Home
Jump to Risk Factors
Jump to Industries
Jump to Exposures
Jump to Event Codes
Jump to Wiki Summary

Industries
Asset Management and Custody Banks
Construction and Engineering
Construction Materials
Construction and Farm Machinery and Heavy Trucks
Environmental Services
Diversified Financial Services
Banks
Technology Hardware Storage and Peripherals
Information Technology
Technology Hardware and Equipment
Investment Banking and Brokerage
Application Software
Exposures
Economic
Military
Express intent
Provide
Political reform
Regime
Rights
Judicial
Leadership
Cooperate
Event Codes
Solicit support
Accident
Reward
Yield
Human death
Yield to order
Warn
Adjust
Seize
Agree
Acknowledge responsibility
Propose
Empathize
Vote
Release or return
Endorse
Sports contest
Sanction
Host meeting
Military blockade
Request
Yield position
Promise
Riot
Force
Demand
Wiki Wiki Summary
Financial condition report In accounting, a financial condition report (FCR) is a report on the solvency condition of an insurance company that takes into account both the current financial status, as reflected in the balance sheet, and an assessment of the ability of the company to survive future risk scenarios. Risk assessment in an FCR involves dynamic solvency testing, a type of dynamic financial analysis that simulates management response to risk scenarios, to test whether a company could remain solvent in the face of deteriorating economic conditions or major disasters.
Balance sheet In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business partnership, a corporation, private limited company or other organization such as government or not-for-profit entity. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year.
Financial statement Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity.\nRelevant financial information is presented in a structured manner and in a form which is easy to understand.
Financial ratio A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization.
Financial law Financial law is the law and regulation of the insurance, derivatives, commercial banking, capital markets and investment management sectors. Understanding Financial law is crucial to appreciating the creation and formation of banking and financial regulation, as well as the legal framework for finance generally.
Trustmark (bank) Trustmark is a commercial bank and financial services company headquartered in Jackson, Mississippi, United States, with subsidiaries Trustmark National Bank, Trustmark Investment Advisors, and Fisher Brown Bottrell Insurance. The bank's initial predecessor, The Jackson Bank, was chartered by the State of Mississippi in 1889.
Financial analysis Financial analysis (also referred to as financial statement analysis or accounting analysis or Analysis of finance) refers to an assessment of the viability, stability, and profitability of a business, sub-business or project. \nIt is performed by professionals who prepare reports using ratios and other techniques, that make use of information taken from financial statements and other reports.
Form 10-K A Form 10-K is an annual report required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a company's financial performance. Although similarly named, the annual report on Form 10-K is distinct from the often glossy "annual report to shareholders," which a company must send to its shareholders when it holds an annual meeting to elect directors (though some companies combine the annual report and the 10-K into one document).
Federal takeover of Fannie Mae and Freddie Mac In September 2008 the Federal Housing Finance Agency (FHFA) announced that it would take over the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Both government-sponsored enterprises, which finance home mortgages in the United States by issuing bonds, had become illiquid as the market for those bonds collapsed in the subprime mortgage crisis.
Arithmetic Arithmetic (from Ancient Greek ἀριθμός (arithmós) 'number', and τική [τέχνη] (tikḗ [tékhnē]) 'art, craft') is an elementary part of mathematics that consists of the study of the properties of the traditional operations on numbers—addition, subtraction, multiplication, division, exponentiation, and extraction of roots. In the 19th century, Italian mathematician Giuseppe Peano formalized arithmetic with his Peano axioms, which are highly important to the field of mathematical logic today.
Operation Mincemeat Operation Mincemeat was a successful British deception operation of the Second World War to disguise the 1943 Allied invasion of Sicily. Two members of British intelligence obtained the body of Glyndwr Michael, a tramp who died from eating rat poison, dressed him as an officer of the Royal Marines and placed personal items on him identifying him as the fictitious Captain (Acting Major) William Martin.
Special Activities Center The Special Activities Center (SAC) is a division of the Central Intelligence Agency responsible for covert operations and paramilitary operations. The unit was named Special Activities Division (SAD) prior to 2015.
Operations management Operations management is an area of management concerned with designing and controlling the process of production and redesigning business operations in the production of goods or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed and effective in meeting customer requirements.
Emergency operations center An emergency operations center (EOC) is a central command and control facility responsible for carrying out the principles of emergency preparedness and emergency management, or disaster management functions at a strategic level during an emergency, and ensuring the continuity of operation of a company, political subdivision or other organization.\nAn EOC is responsible for strategic direction and operational decisions and does not normally directly control field assets, instead leaving tactical decisions to lower commands.
