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 and other laws and regulations
require financial institutions to, among other things, institute and maintain effective anti-money laundering programs and file suspicious
activity and currency transaction reports as appropriate. The Financial Crimes Enforcement Network, established by the U.S. Department
of the Treasury to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of these
requirements and engages in coordinated enforcement efforts with the individual federal banking regulators, as well as the DOJ, Drug Enforcement
Administration and IRS. There is also increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control
related to U.S. sanctions regimes. If our policies, procedures and systems are deemed deficient or the policies, procedures and systems
of the financial institutions that we have already acquired or may acquire in the future are deficient, we would be subject to liability,
including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals
to proceed with certain aspects of our business plan, including our acquisition plans, which would negatively impact our business, financial
condition and results of operations. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing
could also have serious reputational consequences for us.

39

FDIC deposit insurance assessments may materially increase in
the future, which would have an adverse effect on our earnings and results of operations.

The Bank is a member of the FDIC, and the deposits of the Bank’s
depositors are insured to the maximum amount provided by the FDIA, subject to the Bank’s payment of deposit insurance premiums to
the FDIC. The FDIC calculates assessment rates applicable to the Bank based on a variety of factors, including capital adequacy,
asset quality, management practices, earnings performance, liquidity, and sensitivity to market risk. Any deterioration of these factors
could result in an increase in the Bank’s FDIC assessment rate. In addition, to maintain a strong funding position and restore the
reserve ratios of the DIF following the 2008 financial crisis, the FDIC increased deposit insurance assessment rates generally and, in
response to recent bank failures, charged special assessments applicable to certain FDIC-insured financial institutions. Further increases
in assessment rates or special assessments may occur in the future, especially if there are significant additional financial institution
failures. Any future special assessments, increases in assessment rates or required prepayments of FDIC insurance premiums could reduce
our profitability or limit our ability to pursue certain business opportunities, which could have a material adverse effect on our business,
financial condition and results of operations.

The Bank is, and the Company may become, subject to regulatory
capital requirements.

Applicable regulations require the Bank to maintain specific types
and amounts of capital. Various components of the capital adequacy regulations applicable to the Bank are subject to qualitative judgments
by banking regulators. The Bank is currently considered “well capitalized” under the existing regulatory framework. The Bank’s
failure to remain in a “well capitalized” status could adversely affect customers’ confidence in the Bank, which could
in turn adversely affect our ability to do business. In addition, the Bank’s failure to remain “well capitalized” could
also result in restrictions imposed by banking regulators on the Bank’s growth, acceptance of brokered deposits and deposit rates,
dividends, management compensation and other activities. Lack of customer confidence in the Bank or any such regulatory restrictions could
have a material adverse effect on our financial condition and results of operations. Additionally, although the Company today is treated
as a “small bank holding company” under Federal Reserve policy and is not subject to the Federal Reserve’s consolidated
risk-based capital and leverage rules at the holding company level, if in the future the Company’s total consolidated assets equal
or exceed $3 billion or the Company engages in significant nonbanking activities (either directly or through a nonbank subsidiary),
conducts significant off-balance sheet activities (either directly or through a nonbank subsidiary) or has a material amount of debt or
equity securities (other than trust preferred securities) outstanding that are registered with the SEC, the Company will become subject
to the Federal Reserve’s consolidated risk-based capital and leverage rules at the holding company level, and our failure to comply
with these capital requirements could subject us to a variety of regulatory enforcement actions and could materially and adversely affect
our reputation, our ability to pursue acquisitions or other expansionary activities, and, generally, our business, financial condition
and results of operations.

The Federal Reserve may require us to commit capital resources
to support the Bank.

