What changed in this filing

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Item 1A. Risk Factors

2020-08-07 compared with 2020-05-08 · 20 added, 13 removed, 19 unchanged (63% of the section changed)

3 unchanged sentences

The COVID-19 pandemic has created a global public-health crisis that has resulted in widespread market volatility and deteriorating economic conditions for households and businesses.

The deteriorating economic conditions, most of which are unprecedented, include more than 20 million people becoming unemployed in the United States in one month's time, cuts in consumer spending on almost all categories of purchases except groceries and staples, and closure or significantly reduced operations of restaurants, bars, airlines, hotels, and entertainment and hospitality venues, among others.

In the Bank's local markets, governments put stay-at-home orders into effect which only allow for essential businesses to remain open.

In response to the COVID-19 pandemic, an essential business, the Company implemented business continuity measures, including activating its Crisis Management Team to put into action our business continuity plan, monitoring potential business interruptions, making further improvements to our information technology allowing nearly half of our employees to work from home, and conducting regular discussions with our third-party service providers providing services to facilities that are open.

The deteriorating economic conditions, most of which are unprecedented, include more than 20 million people becoming unemployed in the United States in one month's time, more than 45 million total filing for unemployment benefits, cuts in consumer spending in almost all categories of purchases except groceries and staples, and closure or significantly reduced operations of restaurants, bars, airlines, hotels, and entertainment and hospitality venues, among others.

In the Bank's local markets, governments put stay-at-home orders into effect in March and April which only allow for essential businesses to remain open.

Many of these stay-at-home orders have been lifted or greatly reduced.

In response to the COVID-19 pandemic, as an essential business, the Company implemented business continuity measures, including activating its Crisis Management Team to put into action our business continuity plan, monitoring potential business interruptions, making further improvements to our information technology allowing nearly half of our employees to work from home, and conducting regular discussions with our third-party service providers providing services to facilities that are open.

Heightened cybersecurity, information security and operational risks may result from these remote work-from-home arrangements.

Preventative health measures were put in place including elimination of business-related travel, implementing mandatory work from home for all employees able to do so, social distancing precautions for all employees in the office, adjusting branch banking hours and operational measures to promote social distancing when customers do visit branches, and preventative cleaning at offices and branches.

These actions have resulted in changes to our business operations, but have not yet significantly impacted most business operations.

Additionally, from mid-March to mid-May, lobby services were limited to appointment only.

Due to an increase in COVID-19 cases in late June into July, management decided to change lobby services to appointment only.

These actions have resulted in changes to our business operations, but have not significantly impacted most business operations.

Depending on the severity and length of the COVID-19 pandemic, which is impossible to predict, we could experience significant disruptions in our business operations if key personnel or a significant number of employees were to become unavailable due to the effects of, and restrictions resulting from, the COVID-19 pandemic, as well as decreased demand for our products and services.

2 unchanged sentences

The unknown economic recovery time resulting from the COVID-19 pandemic creates risks that loan modification programs made available to our customers will be insufficient to prevent or reduce delinquencies or help our customers stay in business.

Businesses that do not take advantage of loan modification programs provided by the Bank could also be at risk of becoming delinquent or going out of business.

Businesses that do not take advantage of loan modification programs offered by the Bank could also be at risk of becoming delinquent or going out of business, and this risk could remain even for those businesses that do avail themselves of those programs.

The PPP loans made by the Bank are guaranteed by the SBA and, if used by the borrower for authorized purposes, may be fully forgiven.

1 unchanged sentence

Since the commencement of the PPP, several larger banks have been subject to litigation regarding their processing of PPP loan applications.

The Bank may be exposed to the risk of similar litigation, from both customers and non-customers that approached the Bank seeking PPP loans.

PPP lenders, including the Bank, may also be subject to the risk of litigation in connection with other aspects of the PPP, including but not limited to borrowers seeking forgiveness of their loans.

The Bank may be exposed to the risk of similar litigation, from both customers and non-customers that approach the Bank seeking PPP loans.

PPP lenders, including the Bank, may also be subject to the risk of litigation in connection with other

aspects of the PPP, including but not limited to borrowers seeking forgiveness of their loans.

If any such litigation is filed against the Bank, it may result in significant financial or reputational harm to us.

It is likely that many of our individual borrowers have become unemployed and may not be able to continue making mortgage payments under the terms of their loans.

Also included in the CARES Act were Economic Impact Payments to individuals meeting certain income requirements.

Included in the CARES Act were Economic Impact Payments to individuals meeting certain income requirements.

Individuals began receiving those payments in mid-April 2020.

This may help mitigate the risk that some borrowers become delinquent or delay the potential for default until they can return to work.

However, it is uncertain how long borrowers may need some form of assistance or forbearance.

In order to help our customers, it is likely that utilization of our COVID-19 loan modification programs may increase in the future.

Asset quality may deteriorate further and the amount of our ACL may not be sufficient for future loan losses we may experience.

Additionally, individuals that are unemployed have benefited from the FPUC and other unemployment compensation benefits provided through the CARES Act.

The FPUC provided an additional $600 per week to individuals collecting regular unemployment compensation.

This benefit expired in late July 2020 .

The financial support provided to individuals by the CARES Act may help mitigate the risk that some borrowers become delinquent or delay the potential for default until they can return to work.

However, it is uncertain how long borrowers may need some form of assistance or forbearance and what type of future assistance, if any, the U.S.

Government will provide.

Asset quality may deteriorate and the amount of our ACL may not be sufficient for future loan losses we may experience.

This could require us to increase our reserves and recognize more expense in future periods.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors