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New words:
building, CME, compressing, death, dissolved, geographic, lack, leasehold, letter, nonrecurring, opening, region, reoccurred, secondary, side, SOFR
Removed:
accelerated, accounted, accreting, allocation, amortizing, announced, approach, ascertained, authorizing, BSC, care, CDI, closely, closing, combination, commencing, compensation, comprised, connection, contemplated, converted, creation, Efficiency, employee, ending, enhancing, establishment, existed, experienced, expired, forma, found, GDP, guaranteed, hand, headcount, holder, increasing, iv, Joint, July, lender, Macrolease, manner, matured, MBS, medium, merged, occurred, original, overhead, overnight, owing, participated, PCD, posted, PPP, predominantly, preliminary, premium, pro, professional, proportional, receive, recently, refinancing, relate, repurchased, retention, separate, servicing, sized, supplemental, suspended, TDR, technology, travel, viewpoint
Financial report summary
?Risks
- The possibility of the economy’s return to recessionary conditions and the possibility of further turmoil or volatility in the financial markets would likely have an adverse effect on our business, financial position, and results of operations.
- Our business may be adversely affected by changes in economic conditions in our market area.
- Changes to interest rates could adversely affect our results of operations and financial condition.
- Inflationary pressures and rising prices may affect our results of operations and financial condition.
- We face significant and increasing competition in the financial services industry.
- Our business may be adversely affected if we fail to adapt our products and services to evolving industry standards and consumer preferences.
- Development of new products services and technologies may impose additional costs on us and may expose us to increased operational risk.
- If our allowance for credit losses is not sufficient to cover actual loan and lease losses, our earnings may decrease.
- Our loan and lease portfolios include commercial real estate mortgage loans and commercial loans and leases, including equipment leases, which are generally riskier than other types of loans.
- Environmental liability associated with our lending activities could result in losses.
- Our securities portfolio performance in difficult market conditions could have adverse effects on our results of operations.
- The fair value of our investment securities can fluctuate due to factors outside of our control.
- Potential downgrades of U.S. government securities by one or more of the credit ratings agencies could have a material adverse effect on our operations, earnings and financial condition.
- The replacement of LIBOR may adversely affect our business, financial condition and results of operations.
- We are subject to liquidity risk, which could negatively affect our funding levels.
- Loss of deposits or a change in deposit mix could increase our cost of funding.
- Wholesale funding sources may prove insufficient to replace deposits at maturity and support our operations and future growth.
- Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our financial condition and results of operations.
- The soundness of other financial institutions could adversely affect us.
- Damage to our reputation could significantly harm our business, including our competitive position and business prospects.
- We may be unable to attract and retain qualified key employees, which could adversely affect our business prospects, including our competitive position and results of operations.
- Our ability to service our debt and pay dividends is dependent on capital distributions from our subsidiary banks, and these distributions are subject to regulatory limits and other restrictions.
- We face continuing and growing security risks to our information base, including the information we maintain relating to our customers.
- We may not be able to successfully implement future information technology system enhancements, which could adversely affect our business operations and profitability.
- We rely on other companies to provide key components of our business infrastructure.
- We may incur significant losses as a result of ineffective risk management processes and strategies.
- Our internal controls, procedures and policies may fail or be circumvented.
- Natural disasters, acts of terrorism, pandemics and other external events could harm our business.
- Our financial statements are based in part on assumptions and estimates, which, if wrong, could cause unexpected losses in the future.
- Changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations.
- Changes in tax laws and regulations and differences in interpretation of tax laws and regulations may adversely impact our financial statements.
- Future capital offerings may adversely affect the market price of our common stock.
- The market price and trading volume of our common stock may be volatile.
- Anti-takeover provisions could negatively impact our stockholders.
- If we acquire or seek to acquire other companies, our business may be negatively impacted by certain risks inherent with such acquisitions.
- We may be required to write down goodwill and other acquisition-related identifiable intangible assets.
- We operate in a highly regulated industry, and laws and regulations, or changes in them, could limit or restrict our activities and could have a material adverse effect on our operations.
- We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
- We may become subject to enforcements actions even though noncompliance was inadvertent or unintentional.
- We face significant legal risks, both from regulatory investigations and proceedings and from private actions brought against us.
- The FRB may require us to commit capital resources to support the Banks.
- We are subject to stringent capital requirements which may adversely impact return on equity, require additional capital raises, or limit the ability to pay dividends or repurchase shares.
Management Discussion
- The primary drivers of the Company's net income are net interest income, which is strongly affected by the net yield on and growth of interest-earning assets and liabilities, the quality of the Company's assets, its levels of non-interest income and non-interest expense, and its tax provision.
- The Company's net interest income represents the difference between interest income earned on its investments, loans and leases, and its cost of funds. Interest income is dependent on the amount of interest-earning assets outstanding during the period and the yield earned thereon. Cost of funds is a function of the average amount of deposits and borrowed money outstanding during the year and the interest rates paid thereon. The net interest margin is calculated by dividing net interest income by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. The increases or decreases, as applicable, in the components of interest income and interest expense, expressed in terms of fluctuation in average volume and rate, are summarized under "Rate/Volume Analysis" below. Information as to the components of interest income, interest expense and average rates is provided under "Average Balances, Net Interest Income, Interest-Rate Spread and Net Interest Margin" below.
- Because the Company's assets and liabilities are not identical in duration and in repricing dates, the differential between the two is vulnerable to changes in market interest rates as well as the overall shape of the yield curve. These vulnerabilities are inherent to the business of banking and are commonly referred to as "interest-rate risk." How interest-rate risk is measured and, once measured, how much interest-rate risk is taken on, are based on numerous assumptions and other subjective judgments. See the discussion in “Item 3. Quantitative and Qualitative Disclosures about Market Risk” below.