{"url_path":"/sec/cpbi/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-18","source_url":"https://www.sec.gov/Archives/edgar/data/1979332/0001193125-26-275962-index.html","accession_number":"0001193125-26-275962","cik":"0001979332","ticker":"CPBI","issuer_name":"Central Plains Bancshares, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1979332/0001193125-26-275962-index.html","primary_entity_key":"0001979332","primary_entity_name":"Central Plains Bancshares, Inc."},"word_count":6300,"has_tables":true,"body_markdown":"Item 1A. Risk Factors.\n\nThe material risks and uncertainties that management believes affect us are described below. You should carefully consider the risks and uncertainties described below, together with all of the other information included or incorporated by reference herein as well as in other documents we file with the SEC. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair our business operations. This report is qualified in its entirety by these risk factors. See also, “Forward-Looking Statements.”\n\nRisks Related to Market Interest Rates\n\nFuture changes in interest rates could reduce our profits and asset values.\n\nNet interest income comprises a significant portion of our earnings and represents the difference between interest income earned on interest-earning assets, such as loans and securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowings.\n\nA substantial portion of our loan portfolio consists of fixed-rate loans, and many of our other interest-earning assets and interest-bearing liabilities are subject to contractual repricing over different timeframes. Our interest-bearing liabilities generally reprice or mature more quickly than our interest-earning assets, which may result in increased sensitivity of our net interest income to changes in market interest rates. In a rising rate environment, interest expense on deposits and borrowings may increase more rapidly than interest income on assets, which could negatively impact our net interest margin and earnings.\n\nChanges in interest rates also affect the average lives of loans and mortgage-backed and related securities. In declining rate environments, prepayments typically increase as borrowers refinance, which accelerates the amortization of premiums and creates reinvestment risk, as we may be unable to reinvest these funds at comparable yields.\n\nIn addition, an inverted yield curve—where short-term interest rates exceed long-term interest rates—may compress our net interest margin and adversely affect profitability, particularly on longer-term fixed-rate assets.\n\nAny substantial or prolonged changes in market interest rates could have a material adverse effect on our financial condition, liquidity, and results of operations. Interest rate changes may also reduce loan demand, adversely affect the fair value of our assets (including available-for-sale securities), and limit our ability to realize gains on asset sales. Additionally, our interest rate risk management models and assumptions may not fully capture the actual impact of rate changes on our balance sheet or operating results.\n\n23\n\n[Table of Contents](#toc_page)\n\n \n\nRisks Related to Our Lending Activities\n\nOur real estate commercial loans involve credit risks that could adversely affect our financial condition and results of operations.\n\nAt March 31, 2026, commercial real estate loans comprised approximately 28.82% of our loan portfolio. Given their larger balances and the complexity of the underlying collateral, commercial real estate loans generally involve greater risk than the one- to four-family residential real estate loans we originate. The repayment of these loans depends on the successful management and operation of the borrower’s properties or related businesses and may be adversely affected by conditions in the local real estate market or economy. A downturn in real estate markets or local economic conditions could reduce property values or borrower revenues, increasing the risk of non-performing loans and losses. We intend to increase our commercial real estate loan portfolio, and as it grows, the associated risks and potential for losses may also increase.\n\nOur agricultural loans involve credit risks that could adversely affect our financial condition and results of operations.\n\nAt March 31, 2026, agricultural loans comprised approximately 12.19% of our loan portfolio. Agricultural lending exposes us to risks unique to this industry, including volatility in commodity prices, weather conditions, input costs, government support programs, and global trade dynamics. Adverse developments such as drought, flooding, disease, trade restrictions, or reductions in government subsidies may impair borrowers’ repayment capacity and could result in increased delinquencies or loan losses. In addition, concentrations in agricultural lending may increase our exposure to localized economic downturns or natural disasters. Any deterioration in the agricultural economy could materially and adversely affect our loan portfolio and overall results of operations.\n\nOur commercial and industrial loans involve credit risks that could adversely affect our financial condition and results of operations.