7 unchanged sentences
The Corporation's businesses and results of operation are affected by the financial markets and general economic conditions in the United States, and particularly to adverse conditions in New York and Pennsylvania.
−Removed: Key economic factors affecting the Corporation include the level and volatility of short-term and long-term interest rates, inflation, home prices, unemployment and under-employment levels, bankruptcies, household income, consumer spending, fluctuations in both debt and equity capital markets and currencies, liquidity of the financial markets, the availability and the cost of capital and credit, investor sentiment, confidence in the financial markets, and the sustainability of economic growth.
+Added: Key economic factors affecting the Corporation include the level and volatility of short-term and long-term interest rates, inflation, tariffs, home prices, unemployment and under-employment levels, bankruptcies, household income, consumer spending, fluctuations in both debt and equity capital markets and currencies, liquidity of the financial markets, the availability and the cost of capital and credit, investor sentiment, confidence in the financial markets, and the sustainability of economic growth.
The deterioration of any of these conditions could adversely affect the Corporation's consumer and commercial businesses, its securities and derivatives portfolios, its level of charge-offs and provision for credit losses, the carrying value of the Corporation's deferred tax assets, its capital levels and liquidity, and the Corporation's results of operations.
8 unchanged sentences
In 2006, the Office of the Comptroller of the Currency, the FDIC, and the FRB (collectively, the “Agencies”) issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”).
−Removed: Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months.
−Removed: Commercial real estate loans represent 403.6% of Bank risk-based capital at December 31, 2023 and the outstanding balance of our commercial real estate loan portfolio has increased by greater than 50% during the 36 months preceding December 31, 2023.
+Added: Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and outstanding balances of such loans has increased by 50% or more during the preceding 36 months.
+Added: Non-owner occupied commercial real estate loans represented 399.4% of Bank risk-based capital as of December 31, 2024 and outstanding balances of non-owner occupied commercial real estate loans increased by 53.2% during the 36 months preceding December 31, 2024.
In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”).
2 unchanged sentences
Commercial real estate and commercial and industrial loans increase the Corporation’s exposure to credit risks.
−Removed: At December 31, 2023, the Corporation’s portfolio of commercial real estate and commercial and industrial loans totaled $1.387 billion or 70.3% of total loans.
+Added: As of December 31, 2024, the Corporation’s portfolio of commercial real estate and commercial and industrial loans totaled $1.517 billion or 73.2% of total loans.
The Corporation plans to continue to emphasize the origination of these types of loans, which generally expose the Corporation to a greater risk of nonpayment and loss than residential real estate or consumer loans because repayment of commercial real estate and commercial and industrial loans often depends on the successful operation and income stream of the borrower’s business.
8 unchanged sentences
Changes in occupancy trends resulting from shifts in macroeconomic conditions could adversely impact our commercial borrowers, particularly in relation to borrowers with substantial office or retail-specific exposures.
−Removed: Loan participations may have a higher risk of loss than loans the Bank originates because the Bank is not the lead lender and has limited control over credit monitoring.
−Removed: The Corporation occasionally purchases commercial real estate and commercial and industrial loan participations secured by properties outside its market area in which the Bank is not the lead lender.
+Added: Loan participations may have a higher risk of loss than loans the Bank originates because the Bank is not the lead bank and has limited control over credit monitoring.
+Added: The Corporation occasionally purchases commercial real estate and commercial and industrial loan participations secured by properties outside its market areas in which the Bank is not the lead bank.
The Corporation has purchased loan participations secured by various types of collateral such as real estate, equipment, and other business assets located primarily in New York and Pennsylvania.
−Removed: Loan participations may have a higher risk of loss than loans the Bank originates because we rely on the lead lender to monitor the performance of the loan.
−Removed: Moreover, our decisions regarding the classification of a loan participation and credit loss provisions associated with a loan participation are made in part based upon information provided by the lead lender.
−Removed: A lead lender also may not monitor a participation loan in the same manner as we would for loans that the Bank originates.
−Removed: At December 31, 2023, loan participation balances where the Bank is not the lead lender totaled $177.6 million, or 9.00% of our loan portfolio.
−Removed: At December 31, 2023, commercial and industrial loan participations outside our market area totaled $11.6 million, or 4.38% of the commercial and industrial loan portfolio.
−Removed: There were no commercial real estate loan participations outside our market area.
−Removed: If the Bank’s underwriting of these participation loans is not sufficient, our non-performing loans may increase and our earnings may decrease.
+Added: Loan participations may have a higher risk of loss than loans the Bank originates because we rely on the lead bank to monitor the performance of the loan.
+Added: Moreover, our decisions regarding the classification of a loan participation and
+Added: credit loss provisions associated with a loan participation are made in part based upon information provided by the lead bank.
+Added: A lead bank also may not monitor a participation loan in the same manner as we would for loans that the Bank originates.
+Added: As of December 31, 2024, loan participation balances where the Bank is not the lead bank totaled $168.2 million, or 8.1% of our loan portfolio.
+Added: As of December 31, 2024, commercial and industrial loan participations outside our market areas totaled $11.3 million, or 3.8% of the commercial and industrial loan portfolio, and commercial real estate loan participations outside our market areas totaled $2.1 million, or 0.2% of the commercial real estate portfolio.
+Added: If the Bank’s underwriting of these participation loans is not sufficient, our non-performing loans may increase, negatively effecting our results of operations.
We are subject to environmental liability risk associated with lending activities.
13 unchanged sentences
The Corporation's portfolio of indirect automobile lending exposes it to increased credit risks.
−Removed: At December 31, 2023, $210.4 million, or 10.7% of our total loan portfolio, consisted of automobile loans, primarily originated through automobile dealers for the purchase of new or used automobiles.