Operations research Operations research (British English: operational research), often shortened to the initialism OR, is a discipline that deals with the development and application of advanced analytical methods to improve decision-making. It is sometimes considered to be a subfield of mathematical sciences.
Surgery Surgery is a medical or dental specialty that uses operative manual and instrumental techniques on a person to investigate or treat a pathological condition such as a disease or injury, to help improve bodily function, appearance, or to repair unwanted ruptured areas.\nThe act of performing surgery may be called a surgical procedure, operation, or simply "surgery".
Bitwise operation In computer programming, a bitwise operation operates on a bit string, a bit array or a binary numeral (considered as a bit string) at the level of its individual bits. It is a fast and simple action, basic to the higher-level arithmetic operations and directly supported by the processor.
Operation (mathematics) In mathematics, an operation is a function which takes zero or more input values (called operands) to a well-defined output value. The number of operands (also known as arguments) is the arity of the operation.
Stock market A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowdfunding platforms. Investment is usually made with an investment strategy in mind.
Regulation Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context.
Management Management (or managing) is the administration of an organization, whether it is a business, a non-profit organization, or a government body. It is the art and science of managing resources of the business.
Agile management Agile management is the application of the principles of Agile software development to various management processes, particularly project management. Following the appearance of the Manifesto for Agile Software Development in 2001, Agile techniques started to spread into other areas of activity.
Problem management Problem management is the process responsible for managing the lifecycle of all problems that happen or could happen in an IT service. The primary objectives of problem management are to prevent problems and resulting incidents from happening, to eliminate recurring incidents, and to minimize the impact of incidents that cannot be prevented.
Network management Network management is the process of administering and managing computer networks. Services provided by this discipline include fault analysis, performance management, provisioning of networks and maintaining quality of service.
Sport management Sport management is the field of business dealing with sports and recreation. Sports management involves any combination of skills that correspond with planning, organizing, directing, controlling, budgeting, leading, or evaluating of any organization or business within the sports field.
Women Management Women Management is a modeling agency based in New York. Founded by Paul Rowland in 1988, Women also has two sister agencies, Supreme Management and Women 360 Management, which is also part of the Women International Agency Chain.
Emergency management Emergency management, also called emergency response or disaster management, is the organization and management of the resources and responsibilities for dealing with all humanitarian aspects of emergencies (prevention, preparedness, response, mitigation, and recovery). The aim is to prevent and reduce the harmful effects of all hazards, including disasters.
Test management Test management most commonly refers to the activity of managing a testing process. A test management tool is software used to manage tests (automated or manual) that have been previously specified by a test procedure.
Consolidation (business) In business, consolidation or amalgamation is the merger and acquisition of many smaller companies into a few much larger ones. In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group company as consolidated financial statements.
Common stock dividend A common stock dividend is the dividend paid to common stock owners from the profits of the company. Like other dividends, the payout is in the form of either cash or stock.
Preferred stock Preferred stock (also called preferred shares, preference shares, or simply preferreds) is a component of share capital that may have any combination of features not possessed by common stock, including properties of both an equity and a debt instrument, and is generally considered a hybrid instrument. Preferred stocks are senior (i.e., higher ranking) to common stock but subordinate to bonds in terms of claim (or rights to their share of the assets of the company, given that such assets are payable to the returnee stock bond) and may have priority over common stock (ordinary shares) in the payment of dividends and upon liquidation.
Matthiola incana Matthiola incana is a species of flowering plant in the cabbage family Brassicaceae. Common names include Brompton stock, common stock, hoary stock, ten-week stock, and gilly-flower.
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed companies at US$30.1 trillion as of February 2018.
Treasury stock A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market ("open market" including insiders' holdings). \nStock repurchases are used as a tax efficient method to put cash into shareholders' hands, rather than paying dividends, in jurisdictions that treat capital gains more favorably.
Convertible bond In finance, a convertible bond or convertible note or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. It is a hybrid security with debt- and equity-like features.