\n\nAt March 31, 2026, commercial and industrial loans comprised approximately 10.79% of our loan portfolio. These loans are generally based on the borrower’s ability to generate cash flow from business operations, rather than on collateral values that are more readily ascertainable, as is often the case with residential real estate lending. Collateral securing these loans may fluctuate in value and may be difficult to appraise or liquidate. Repayment is therefore more dependent on the success of the underlying business. Accordingly, these loans may present a higher level of risk than other types of lending.\n\nOur real estate construction loans involve credit risks that could adversely affect our financial condition and results of operations.\n\nAt March 31, 2026, construction real estate loans comprised approximately 6.39% of our loan portfolio. Construction lending involves additional risks compared to permanent financing because funds are advanced based on the projected value of the project, which is inherently uncertain prior to completion. Estimating construction costs and the market value of the completed project can be difficult, and cost overruns or project delays may occur. Repayment is typically dependent on the successful completion of the project and the borrower’s ability to sell or lease the property or obtain permanent financing. If the appraised value of a completed project is overstated, we may have insufficient collateral to fully recover the loan, which could result in losses. As this portfolio grows, the associated risks may increase.\n\nOur historical emphasis on real estate residential loans exposes us to lending risks.\n\nAt March 31, 2026, approximately 36.14% of our loan portfolio was secured by one- to four-family and multi-family residential real estate. Residential mortgage lending is sensitive to regional and local economic conditions that affect borrowers’ ability to repay. Declines in real estate values could result in inadequately collateralized loans, increasing the risk of loss if we are required to foreclose and sell the underlying collateral.\n\nIf our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease.\n\nWe make assumptions and judgments about the collectability of our loan portfolio, including borrower creditworthiness and collateral values. In determining the adequacy of our allowance for credit losses, we consider historical loss experience, current economic conditions, and other relevant factors. If our assumptions prove incorrect, or if economic conditions deteriorate, our allowance may not be sufficient to cover expected losses, requiring additional provisions that would reduce earnings. Growth in higher-risk loan portfolios, including commercial real estate and commercial and industrial loans, could also necessitate increases in the allowance.\n\nIn addition, bank regulatory agencies periodically review our allowance for credit losses and may require us to increase the allowance or recognize additional charge-offs. Any such actions could have a material adverse effect on our financial condition and results of operations.\n\n24\n\n[Table of Contents](#toc_page)\n\n \n\nWe are subject to environmental liability risk associated with our lending activities and owned properties.\n\nA significant portion of our loan portfolio is secured by real estate. We may become subject to environmental liabilities associated with properties securing our loans or properties we acquire through foreclosure. Hazardous substances or environmental contamination could result in liability for remediation costs, personal injury, property damage, civil penalties, or criminal sanctions, regardless of when the contamination occurred. Environmental laws may require significant expenditures and could reduce property values or limit our ability to sell such properties. Although we conduct environmental reviews prior to foreclosure on non-residential properties, these reviews may not identify all potential risks. Any such environmental liability could have a material adverse effect on our financial condition and results of operations.\n\nOur mortgage banking revenue and the value of our mortgage servicing rights can be volatile.\n\nWe sell a portion of our originated mortgage loans in the secondary market to generate non-interest income and earn fees from servicing mortgage loans. Changes in interest rates significantly affect these activities. Rising interest rates typically reduce mortgage origination volume and gain-on-sale income, while potentially increasing servicing income due to slower prepayment speeds. Conversely, declining rates may increase originations but reduce the value of mortgage servicing rights. As a result, our mortgage banking revenue may be volatile.\n\nAdditionally, non-interest expenses associated with mortgage banking—such as compensation, occupancy, and data processing—may not decline proportionately during periods of reduced loan demand, which could adversely affect our results of operations.\n\nThe foreclosure process may adversely impact our recoveries on non-performing loans.\n\nForeclosure processes may be lengthy and subject to regulatory and legal constraints, which can delay the resolution of non-performing loans. Extended timelines may result from evolving regulatory requirements, increased judicial scrutiny, and borrower protections, including loan modification programs.\n\nRisks Related to Laws and Regulations\n\nChanges in laws and regulations and the cost of regulatory compliance may adversely affect our operations and increase our expenses.\n\nHome Federal Savings is subject to extensive regulation, supervision, and examination by the Office of the Comptroller of the Currency (the “OCC”), and Central Plains Bancshares is subject to oversight by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Such regulation governs the activities in which we and our subsidiaries may engage and is intended primarily for the protection of the Deposit Insurance Fund and depositors, rather than our stockholders.