Federal law requires a bank holding company to act as a source of financial
and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks. Under the “source of strength”
doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank and may charge
the bank holding company with engaging in unsafe and unsound practices for a failure to commit resources to a subsidiary bank. A Bank
capital injection may be required at times when we do not have the resources to provide it and, therefore, we may be required to borrow
the needed funds or raise capital, even if further investment in the Bank is not otherwise warranted. In the event of a bank holding company’s
bankruptcy, the bankruptcy trustee will assume any commitment by the bank holding company to a federal bank regulatory agency to maintain
the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority
of payment over the claims of the bank holding company’s general unsecured creditors, including the holders of its note obligations.
Accordingly, any borrowings by the Company in order to make a required capital injection into the Bank may be difficult and expensive
and may adversely impact our cash flows, financial condition, results of operations and prospects.

40

We may need to raise additional capital in the future, including
as a result of heightened regulatory capital requirements, but that capital may not be available, or available on favorable terms, when
it is needed or may be dilutive to shareholders.

We are required by federal and state regulatory authorities to meet
certain regulatory capital requirements. Institutions that seek acquisitions, such as us, are expected to maintain capital levels substantially
above the regulatory minimums. New regulations implementing minimum capital standards could require financial institutions to maintain
higher minimum capital ratios and may place a greater emphasis on common equity or tangible common equity as a component of “Tier
1 capital,” which consists generally of shareholders’ equity and qualifying preferred stock, less certain goodwill items and
other intangible assets. In order to support our operations and comply with applicable regulatory requirements, we may need to raise capital
in the future. Our ability to raise additional capital will depend on various factors, including conditions in the capital markets at
the time (which are outside of our control) and our financial condition and performance. The capital and credit markets have experienced
significant volatility in recent years, and capital may not be available to us on reasonable terms, or at all, when needed. In some
cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those
issuers’ underlying financial strength. If we cannot raise additional capital when needed, our financial condition and results of
operations may be adversely affected and our banking regulators may subject us to regulatory enforcement actions as outlined above. Furthermore,
our issuance of additional shares of common stock could dilute the economic ownership interests of our current shareholders.

The Company is an entity separate and distinct from the Bank.

The Company is an entity separate and distinct from the Bank. Company
transactions with the Bank are limited by Sections 23A and 23B of the Federal Reserve Act and Federal Reserve Regulation W. We
depend upon the Bank’s earnings and dividends from the Bank, the amount of which is limited by federal and state laws and regulations
and regulatory policies, for cash to pay the Company’s obligations and to pay dividends to our shareholders. If the Bank’s
ability to pay dividends to the Company becomes limited, the Company’s liquidity and financial condition could be materially and
adversely affected.

Our ability to pay dividends is subject to restriction by various
laws and regulations and other factors.

Both the Company and the Bank are subject to various regulatory restrictions
relating to the payment of dividends. In addition, the Federal Reserve has the authority to prohibit bank holding companies from engaging
in unsafe or unsound practices in conducting their businesses, which in some cases can include the payment of dividends. Federal and state
laws and regulations and regulatory policies impacting the ability of the Bank and the Company to pay dividends are described in greater
detail in “Supervision and Regulation — Payment of Dividends and Repurchases of Capital Instruments” and “Supervision
and Regulation — Prompt Corrective Action and Other Consequences of Capital Adequacy.”

For the foreseeable future, the majority, if not all, of the Company’s
revenue will be from dividends, if any, paid to the Company by the Bank. Accordingly, our ability to pay dividends is substantially dependent
on the ability of the Bank to pay dividends to us. Furthermore, the present and future dividend policy of the Bank is subject to the discretion
of the Bank’s board of directors.

We cannot guarantee that the Company or the Bank will be permitted
by its financial condition or applicable laws, regulations, and regulatory policy to pay dividends or that the Bank’s board of directors
will elect for the Bank to pay dividends to us, nor can we guarantee the timing or amount of any dividends actually paid.

The 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.