Risk Factors
CITIZENS HOLDING CO /MS/ ITEM 1A RISK FACTORS In addition to the other information contained in or incorporated by reference into this Annual Report on Form 10-K and the exhibits hereto, the following risk factors should be considered carefully in evaluating our business
The risks disclosed below, either alone or in combination, could materially adversely affect the business, financial condition or results of operations of the Company
Additional risks not presently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition or results of operations
Risks Related To Our Business and Industry We are subject to interest rate risk
Our earnings and cash flows are largely dependent upon the net interest income of the Company
Net interest income is the difference between interest earned on assets, such as loans and securities, and the cost of interest-bearing liabilities, such as deposits and borrowed funds
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the FRB Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans and obtain deposits, which could reduce the amount of fee income generated, (ii) the fair value of our financial assets and liabilities, and (iii) the average duration of our mortgage-backed securities portfolio
If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income could be adversely affected, which in turn could negatively affect our earnings
Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings
Although management believes it has implemented effective asset and liability management strategies to reduce the potential effects of changes in interest rates on the results of operations of the Company, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations
Volatility in interest rates may also result in disintermediation, which is the flow of funds away from financial 9 ______________________________________________________________________ [37]Table of Contents institutions into direct investments, such as US Government and Agency securities and other investment vehicles, including mutual funds, which generally pay higher rates of return than financial institutions because of the absence of federal insurance premiums and reserve requirements
Disintermediation could also result in material adverse effects on our financial condition and results of operations
A discussion of the policies and procedures used to identify, assess and manage certain interest rate risk is set forth in Item 7A, “Qualitative and Quantitative Disclosures about Market Risk
” We are subject to lending risk
There are inherent risks associated with our lending activities
These risks include, among other things, the impact of changes in interest rates and changes in the economic conditions in the markets where we operate as well as those across the United States
Increases in interest rates and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans
As of December 31, 2005, approximately 82prca of our loan portfolio consisted of commercial, construction and commercial real estate loans
These types of loans are generally viewed as having more risk of default than residential real estate loans or consumer loans due primarily to the large amounts loaned to individual borrowers
Because the loan portfolio contains a significant number of commercial, construction and commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in non-performing loans
An increase in non-performing loans could result in a net loss of earnings from these loans, an increase in the provision for possible loan losses and an increase in loan charge-offs, all of which could have a material adverse effect on our financial condition and results of operations
The allowance for possible loan losses may be insufficient
Although we try to maintain diversification within our loan portfolio in order to minimize the effect of economic conditions within a particular industry, management also maintains an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, to absorb probable credit losses inherent in the entire loan portfolio
The appropriate level of the allowance is based on management’s quarterly analysis of the loan portfolio and represents an amount that management deems adequate to provide for inherent losses, including collective impairment
Among other considerations in establishing the allowance for loan losses, management considers economic conditions reflected within industry segments, the unemployment rate in our markets, loan segmentation, and historical losses that are inherent in the loan portfolio
The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires management to make significant estimates of current credit risks and future trends, all of which may undergo material changes
Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of the our control, may require an increase in the allowance for loan losses
10 ______________________________________________________________________ [38]Table of Contents In addition, bank regulatory agencies periodically review the allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different than those of management
In addition, if charge-offs in future periods exceed the allowance for loan losses, we will need additional provisions to increase the allowance for loan losses
Any increases in the allowance for loan losses will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our financial condition and results of operations
A discussion of the policies and procedures related to management’s process for determining the appropriate level of the allowance for loan losses is set forth in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations
” Bank holding companies depend on the accuracy and completeness of information about customers and counterparties
In deciding whether to extend credit or enter into other transactions, we often rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information
We may also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on our business and, in turn, our financial condition and results of operations
We are subject to environmental liability risk associated with lending activities
A significant portion of the loan portfolio is secured by real property
In doing so, there is a risk that hazardous or toxic substances could be found on these properties
If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage
Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value or limit the ability of the Company to use or sell the affected property
In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability
Although management has policies and procedures to perform an environmental review during the loan application process and also before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations
The profitability of the Company depends significantly on economic conditions in the State of Mississippi
Our success depends primarily on the general economic conditions of the State of Mississippi and the specific local markets in which we operate
Unlike larger national or other regional banks that are more geographically diversified, we provide banking and financial services to customers primarily in East Central Mississippi
The local economic conditions in this area have a significant impact on the demand for our products and services as well as the ability of our customers to repay loans, the value of the collateral securing loans and the stability of our deposit funding sources
11 ______________________________________________________________________ [39]Table of Contents The earnings of bank holding companies are significantly affected by general business and economic conditions