\n\n \n\nRegulatory authorities have broad discretion in their supervisory and enforcement activities, including the authority to impose restrictions on our operations, classify assets, and determine the adequacy of our allowance for credit losses. These regulations, together with applicable tax, accounting, securities, insurance, and monetary laws, rules, standards, and interpretations, govern our business practices, strategic initiatives, financial reporting, and disclosures.\n\n \n\nChanges in applicable laws, regulations, or regulatory policies—whether through legislation, rulemaking, or supervisory guidance—may materially affect our business, financial condition, and results of operations. In addition, changes in accounting standards can be difficult to predict and may require significant judgment in interpretation and application by management and our independent auditors. Such changes could materially affect how we report our financial condition and results of operations, potentially on a retrospective basis.\n\nNon-compliance with the USA PATRIOT Act, Bank Secrecy Act, or related regulations could result in significant penalties.\n\nThe Bank Secrecy Act (“BSA”), the USA PATRIOT Act, and related regulations require financial institutions to implement programs designed to prevent money laundering and terrorist financing. These requirements include, among other things, customer identification and due diligence procedures, monitoring and reporting of suspicious activities to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”), and maintaining appropriate internal controls.\n\n \n\nFailure to comply with these requirements could result in significant regulatory penalties, including fines, sanctions, restrictions on acquisitions or expansion activities, and reputational harm. Although we maintain policies and procedures designed to promote compliance with these laws and regulations, such measures may not be fully effective in preventing violations. Additionally, these regulatory requirements continue to evolve, increasing compliance complexity and cost.\n\n25\n\n[Table of Contents](#toc_page)\n\n \n\nWe have not incurred material penalties or experienced material reputational harm related to money laundering or related activities; however, there can be no assurance that such issues will not arise in the future.\n\nWe may become subject to enforcement actions, even in cases of inadvertent noncompliance.\n\nThe financial services industry is subject to heightened regulatory scrutiny and enforcement, particularly with respect to consumer protection, mortgage lending practices, anti-money laundering compliance, and adherence to Office of Foreign Assets Control (“OFAC”) regulations and economic sanctions.\n\nEnforcement actions may be initiated for violations of laws or regulations, as well as for practices deemed unsafe or unsound. While we maintain systems, policies, and procedures designed to ensure compliance, certain regulatory frameworks allow for the imposition of penalties even where non-compliance is inadvertent or unintentional.\n\nAny failure to comply with applicable laws, regulations, or supervisory expectations may result in fines, penalties, legal proceedings, regulatory restrictions, or reputational damage, which could materially adversely affect our business, financial condition, and results of operations.\n\nMonetary policies of the Federal Reserve may adversely affect our business and results of operations.\n\nOur earnings and growth are significantly influenced by the monetary and fiscal policies of the Federal Reserve, in addition to general economic conditions. The Federal Reserve regulates the money supply and credit conditions through various tools, including open market operations, adjustments to the discount rate, and changes in reserve requirements.\n\nThese policies directly and indirectly affect interest rates, loan demand, deposit levels, and the overall availability and cost of credit. As a result, they have had, and are expected to continue to have, a material impact on the operations and profitability of financial institutions, including us.\n\nThe effects of future monetary policy actions on our business, financial condition, and results of operations are inherently uncertain and cannot be predicted.\n\nCapital requirements may limit our operations and adversely affect our return on equity.\n\nWe are subject to regulatory capital requirements that establish minimum risk-based and leverage ratios and define qualifying capital instruments. These requirements include minimum ratios for common equity Tier 1, Tier 1 capital, total capital, and leverage, as well as a capital conservation buffer of 2.5%, which effectively increases the minimum required levels.\n\nFailure to maintain required capital levels, including the buffer, may result in restrictions on capital distributions, including dividends and share repurchases, as well as limitations on discretionary bonus payments. In addition, higher capital requirements may reduce our return on equity and constrain growth.\n\nHome Federal Savings’ ability to pay dividends to Central Plains Bancshares is dependent on maintaining required capital levels, which in turn may affect our ability to pay dividends to our stockholders.