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New words:
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Removed:
al, allegedly, backed, bisceglia, Butsch, Carpoff, coincide, complaint, consecutive, contracted, District, Eastern, Eclipse, fallback, filing, finalized, frank, hedging, heightening, inclusion, inclusive, Indenture, interbank, Jeff, kaczmarek, Kingdom, legislature, mandate, Margo, moving, oriented, outlook, paramount, perpetrated, phasing, post, recommended, replacement, restructuring, scheme, SOFR, Solano, Solar, Solarmore, Sunnyvale, tenure, timed, walter, West, Wilmington
Financial report summary
?Risks
- Our Business could be adversely affected by unfavorable economic and market conditions.
- The COVID-19 pandemic has in the past negatively affected, and future pandemics, epidemics, disease outbreaks and other public health crises could negatively affect the global and U.S. economies and could harm our business and results of operations, and such effects will depend on future developments, which are highly uncertain and are difficult to predict.
- Our profitability is dependent upon the geographic concentration of the markets in which we operate.
- Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.
- Competition among U.S. banks for customer deposits is intense, may increase the cost of retaining current deposits or procuring new deposits, and may otherwise negatively affect our ability to grow our deposit base.
- We may not keep pace with the rapid technological developments in the financial services industry. Fraudulent and other illegal activity involving our products, services and systems could adversely affect our financial position and results of operations.
- Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
- Our construction and land development loans are based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate and we may be exposed to more losses on these projects than on other loans.
- Increased scrutiny by regulators of commercial real estate concentrations could restrict our activities and impose financial requirements or limits on the conduct of our business.
- Our use of appraisals in deciding whether to make a loan on or secured by real property does not ensure the value of the real property collateral.
- Many of our loans are to commercial borrowers, which may have a higher degree of risk than other types of borrowers.
- The small and medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair a borrower’s ability to repay a loan, and such impairment could adversely affect our business, financial condition and results of operation.
- We may suffer losses in our loan portfolio despite our underwriting practices.
- Small Business Administration lending is an important part of our business. Our SBA lending program is dependent upon the U.S. federal government, and we face specific risks associated with originating SBA loans.
- The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions.
- Our business depends on our ability to successfully manage credit risk.
- Our allowance for credit losses on loans may prove to be insufficient to absorb potential losses in our loan portfolio.
- Nonperforming assets adversely affect our results of operations and financial condition, and take significant time to resolve.
- Real estate market volatility and future changes in our disposition strategies could result in net proceeds that differ significantly from our other real estate owned fair value appraisals.
- We could be exposed to risk of environmental liabilities with respect to properties to which we take title.
- We face risks related to any future acquisitions we may make.
- Issuing additional shares of our common stock to acquire other banks and bank holding companies may result in dilution for existing shareholders and may adversely affect the market price of our stock.
- If the goodwill that we recorded in connection with a business acquisition becomes impaired, it could require charges to earnings, which would have a negative impact on our financial condition and results of operations.
- Our decisions regarding the fair value of assets acquired could be different than initially estimated, which could materially and adversely affect our business, financial condition and results of operations.
- We must effectively manage our branch growth strategy.
- New lines of business or new products and services may subject us to additional risks.
- Fluctuations in interest rates may reduce net interest income and otherwise negatively affect our business, financial condition and results of operations.
- Rising interest rates have decreased the value of a portion of the Company’s securities portfolio, and the Company would realize losses if it were required to sell such securities to meet liquidity needs.
- Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations.
- We may be subject to more stringent capital requirements in the future.
- We may need to raise additional capital in the future, and if we fail to maintain sufficient capital, whether due to losses, an inability to raise additional capital or otherwise, our financial condition, liquidity and results of operations, as well as our ability to maintain regulatory compliance, would be adversely affected.
- We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, financial condition and results of operations.
- Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our business, financial condition and results of operations.
- Our risk management framework may not be effective in mitigating risks and/or losses to us.
- Interruptions, cyber-attacks, fraudulent activity or other security breaches could have a material adverse effect on our business.
- Our operations could be interrupted by our third-party service providers experiencing difficulty in providing their services, terminating their services or failing to comply with banking regulations.
- Employee misconduct could expose us to significant legal liability and reputational harm.
- We depend on the accuracy and completeness of information provided by customers and counterparties and any misrepresented information could adversely affect our business, financial condition and results of operations.
- We face strong competition from financial services companies and other companies that offer commercial banking services, which could harm our business.
- We have a continuing competitive need for technological change, and we may not have the resources to effectively implement new technology or we may experience operational challenges when implementing new technology.
- The costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, financial condition and results of operations.
- Our ability to access markets for funding and acquire and retain customers could be adversely affected by the deterioration of other financial institutions or the financial service industry’s reputation.
- Severe weather, natural disasters, pandemics, acts of war or terrorism, social unrest and other external events could significantly impact our business.
- Climate change could have a material negative impact on the Company and our customers.
- Accounting estimates and risk management processes rely on analytical models that may prove inaccurate resulting in a material adverse effect on our business, financial condition and results of operations.
- Changes in accounting standards could materially impact our financial statements.
- Failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business and stock price.
- We have significant deferred tax assets and cannot assure that they will be fully realized.
- We are subject to extensive government regulation that could limit or restrict our activities, which in turn may adversely impact our ability to increase our assets and earnings.
- Legislative and regulatory actions taken now or in the future may impact our business, governance structure, financial condition or results of operations. Proposed legislative and regulatory actions, including changes to financial regulation and the corporate tax law, may not occur on the timeframe that is expected, or at all, which could result in additional uncertainty for our business.
- Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings.
- We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
- 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.
- Regulations relating to privacy, information security, cybersecurity and data protection could increase our costs and affect or limit how we collect and use personal information.
- An investment in our common stock is not an insured deposit.
- The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell shares of common stock owned by you at times or at prices you find attractive.
- The trading volume in our common stock is less than that of other larger financial services companies.
- Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.
- We have limited the circumstances in which our directors will be liable for monetary damages.
- Future equity issuances could result in dilution, which could cause our common stock price to decline.
- We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock.
- The holders of our debt obligations will have priority over our common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest and dividends.
- Provisions in our charter documents and California law may have an anti-takeover effect, and there are substantial regulatory limitations on changes of control of bank holding companies.
Management Discussion
- The Company earns income from two primary sources. The first is net interest income, which is interest income generated by earning assets less interest expense on interest-bearing liabilities. The second is noninterest income, which primarily consists of gains on the sale of loans, loan servicing fees, customer service charges and fees, the increase in cash surrender value of life insurance, and gains on the sale of securities. The majority of the Company’s noninterest expenses are operating costs that relate to providing banking services to our customers.
- The level of net interest income depends on several factors in combination, including growth in earning assets, yields on earning assets, the cost of interest-bearing liabilities, the relative volumes of earning assets and interest-bearing liabilities, and the mix of products that comprise the Company’s earning assets, deposits, and other interest-bearing liabilities. Net interest income can also be impacted by the reversal of interest on loans placed on nonaccrual status, and recovery of interest on loans that have been on nonaccrual and are either sold or returned to accrual status. To maintain its net interest margin, the Company must manage the relationship between interest earned and interest paid.
- (3) Reflects tax equivalent adjustment for Federal tax exempt income based on a 21% tax rate for the years ended December 31, 2023, 2022 and 2021.