In addition to the risks associated with the general economic conditions in the markets in which we operate, our operations and profitability are also impacted by general business and economic conditions in the United States and abroad
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, and the strength of the US economy and the local economies in which we operate, all of which are beyond our control
A deterioration in economic conditions could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, among other things, any of which could have a material adverse impact on our financial condition and results of operations
We operate in a highly competitive industry and market area
We face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources
Such competitors primarily include national, regional and community banks within the various markets in which we operate
We also face competition from many other types of financial institutions, including savings and loans, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial intermediaries
The information under the heading “Competition” in Item 1, “Business,” provides more information regarding the competitive conditions in our markets
Our 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
Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems
Many of our competitors have fewer regulatory constraints and may have lower cost structures
Additionally, many of our competitors have substantially greater resources than us, including higher total assets and capitalization, greater access to capital markets and a broader offering of financial services
Our ability to compete successfully depends on a number of factors, including, among other things: • The ability to develop, maintain and build upon long-term customer relationships based on top quality service, high ethical standards and safe, sound assets
• The ability to expand the Company’s market position
• The scope, relevance and pricing of products and services offered to meet customer needs and demands
• The rate at which we introduce new products and services relative to our competitors
• Customer satisfaction with our level of service
Industry and general economic trends
12 ______________________________________________________________________ [40]Table of Contents 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 have a material adverse effect on our financial condition and results of operations
We are subject to extensive government regulation and supervision
The Company and the Bank are subject to extensive federal and state regulation and supervision
Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not the economic or other interests of shareholders
These regulations affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things
Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of the foregoing, could affect the Company and/or the Bank in substantial and unpredictable ways
Such changes could subject us to additional costs, limit the types of financial services and products we may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things
Under regulatory capital adequacy guidelines and other regulatory requirements, the Company and the Bank must meet guidelines that include quantitative measures of assets, liabilities and certain off-balance sheet items, subject to qualitative judgments by regulators about components, risk weightings and other factors
If we fail to meet these minimum capital guidelines and other regulatory requirements, our financial condition would be materially and adversely affected
Our failure to maintain the status of “well capitalized” under our regulatory framework could affect the confidence of our customers in us, thus compromising our competitive position
In addition, failure to maintain the status of “well capitalized” under our regulatory framework or “well managed” under regulatory examination procedures could compromise our status as a bank holding company and related eligibility for a streamlined review process for acquisition proposals
We are also subject to laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes Act and new SEC regulations
These laws, regulations and standards are subject to varying interpretations in many cases, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices
We are committed to maintaining high standards of corporate governance and public disclosure
As a result, our efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased expenses and a diversion of management time and attention
Failure to comply with laws, regulations or policies could also result in sanctions by regulatory agencies and/or civil money penalties, which could have a material adverse effect on our business, financial condition and results of operations
While we have policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur
The information under the heading “Supervision and Regulation” in Item 1, “Business,” and Note 14, “Regulatory Matters” to the Consolidated Financial Statements of the Company in Item 8, “Financial Statements and Supplementary Data,” provides more information regarding the regulatory environment in which we and our Bank operate
13 ______________________________________________________________________ [41]Table of Contents Our controls and procedures may fail or be circumvented
Management regularly reviews and updates our internal control over financial reporting, disclosure controls and procedures and corporate governance policies and procedures
Any system of controls, however well designed and operated, has inherent limitations, including the possibility that a control can be circumvented or overridden, and misstatements due to error or fraud may occur and not be detected
Also, because of changes in conditions, internal control effectiveness may vary over time
Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to our adherence to financial reporting, disclosure and corporate governance policies and procedures
Slower than anticipated growth in new branches and new product and service offerings could result in reduced income
We have placed a strategic emphasis on expanding our branch network and product offerings
Executing this strategy carries risks of slower than anticipated growth both in new branches and new products
New branches and products require a significant investment of both financial and personnel resources
Lower than expected loan and deposit growth in new investments can decrease anticipated revenues and net income generated by those investments, and opening new branches and introducing new products could result in more additional expenses than anticipated and divert resources from current core operations
We are substantially dependent on dividends from the Bank for our revenues
The Company is a separate and distinct legal entity from the Bank, and it receives substantially all of its revenue from dividends from the Bank
These dividends are the principal source of funds to pay dividends on our common stock and interest and principal on debt
Various federal and/or state laws and regulations limit the amount of dividends that the Bank may pay to the Company
In the event the Bank is unable to pay dividends to us, we may not be able to service debt, pay obligations or pay dividends on our common stock
The inability to receive dividends from the Bank could have a material adverse effect on our business, financial condition and results of operations
The information under the heading “Supervision and Regulation” in Item 1, “Business,” provides a discussion about the restrictions governing the Bank’s ability to transfer funds to us
Potential acquisitions may disrupt the our business and dilute shareholder value