\n\n \n\nAt March 31, 2026, Home Federal Savings exceeded all applicable regulatory capital requirements and was considered “well capitalized.”\n\nOur status as an emerging growth company may make our common stock less attractive to investors.\n\nCentral Plains Bancshares qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”). As an emerging growth company, we may elect to take advantage of certain reduced reporting and disclosure requirements, including exemptions from certain executive compensation disclosures and the requirement to obtain an auditor attestation of internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act.\n\nWe have also elected to use the extended transition period for adopting new or revised accounting standards applicable to private companies, which may result in our financial statements being less comparable to those of other public companies.\n\nIf investors perceive our reduced disclosure as less transparent, it could adversely affect the marketability and trading price of our common stock\n\n26\n\n[Table of Contents](#toc_page)\n\n \n\nOur status as a smaller reporting company may also reduce disclosure comparability.\n\nWe also qualify as a “smaller reporting company” under federal securities laws, which allows us to provide reduced disclosures in our periodic reports and proxy statements. While these accommodations reduce compliance costs, they may limit the information available to investors.\n\nIf investors view our reduced disclosure unfavorably, it could result in decreased market liquidity and increased volatility in the trading price of our common stock.\n\nThe Federal Reserve Board may require us to provide financial support to our bank subsidiary.\n\nUnder federal law and regulatory policy, bank holding companies are expected to act as a source of financial and managerial strength to their subsidiary banks. The Federal Reserve may require us to commit capital resources to support Home Federal Savings, including at times when it may not otherwise be advantageous to do so.\n\nSuch a requirement could necessitate raising additional capital or incurring debt, which may be costly or difficult under adverse market conditions. Any such actions could materially adversely affect our financial condition and results of operations.\n\nRisks Related to Economic Conditions\n\nChanges in trade policies and tariffs could adversely affect our business, financial condition, and results of operations.\n\nChanges in trade policies, including the imposition or escalation of tariffs and trade restrictions, could negatively affect economic conditions in the markets we serve. Our customers—particularly those engaged in agriculture, manufacturing, and retail—may experience higher input costs, reduced export demand, and supply chain disruptions as a result of such policies. These factors could reduce customer revenues and profitability, potentially leading to layoffs and impairing borrowers’ ability to meet their financial obligations.\n\nProlonged trade tensions may also contribute to market volatility, declining asset values, and weakened consumer confidence. As a result, we may experience increased loan delinquencies, higher credit losses, and deterioration in asset quality. In addition, a slowdown in local economic activity could reduce loan demand, deposit growth, and fee-based income. We cannot predict the outcome of trade negotiations or the full impact of tariffs and related policies on our customers or the broader economy. Any adverse developments could materially and negatively affect our financial condition, results of operations, and growth prospects.\n\nInflation could adversely affect our financial performance and our customers' ability to repay loans.\n\nInflation risk represents the potential for increases in the cost of goods and services to erode purchasing power and negatively impact economic activity. Rising inflation may reduce the fair value of our investment securities, particularly those with longer durations, although floating-rate instruments may be less affected.\n\nInflation also increases our operating costs, including expenses for utilities, technology, and personnel, which may adversely affect our noninterest expense levels. At the same time, our customers may face higher household and business expenses, which could reduce their disposable income and cash flow. These pressures may impair borrowers’ ability to repay loans, resulting in higher delinquencies and credit losses.\n\nOur concentration in real estate lending and our limited geographic diversification increase our exposure to adverse economic conditions.\n\nWe maintain a significant concentration of loans secured by real estate, primarily within our local market area, and have limited geographic diversification. As a result, our financial performance is particularly dependent on economic conditions in this region. Adverse changes in local economic conditions may disproportionately affect our borrowers’ ability to meet their repayment obligations.\n\nA deterioration in economic conditions—whether local, national, or global—may negatively impact real estate values, reduce collateral coverage, and increase the risk of loan losses. In addition, disruptions in credit markets or broader economic downturns could adversely affect the value of our loan portfolio, investments, and collateral, as well as our operating results. These factors could lead to increased delinquencies, higher levels of nonperforming and classified assets, and reduced demand for our products and services, which may adversely affect our capital, liquidity, and overall financial condition.\n\n27\n\n[Table of Contents](#toc_page)\n\n \n\nA deterioration in economic conditions could reduce demand for our products and services and increase credit-related risks.\n\nOur profitability is largely dependent on economic conditions in our primary market area. Unlike more geographically diversified institutions, we are more susceptible to localized economic downturns. A weakening of economic conditions—whether due to inflation, recessionary pressures, trade disruptions, geopolitical events, unemployment, or other factors beyond our control—could have a material adverse effect on our business. Such conditions may result in:\n\n•\nreduced demand for loans and other financial products;\n\n•\nincreased loan delinquencies, nonperforming assets, and foreclosures;\n\n•\ndeclines in the value of collateral, particularly real estate, reducing borrowing capacity and recovery values; and\n\n•\ndeterioration in the financial condition of guarantors, impairing their ability to fulfill their obligations.\n\nAdditionally, deflationary pressures, while potentially lowering certain operating costs, could adversely affect borrowers by reducing asset values and revenues, thereby impairing their ability to service debt. Any of these developments could materially and adversely affect our financial condition, liquidity, and results of operations.\n\nSignificant changes to the size, structure, powers and operations of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition.\n\n \n\nThe current U.S. administration has implemented significant changes in federal priorities and has taken steps to change the operations, structure, and policy focus of various federal agencies, as well as regulatory priorities, policy approaches and interpretations of existing laws by those federal agencies. For example, recent executive actions and proposed legislation has changed agency mandates, modified or reduced federal program funding, altered regulatory frameworks, or adjusted the size and composition of the federal workforce. Moreover, leadership transitions at key federal agencies have impacted or may impact rulemaking, supervision, enforcement, and examination priorities across the financial regulatory landscape. These developments in the federal government may have varying effects on the banking and financial services industry that are difficult to predict, which makes it difficult for us to anticipate and mitigate attendant risks. Compliance with changing federal and regulatory priorities could, among other things, increase the costs of operating our business, reduce the demand for our products and services, impact our ability to achieve our business goals, and increase our legal, operational and reputational risks, any or all of which could materially adversely affect our results of operations.\n\n \n\nThe current U.S. administration also has implemented rapid shifts in macroeconomic policies, such as those relating to trade restrictions and tariffs, which have created significant uncertainties regarding U.S. economic growth, the potential for recession, and concerns over an increase in inflation. Slow economic growth, economic contraction or recession, or shifts in broader consumer and business trends would significantly impact our ability to originate loans, the ability of borrowers to repay loans, and the value of the collateral securing loans.\n\n \n\nOther political and economic events within the United States, including a contentious domestic political environment, changes in or disagreements over U.S. monetary policy and actions of the Federal Reserve Board, disagreements over long-term federal budget and deficit reduction plans, disagreements over, or threats not to increase, the U.S. government’s borrowing limit (or “debt ceiling”), and risk of further downgrade of the ratings of U.S. government debt obligations, also may negatively impact financial markets and the U.S. economy.\n\nRegional business and economic conditions are a major driver of our results of operations. Difficult conditions in the regional business and economic environment, including those caused by the lack of stability and predictability of U.S. policymaking, may materially adversely affect our operating expenses, the quality of our assets, credit losses, and the demand for our products and services.\n\n \n\nRisks Related to our Business Strategy\n\nOur growth strategy may not be successful and may adversely affect our financial condition and results of operations.\n\nOur business strategy includes growth in assets, deposits, and the scale of our operations. Achieving this growth will require us to attract customers who currently maintain relationships with competing financial institutions. Our ability to grow successfully depends on several factors, including our ability to attract and retain experienced personnel, identify and execute on viable business opportunities, and compete effectively within our market area.\n\n28\n\n[Table of Contents](#toc_page)\n\n \n\nThere can be no assurance that growth opportunities will be available or that we will be able to manage growth effectively. Failure to do so could adversely affect our financial condition and results of operations. In addition, expansion efforts typically involve significant upfront costs, including investments in personnel, infrastructure, and lending capacity, and there may be a lag before such investments generate corresponding revenues. As a result, growth initiatives may place downward pressure on earnings until economies of scale are achieved.