We may be involved from time to time in a variety of litigation, investigations
or similar matters arising out of our business. It is inherently difficult to assess the outcome of these matters, and we may not prevail
in certain proceedings or litigation. Also, our insurance may not cover all claims that may be asserted against us and indemnification
rights to which we are entitled may not be honored, and any claims asserted against us, regardless of merit or eventual outcome, may harm
our reputation. If the ultimate liability we incur in connection with any litigation, investigation or similar matter significantly exceeds
our insurance coverage, it could have a material adverse effect on our business, financial condition and results of operations. In addition,
premiums for insurance covering the financial and banking sectors are rising. We may not be able to obtain appropriate types or levels
of insurance in the future, and we may not be able to obtain adequate replacement policies with acceptable terms or at historic rates,
if at all.

41

Risks Related to Our Common Stock

The Company’s ability to pay cash dividends is limited,
and we may be unable to pay future dividends even if we desire to do so.

Even though our Board has approved the payment of cash dividends on
our common stock in recent years, there can be no assurance as to whether or when we may pay dividends on our common stock in the
future. Future dividends, if any, will be declared and paid at the discretion of our Board and will depend on a number of factors. Our
principal source of funds used to pay cash dividends on our common stock will be dividends that we receive from the Bank. The Bank’s
asset quality, earnings performance, liquidity, prospects and capital levels generally will be taken into account before the Bank’s
board of directors declares or pays future dividends to the Company. Our Board will also consider the Company’s liquidity, prospects
and capital levels when considering whether to declare and pay dividends on our common stock, and, to the extent there is available cash
on hand, our Board could determine to declare and pay dividends without relying on dividend payments from the Bank.

Federal and state banking laws and regulations and state corporate
laws restrict the amount of dividends we may declare and pay and that the Bank may declare and pay to the Company, which could limit our
ability to pay dividends in the future even at times when we desire to do so.

The Company may also from time to time enter into contractual arrangements,
including borrowing relationships with other financial institutions, that could limit the ability of the Company to pay dividends on its
common stock in the future.

The requirements of being a public company may strain our resources
and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging
growth company” and a “smaller reporting company.”

We are required to comply with various regulatory and reporting requirements
as a publicly traded company, including those of the SEC. Complying with these reporting and other regulatory requirements will be
time-consuming and will result in increased costs to us and could have a negative effect on our business, financial condition and results
of operations. Furthermore, as an “emerging growth company” and a “smaller reporting company,” we intend to take
advantage of certain reduced regulatory and reporting requirements and our costs of being a public company will likely increase further
once we no longer qualify as an “emerging growth company” or a “smaller reporting company.”

As a public company, we will be subject to the reporting requirements
of the Exchange Act and the requirements of the Sarbanes-Oxley Act, as applicable. We are inexperienced with these reporting and
accounting requirements and, as such, these requirements may place a strain on our systems and resources. The Exchange Act requires
that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires
that we maintain effective disclosure controls and procedures and internal control over financial reporting. To maintain and improve the
effectiveness of our disclosure controls and procedures, we will need to commit significant resources, potentially hire additional staff
and provide additional management oversight. We are currently implementing additional procedures and processes for the purpose of addressing
the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management,
operational and financial resources to identify new individuals to join our business and to maintain appropriate operational and financial
systems to adequately support our expansion. These activities will likely divert management’s attention from other business concerns,
including implementing our growth strategy, which could have a material adverse effect on our business, financial condition, results of
operations and future growth.

42

The market price of our common stock may be subject to substantial
fluctuations, which may make it difficult for you to sell your shares at the volumes, prices and times desired.

The market price of our common stock may be highly volatile, which
may make it difficult for you to resell your shares at the volumes, prices and times desired. There are many factors that may impact the
market price and trading volume of our common stock, including without limitation:

In particular, the realization of any of the risks described in the
“Risk Factors” section of this Report could have a material adverse effect on the market price of our common stock and cause
the value of your investment to decline. The stock market and, in particular, the market for financial institution stocks have at times
experienced substantial fluctuations in recent years, which in many cases have been unrelated to the operating performance and prospects
of particular companies. In addition, significant fluctuations in the trading volume in our common stock may cause significant price variations
to occur. Increased market volatility could have an adverse effect on the market price of our common stock, which could make it difficult
for you to sell your shares at the volumes, prices and times desired.