We seek merger or acquisition partners that are culturally similar and have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale or expanded services
Acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among other things: • Potential exposure to unknown or contingent liabilities of the target company
• Exposure to potential asset quality issues of the target company
Difficulty and expense of integrating the operations and personnel of the target company
14 ______________________________________________________________________ [42]Table of Contents Potential disruption to our business
Potential diversion of management’s time and attention
• The possible loss of key employees and customers of the target company
Difficulty in estimating the value of the target company
Potential changes in banking or tax laws or regulations that may affect the target company
We regularly evaluate merger and acquisition opportunities and conduct due diligence activities related to possible transactions with other financial institutions
As a result, merger or acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving cash, debt or equity securities may occur at any time
Acquisitions typically involve the payment of a premium over book and market values, and, therefore, some dilution of our tangible book value and net income per common share may occur in connection with any future transaction
Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have a material adverse effect on our financial condition and results of operations
Our success depends in part on our ability to retain key executives and to attract and retain additional qualified personnel who have experience both in sophisticated banking matters and in operating a bank of our size
Competition for such personnel is strong in the banking industry, and we may not be successful in attracting or retaining the personnel we require
The unexpected loss of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of our markets, years of industry experience and the difficulty of promptly finding qualified replacements
We expect to effectively compete in this area by offering financial packages that are competitive within the industry
Our information systems may experience an interruption or breach in security
We rely heavily on communications and information systems to conduct our business
Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems
While we have policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed
The occurrence of any failures, interruptions or security breaches of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on the financial condition and results of operations of the Company
We continually encounter technological change
Our industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services
The effective use of technology increases efficiency and enables financial institutions to better serve customers and reduce costs
15 ______________________________________________________________________ [43]Table of Contents Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations
Many of our competitors have substantially greater resources to invest in technological improvements
We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers
Failure to successfully keep pace with technological change affecting our industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations
Consumers may decide not to use banks to complete their financial transactions
While we continually attempt to use technology to offer new products and services, at the same time, technology and other changes are allowing parties to complete financial transactions that historically have involved banks through alternative methods
For example, consumers can now maintain funds in brokerage accounts or mutual funds that would have historically been held as bank deposits
Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks
The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits
The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our financial condition and results of operations
Severe weather, natural disasters, acts of war or terrorism and other external events could significantly impact our business
Severe weather, natural disasters, acts of war or terrorism and other adverse external events could have a significant impact on the ability of the Company to conduct business
Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses
For example, during 2005, Hurricanes Katrina and Rita made landfall and subsequently caused extensive flooding and destruction along the coastal areas of the Gulf of Mexico
Although our operations were not disrupted by these hurricanes or their aftermath, other severe weather or natural disasters, acts of war or terrorism or other adverse external events may occur in the future
Although management has established disaster recovery 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
Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices you find attractive
Our stock price can fluctuate significantly in response to a variety of factors including, among other things: • Actual or anticipated variations in quarterly results of operations
16 ______________________________________________________________________ [44]Table of Contents • Recommendations by securities analysts
Operating and stock price performance of other companies that investors deem comparable to the Company
• News reports relating to trends, concerns and other issues in the banking and financial services industry
Perceptions in the marketplace regarding us and/or our competitors
• New technology used, or services offered, by competitors
Significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors
• Failure to integrate acquisitions or realize anticipated benefits from acquisitions
• Changes in government regulations
Geopolitical conditions such as acts or threats of terrorism or military conflicts
General market fluctuations, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause our stock price to decrease regardless of operating results
The trading volume in our common stock is less than that of other larger bank holding companies
Our common stock is listed for trading on the American Stock Exchange; the average daily trading volume in our common stock is low, generally less than that of many of the our competitors and other larger bank holding companies
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time
This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control
Given the lower trading volume of our common stock, significant sales of our common stock, or the expectation of these sales, could cause volatility in the price of our common stock
An investment in our common stock is not an insured deposit
Our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any deposit insurance fund or by any other public or private entity
Investment in our common stock is inherently risky for the reasons described in this “Risk Factors” section and elsewhere in this report and is subject to the same market forces that affect the price of common stock in any company
As a result, if you acquire our common stock, you may lose some or all of your investment
Our Articles of Incorporation and Bylaws, as well as certain banking laws, may have an anti-takeover effect
Provisions of our Articles of Incorporation and Bylaws, which are exhibits to this Annual Report on Form 10-K, and federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire the Company, even if doing so would be perceived to be beneficial to our shareholders
The combination of these provisions impedes a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of our common stock