\n\nOur growth may require additional capital, which may not be available on acceptable terms, if at all.\n\nWe are subject to regulatory capital requirements and may need to raise additional capital to support future growth. If we raise capital through the issuance of equity or other securities, existing stockholders may experience dilution in ownership and, potentially, book value per share. Newly issued securities may also carry rights, preferences, or privileges senior to those of existing stockholders.\n\nOur ability to raise additional capital will depend on market conditions and our financial performance, both of which are beyond our control. We may not be able to access capital markets on favorable terms, or at all, when needed. If we are unable to raise sufficient capital, our ability to pursue growth opportunities, including acquisitions and organic expansion, could be materially impaired.\n\nRisks Related to Competitive Matters\n\nStrong competition may limit our growth and profitability.\n\nThe banking and financial services industry is highly competitive. We compete with a wide range of financial institutions and non-bank financial service providers, many of which are significantly larger and have greater financial resources, broader product offerings, higher lending limits, and more advanced technologies.\n\nThese competitors may offer more favorable loan terms, higher deposit rates, or enhanced digital capabilities. Increased competition may also make it more difficult and costly to attract and retain qualified employees. Ongoing industry consolidation, as well as legislative and technological changes, may further intensify competition. Our ability to maintain and grow profitability depends on our ability to compete effectively in this environment.\n\nOur relatively small size may limit our ability to compete effectively.\n\nAs a smaller financial institution, we have fewer financial and operational resources than many of our competitors. This may limit our ability to invest in marketing, technology, and new products and services at the same level as larger institutions.\n\nBecause our primary source of income is net interest income, our revenue-generating capacity is constrained by the size of our balance sheet. This may hinder our ability to absorb rising costs, including regulatory compliance expenses. In addition, our smaller customer base may limit our ability to generate diversified noninterest income. These factors could adversely affect our competitive position and growth prospects.\n\nRisks Related to Operational Matters\n\nWe are subject to operational and cybersecurity risks, including risks related to technology failures and data security breaches\n\nOur business is highly dependent on information technology systems and third-party service providers. We process, transmit, and store significant amounts of confidential information. Any failure, interruption, or breach of these systems could disrupt operations and compromise sensitive data.\n\nWe face risks from cyber-attacks, including malware, phishing, ransomware, denial-of-service attacks, and other security incidents. These threats are continually evolving, and while we implement security measures, there can be no assurance that such measures will be effective. A successful cyber incident or system failure could result in financial losses, reputational harm, regulatory scrutiny, and legal liability, any of which could materially and adversely affect our business.\n\nOur reliance on third-party vendors for critical services, including data processing, also exposes us to risks related to vendor performance and security. Disruptions, failures, or security breaches at these vendors could negatively impact our operations. In addition, such incidents may not be disclosed to us in a timely manner, limiting our ability to respond effectively.\n\n29\n\n[Table of Contents](#toc_page)\n\n \n\nOur board relies on management and external advisors for oversight of cybersecurity risk.\n\nOur board of directors relies significantly on management and third-party experts to oversee cybersecurity risk management. While we maintain an internal technology committee and engage external consultants, members of our board have limited direct experience in cybersecurity matters. As a result, effective oversight depends on the quality of information and recommendations provided by management and advisors, which may not fully mitigate cybersecurity risks.\n\nThe loss of key personnel could adversely affect our business.\n\nOur success depends on the continued service of our senior management and key employees, who possess significant industry experience, market knowledge, and customer relationships. The loss of these individuals, or our inability to attract and retain qualified personnel, could disrupt our operations and impair our ability to execute our business strategy. We do not maintain key-person life insurance on members of our senior management team.\n\nLiquidity constraints or funding disruptions could adversely affect our operations and financial condition.\n\nWe must maintain adequate liquidity to meet deposit withdrawals and borrower funding needs. While we rely primarily on core deposits, we also utilize alternative funding sources such as Federal Home Loan Bank advances, Federal Reserve Discount Window, federal funds purchased, and brokered deposits.