43

We have shareholders who own significant portions of our common
stock and those shareholders’ interests may differ from those of our other shareholders.

A relatively large percentage of our outstanding common stock is currently
beneficially owned by each of Robertson Holding Company, L.P. (“Robertson Holding Co.”) (approximately 16.9%) and Unified
Shares, LLC (“Unified Shares”) (approximately 8.5%). While neither Robertson Holding Co. nor Unified Shares
has Board representation or other similar rights not shared by our other shareholders, this concentration of ownership will result in
Robertson Holding Co. and Unified Shares having a strong influence on corporate actions requiring shareholder approval, including the
following actions:

Although Robertson Holding Co. and Unified Shares have no plans or
arrangements to form a “group,” should they in the future decide to form a group together, or with another large shareholder
or group of shareholders, we could become a “controlled company.” Under applicable Nasdaq rules, a “controlled company”
may elect not to comply with certain corporate governance requirements, which could cause our common stock to be less attractive to certain
investors or otherwise harm our trading price.

The interests of Robertson Holding Co. and/or Unified Shares may differ
from or conflict with the interests of our other shareholders. In addition, neither Robertson Holding Co. nor Unified Shares is subject
to any contractual restrictions on its ability to acquire additional shares of our common stock. This concentration of stock ownership
may adversely affect the trading price for our common stock to the extent that investors perceive disadvantages in Robertson Holding Co.’s
and/or Unified Shares’ significant ownership of or control over the affairs of the Company.

Additionally, J. Adam Robertson and Aaron A. Robertson, the general
partners of Robertson Holding Co., serve as directors of the Company and the Bank, and J. Adam Robertson also serves as Executive Chairperson
of the Company and the Bank. Further, Martha S. Spurlock, a director of the Company and the Bank, is also a member and manager of Unified
Shares. Notwithstanding that all of our directors are obligated to fulfill certain fiduciary duties owed to us and our shareholders, the
interests of these individuals may differ from the interests of our other directors and/or holders of our common stock as a whole. As
members of the Board, these individuals may have influence over matters requiring the vote of the Board, such as, for example, mergers
and acquisitions, the appointment or removal of certain officers, and the Company’s issuance of additional equity securities.

Our corporate governance documents and the provisions of Tennessee
law to which we are subject could make a takeover more difficult, which could adversely affect the market price of our common stock.

The A&R Charter and our amended and restated bylaws (the “A&R
Bylaws”) could make it more difficult for a third party to acquire control of our organization or conduct a proxy contest, even
if those events were perceived by many of our shareholders as beneficial to their interests. Our A&R Charter and/or A&R Bylaws
include, among other things, provisions that:

44

Our A&R Charter provides for noncumulative voting for directors
and authorizes our Board to issue shares of common stock or preferred stock, as permitted by the TBCA and applicable Nasdaq rules, without
shareholder approval and upon such terms as our Board may determine. In the event that we issue preferred stock in the future that has
preference over our common stock with respect to payment of dividends or upon our liquidation, dissolution or winding up, or if we issue
preferred stock with voting rights that dilute the voting power of our common stock, the rights of the holders of our common stock or
the market price of our common stock could be adversely affected. In addition, certain provisions of Tennessee law, including a provision
which restricts certain business combinations between a Tennessee corporation and certain affiliated shareholders, may delay, discourage
or prevent an attempted acquisition or change in control of the Company. Any of the foregoing provisions may discourage potential acquisition
proposals and could delay or prevent a change in control, including under circumstances in which our shareholders might otherwise receive
a premium over the market price of our shares. See “Description of Our Capital Stock.”

There are substantial regulatory limitations on changes of control
of bank holding companies that may discourage investors from purchasing shares of our common stock.