\n\nMarket disruptions, competitive pressures, or adverse operating performance could limit our access to these funding sources or increase their cost. If we are required to rely on higher-cost funding, our net interest margin and profitability may be negatively affected. In addition, we may be required to sell assets at unfavorable prices to meet liquidity needs, potentially resulting in realized losses.\n\nLiquidity constraints may also result in increased regulatory scrutiny or restrictions, including limitations on growth, dividend payments, and the use of brokered deposits.\n\nFuture potential reliance on and integration of artificial intelligence (AI) and machine learning (ML) technologies could expose us to various risks, including operational, data, regulatory, and reputational risks, which could materially affect our business and financial results.\n\n \n\nThe enhanced use of AI and ML by financial institutions can lead to a variety of risks.\n\n•\nOperational & Model Risk: AI/ML models that can be used for credit scoring, fraud detection, customer service, and investment decisions can rely on complex algorithms and vast datasets. Errors, biases, or \"hallucinations\" (generating false information) in these models, or unexpected system failures, could lead to flawed decisions, financial losses, compliance failures, or degraded customer experiences, impacting profitability and client retention.\n\n•\nData Security & Privacy: AI systems process sensitive customer data. Security breaches or unauthorized access to these systems could result in data theft, loss of intellectual property, and significant penalties, damaging customer trust.\n\n•\nRegulatory & Compliance Risk: The regulatory landscape for AI is rapidly evolving. New laws could impose costly compliance burdens, restrict AI use, or introduce liabilities, particularly concerning algorithmic bias and fair lending practices (e.g., \"digital redlining\"), potentially increasing operational costs and limiting service offerings.\n\n•\nTalent & Third-Party Risk: Attracting and retaining skilled AI professionals is crucial and competitive. Financial institutions may also have greater dependence on third-party AI vendors, creating dependency risks and potential issues with data handling, model reliability, and licensing, all of which could disrupt operations.\n\n•\nReputational & Ethical Risk: Misuse of AI, biased outcomes, or privacy violations can harm a financial institution’s brand, erode customer confidence, and attract negative public attention, potentially affecting demand for services.\n\nIf we cannot effectively manage these challenges, including adapting to rapid technological change and ensuring responsible AI governance, our reputation, competitive position, and financial performance could be significantly harmed.\n\nThe financial condition of other financial institutions could adversely affect us.\n\nWe have exposure to other financial institutions through various transactions and relationships, including funding, clearing, and investments. The financial instability or failure of one or more institutions could lead to market-wide liquidity disruptions and increased credit risk.\n\n30\n\n[Table of Contents](#toc_page)\n\n \n\nDefaults by counterparties or declines in the value of collateral could result in financial losses. Broader concerns about the financial services industry may also negatively impact market confidence and funding availability, which could materially and adversely affect our operations and financial condition.\n\nOur inability to tailor our retail delivery model to respond to consumer preferences in banking may negatively affect earnings.\n\nOur branch network continues to be a very significant source of new business generation, however, consumers continue to migrate much of their routine banking to self-service channels. In recognition of this shift in consumer patterns, we regularly review our branch network, which can result in branch consolidation accompanied by the enhancement of our capabilities to serve its customers through alternate delivery channels. In that regard, we expect to continue to devote substantial time and resources to improving our digital products and services. The success of these initiatives will depend on, among other things, whether our upgraded technology and digital solutions are received favorably by our customers and employees and improves their experiences and interactions with us. If we are unable to fully implement the digital offerings or successfully achieve these objectives with customers, the anticipated benefits of these initiatives may not be realized fully, or at all, or may take longer to realize than expected or we may experience significant customer attrition.\n\nRisks Related to Acquisitions\n\nAcquisitions may not achieve expected benefits and may adversely affect our financial condition.\n\nWe may pursue acquisitions as part of our growth strategy. These transactions involve various risks, including:\n\n•\npotential dilution of tangible book value and earnings per share;\n\n•\nexposure to unknown or contingent liabilities;\n\n•\nasset quality deterioration in acquired portfolios;\n\n•\ngoodwill impairment and earnings volatility;\n\n•\nintegration challenges and associated costs;\n\n•\nfailure to achieve anticipated synergies or cost savings;\n\n•\ndiversion of management attention; and\n\n•\nthe loss of key employees or customers.\n\n \n\nThese risks could adversely affect our financial performance and the value of our common stock.