With limited exceptions, federal law and regulations prohibit a person
or a group of persons deemed to be “acting in concert” from, directly or indirectly, acquiring 10% or more (or 5% if the acquirer
is a bank holding company) of any class of our voting stock or obtaining the ability to control in any manner the election of a majority
of our directors or otherwise direct the management or policies of our company without prior notice or application to, and the approval
of, the Federal Reserve. Companies investing in banks and bank holding companies receive additional review and may be required to file
Change in Bank Control Act notices. Accordingly, prospective investors must be aware of and comply with these requirements, if applicable,
in connection with any purchase of shares of our common stock. These provisions of law and regulations could discourage third parties
from seeking to acquire significant interests in us or in attempting to acquire control of us, which, in turn, could materially and adversely
affect the market price of our common stock.

We are an “emerging growth company” and a “smaller
reporting company” and the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies
may make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in Section
2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long
as we continue to be an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not “emerging growth companies.” As an emerging growth company:

45

We may take advantage of these exemptions until we are no longer an
emerging growth company. We will cease to be an emerging growth company upon the earliest of: (i) the last day of the fiscal
year in which we have at least $1.235 billion in annual gross revenues, (ii) the date on which we become a “large accelerated
filer” as defined in Rule 12b-2 under the Exchange Act (the last day of the fiscal year in which we have more than
$700 million in market value of our common stock held by non-affiliates as of the prior June 30), (iii) the date on which
we issue more than $1.0 billion of non-convertible debt during the prior three-year period, or (iv) the last day of the
fiscal year following the fifth anniversary of our initial public offering (December 31, 2030). We may choose to take advantage of some
but not all of these reduced disclosure requirements. We have elected to adopt certain of the reduced disclosure requirements described
above for purposes of this Report.

We expect to take advantage of certain of the reduced reporting and
other requirements of the JOBS Act with respect to the periodic reports we will file with the SEC and proxy statements that we use to
solicit proxies from our shareholders. As a result, the information that we provide to our shareholders may be different than what you
might receive from other public reporting companies in which you hold equity interests.

In addition, the JOBS Act permits us to take advantage of an extended
transition period for complying with new or revised accounting standards affecting public companies. We have elected to use this extended
transition period, which means that the financial statements included in this Report, as well as any financial statements that we file
in the future, may not be subject to all new or revised accounting standards generally applicable to public companies for the transition
period as long as we remain an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period
under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of public companies that comply
with such new or revised accounting standards on a non-delayed basis.

We are also a smaller reporting company as defined in the Exchange
Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of
certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures
for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business
day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year
and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of
our second fiscal quarter.

We cannot predict whether investors will find our common stock less
attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be
a less active trading market for our common stock and our stock price may be more volatile or decline.

46

The accuracy of our financial statements and related disclosures
could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate.

The preparation of financial statements and related disclosure in conformity
with GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements
and accompanying notes. Our critical accounting policies, which are included in the section captioned “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in this Report, describe those significant accounting policies and
methods used in the preparation of our consolidated financial statements that we consider “critical” because they require
judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures. As a result,
if future events differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events
could have a material impact on our consolidated financial statements and related disclosures.

Any deficiencies in our financial reporting or internal controls
could materially and adversely affect our business and the market price of our common stock.

As a public company, our management is responsible for establishing
and maintaining adequate internal control over financial reporting and for evaluating and reporting on that system of internal controls.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with GAAP. We are currently in the process
of enhancing our internal control over financial reporting to enable us to comply with our obligations under the federal securities laws
and other applicable legal requirements. We are not currently required to comply with SEC rules that implement Section 404 of the
Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial
reporting for that purpose. When evaluating our internal control over financial reporting, we may identify material weaknesses that we
may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404
of the Sarbanes-Oxley Act. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are
modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have
effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. We cannot be certain
as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. If
we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance,
our independent registered public accounting firm may issue an adverse opinion due to ineffective internal control over financial reporting
and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. As a result, there could be a negative
reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