\n\nRisks Related to Accounting Matters\n\nChanges in estimates and assumptions could materially affect our financial statements.\n\nThe preparation of financial statements requires management to make estimates and assumptions that are inherently uncertain and subject to change. Key areas include the allowance for credit losses, pension obligations, and the fair value of financial instruments. Actual results may differ materially from these estimates, which could affect our financial condition and results of operations.\n\nChanges in accounting standards could impact reported results.\n\nAccounting standard-setters and regulators periodically update financial reporting requirements. These changes may affect how we recognize and measure financial statement items and could require retrospective application. Such changes could materially impact our reported financial condition and results of operations.\n\nOther Risks Related to Our Business\n\nOur reputation is critical to our success.\n\nAs a community bank, our reputation is a key component of our business strategy. Negative publicity, whether warranted or not, could result in the loss of customers, employees, and business opportunities. Reputational harm may arise from operational failures, regulatory issues, cybersecurity incidents, or misconduct by employees or customers, and could materially and adversely affect our performance.\n\n31\n\n[Table of Contents](#toc_page)\n\n \n\nClimate-related risks may adversely affect our business and customers.\n\nRegulatory, economic, and behavioral responses to climate change may affect our customers and the markets we serve. These changes could reduce demand for certain products, impair borrowers’ creditworthiness, and decrease the value of collateral. Our efforts to manage these risks may not be effective, and such developments could adversely affect our financial condition and results of operations.\n\nGovernment shutdowns, natural disasters, and other external events could adversely affect our operations.\n\nGovernment shutdowns may disrupt loan originations and sales, reducing noninterest income. Natural disasters and severe weather events, particularly those affecting our regional footprint (e.g., tornadoes or drought), could impair borrowers’ ability to repay loans, damage collateral, and disrupt operations. Such events could materially and adversely affect our financial condition and results of operations.\n\nAnti-takeover provisions may limit changes in control.\n\nCertain provisions of our articles of incorporation and bylaws and federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of Central Plains Bancshares without our board of directors’ approval. Under regulations applicable to the conversion, for a period of three years following completion of the conversion, no person may offer to acquire or acquire beneficial ownership of more than 10% of our common stock without prior approval of the Federal Reserve Board. Under federal law, subject to certain exemptions, a person, entity or group must notify the Federal Reserve Board and receive the Federal Reserve Board’s non-objection before acquiring control of a bank holding company or a savings and loan holding company.\n\nThere also are provisions in our articles of incorporation and bylaws that we may use to delay or block a takeover attempt, including a provision that prohibits any person from voting more than 10% of our outstanding shares of common stock. Furthermore, shares of restricted stock and stock options that we may grant to employees and directors, stock ownership by our management and directors and other factors may make it more difficult for companies or persons to acquire control of Central Plains Bancshares without the consent of our board of directors, and may increase the cost of an acquisition. Taken as a whole, these statutory or regulatory provisions and provisions in our articles of incorporation and bylaws could result in our being less attractive to a potential acquirer and therefore could adversely affect the market price of our common stock.\n\nOur articles of incorporation provide that, subject to limited exception, state and federal courts in the State of Maryland are the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, and other employees.\n\nThe articles of incorporation of Central Plains Bancshares provide that, unless Central Plains Bancshares consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of Central Plains Bancshares, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Central Plains Bancshares to Central Plains Bancshares or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine will be conducted in a state or federal court located within the State of Maryland, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. This exclusive forum provision does not apply to claims arising under the federal securities laws.\n\nThis exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum it finds favorable for disputes with Central Plains Bancshares and its directors, officers, and other employees or may cause a stockholder to incur additional expense by having to bring a claim in a judicial forum that is distant from where the stockholder resides, or both. In addition, if a court were to find this exclusive forum provision to be inapplicable or unenforceable in a particular action, we may incur additional costs associated with resolving the action in another jurisdiction, which could have a material adverse effect on our financial condition and results of operations."}