During the course of our testing, we may identify deficiencies that
would have to be remediated to satisfy the SEC rules for certification of our internal control over financial reporting. A material weakness
is defined by the standards issued by the PCAOB as a deficiency, or combination of deficiencies, in internal control over financial reporting
that results in a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis. As a consequence, we would have to disclose in periodic reports we file with the SEC any material weakness
in our internal control over financial reporting. The existence of a material weakness would preclude management from concluding that
our internal control over financial reporting is effective and would preclude our independent auditors from expressing an unqualified
opinion on the effectiveness of our internal control over financial reporting. In addition, disclosures of deficiencies of this type in
our SEC reports could cause investors to lose confidence in our financial reporting, may negatively affect the market price of our common
stock, and could result in the delisting of our securities from the securities exchange on which they trade. Moreover, effective internal
controls are necessary to produce reliable financial reports and to prevent fraud. If we have deficiencies in our disclosure controls
and procedures or internal control over financial reporting, it may materially and adversely affect us.

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Beginning with the first Annual Report on Form 10-K we file following
the date we cease to be an “emerging growth company” as defined in the JOBS Act and do not otherwise qualify as a “smaller
reporting company” with less than $100.0 million in annual revenue, we will be required to include our independent registered
public accounting firm’s attestation report on the design and operating effectiveness of our internal control over financial reporting.
This process will require significant documentation of policies, procedures and systems and review of that documentation and testing of
our internal control over financial reporting by our internal auditing and accounting staff and our independent registered public accounting
firm. This process will require considerable time and attention from management, which could prevent us from successfully implementing
our business initiatives and improving our business, financial condition and results of operations, strain our internal resources, and
increase our operating costs. We may experience higher than anticipated operating expenses and outside auditor fees during the implementation
of these changes and thereafter.

If securities analysts do not initiate or continue coverage on
us, or if securities analysts publish unfavorable commentary or downgrade our common stock, the price and trading volume of our common
stock could decline.

The trading market for our common stock will depend, in part, on the
research and reports that securities analysts publish about us and our business. We do not have any control over these securities analysts,
and they may not cover us. If one or more of these analysts cease to cover us or fail to publish regular reports on us, we could lose
visibility in the financial markets, which could cause the price or trading volume of our common stock to decline. If we are covered by
securities analysts and are the subject of an unfavorable report, the price of our common stock may decline.

If we fail to maintain compliance with Nasdaq listing rules,
our common stock may be delisted from Nasdaq, which would result in a limited trading market for our shares and make obtaining future
debt or equity financing more difficult for the Company.

Our common stock is listed on Nasdaq under the symbol “CBK.”
There can be no assurance that we will be able to continue to maintain our compliance with Nasdaq’s continued listing requirements.
If we fail to do so, our common stock may be delisted and cease trading on Nasdaq. As a result, selling our common stock could be more
difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and security analysts’
coverage of us may be reduced. In addition, in the event our common stock is delisted, broker-dealers would face certain regulatory requirements,
which may discourage them from effecting transactions in our common stock and further limit the liquidity of our common stock. These factors
could result in lower prices and larger spreads in the bid and ask prices for our common stock. Such delisting from Nasdaq and continued
or further declines in the share price of our common stock could also greatly impair our ability to raise additional necessary capital
through equity or debt financings and could significantly increase the ownership dilution to shareholders caused by our issuing equity
in financing or other transactions.

An investment in our common stock is not an insured deposit and
is subject to risk of loss.

Your investment in our common stock will not be a bank deposit and,
therefore, will not be insured or guaranteed by the FDIC or any other government agency. Your investment will be subject to investment
risk, and your investment may lose money.

Our management team has limited experience managing and operating
a public company.

Our management team has limited experience managing a publicly traded
company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies in
the United States. Our management team may not successfully or efficiently manage our transition to being a public company due to
significant regulatory oversight and reporting obligations under the U.S. federal securities laws and the continuous scrutiny of
securities analysts and investors. These new obligations and constituents will require significant attention from our senior management
and could divert their attention away from the day-to-day management of our business, which could make it more difficult for us to
attract and retain qualified persons to serve on our Board, on committees of our Board, or as executive officers and/or adversely affect
our business, financial condition, results of operations and prospects.

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