+Added: As of December 31, 2024, $178.1 million, or 8.5% of our total loan portfolio, consisted of automobile loans, primarily originated through automobile dealers for the purchase of new or used automobiles.
The Corporation serves customers that cover a range of creditworthiness and the required terms and rates are reflective of those risk profiles.
8 unchanged sentences
In determining the amount of the allowance for credit losses, management relies on its CECL methodology, loan quality reviews, past experience, and an evaluation of forward-looking economic forecasts, among other factors.
−Removed: If these assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover future losses in the Corporation’s loan portfolio, resulting in additions to the allowance.
+Added: If these assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover future losses in the Corporation’s loan portfolio, resulting in required additions to the allowance for credit losses.
Material additions to the allowance would materially decrease earnings.
4 unchanged sentences
This methodology is dependent on the relationship between economic variables and historic default, and there is no guarantee that these factors will be similarly correlated in the future.
−Removed: A departure or decoupling in correlation may increase the risk that the allowance for credit losses is inadequate to absorb anticipated lifetime credit losses, and may require changes in the Corporation's methodology, which may result in increased provision requirements, materially adversely impacting the results of operations and financial condition.
+Added: A departure or decoupling in correlation may increase the risk of allowance for credit losses being inadequate to absorb anticipated lifetime credit losses, and may require changes in the Corporation's methodology, which may result in increased provision requirements, materially adversely impacting the results of operations and financial condition.
Bank regulators periodically review the Corporation’s allowance for credit losses and may require the Corporation to increase its provision for credit losses or loan charge-offs.
6 unchanged sentences
The Bank owns a participating interest totaling $4.2 million in an approximately $36.0 million commercial credit facility on which the borrower defaulted due to fraudulent activity.
−Removed: On April 23, 2020 the Corporation received payment of $461,309 from the lead bank related to its obligation under the participation agreements.
+Added: On April 23, 2020 the Corporation received payment of $0.5 million from the lead bank related to its obligation under the participation agreements.
The Bank continues to pursue recovery of the remaining $3.7 million, interest, and accumulated expenses as a result of purchasing the participation interest.
3 unchanged sentences
Use of appraisals when underwriting loans secured by real property may not accurately represent the net value of collateral the Bank can realize at a future date.
−Removed: When evaluating decisions to extend credit that is to be secured by real property, it is generally the requirement of the Bank to require an appraisal on the property being collateralized.
+Added: When evaluating decisions to extend credit that is to be secured by real property, it is generally the requirement of the Bank to obtain an appraisal on the property being collateralized.
Appraisals are only an estimate of the value of the property as of the time of the appraisal, and real estate values may fluctuate over short periods of time, whether on a market basis, or in relation to a specific property.
1 unchanged sentence
If an appraisal does not reflect the amount that may be realized on the sale of real property, we may not be able to realize an amount which is equal to the indebtedness secured by the property.
−Removed: Additionally, appraisals are relied upon to establish the fair value of other real estate owned, and to determine specific allocations to the allowance for credit losses on loans that are individually analyzed using the collateral method.
+Added: Additionally, appraisals are relied upon to establish the fair value of other real estate owned, and to determine specific allocations to the allowance for credit losses on collateral-dependent individually analyzed loans.
Inaccuracies in these valuations due to appraisals may result in representation in the consolidated financial statements that is not reflective of current conditions existing as of or subsequent to the measurement date, and could materially adversely impact our results of operation and financial condition.
5 unchanged sentences
Market conditions may impact the competitive landscape for deposits in the banking industry.
−Removed: The rising interest rate environment and future actions the FRB may impact pricing and demand for deposits in the banking industry.
+Added: The elevated interest rate environment and future actions of the FRB may impact pricing and demand for deposits in the banking industry.
Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, regulatory capital requirements, returns available to customers on alternative investments, and general economic conditions.
−Removed: At December 31, 2023, the Bank had $1.8 billion of deposit liabilities, representing 74.8% of total deposits, that had no maturity and, therefore, may be withdrawn by the depositor at any time without penalty.
+Added: of December 31, 2024, the Bank had $1.8 billion of deposit liabilities, representing 74.0% of total deposits, that had no maturity and, therefore, may be withdrawn by the depositor at any time without penalty.
The withdrawal of more deposits than the Corporation anticipates could have an adverse impact on profitability as the Corporation may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations.
−Removed: Such sources include proceeds from Federal Home Loan Bank and Federal Reserve advances, sales of investment securities and loans, and federal funds lines of credit from correspondent banks, as well as out-of-market time deposits which could cause the Corporation’s overall cost of funding to increase.
+Added: Such sources include advances from the Federal Home Loan Bank and the Federal Reserve, sales of investment securities and loans, and federal funds lines of credit from correspondent banks, as well as out-of-market time deposits which could cause the Corporation’s overall cost of funding to increase.
While the Corporation believes that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity demands, particularly if the Corporation continues to grow and experience increasing loan demand.
10 unchanged sentences
and (v) loan prepayments.
−Removed: During 2022 and 2023, in response to accelerated inflation, the FRB implemented monetary tightening policies, resulting in significantly increased interest rates.
−Removed: 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, net interest income, and therefore earnings, could be adversely affected.
−Removed: In addition, the Corporation’s net interest margin may contract in a rising rate environment because its funding costs may increase faster than the yield earned on its interest-earning assets.
−Removed: In a rising rate environment, demand for loans may decrease and loans with adjustable interest rates are more likely to experience a higher rate of default.
−Removed: Additionally, changes in interest rates also affect the fair value of the securities portfolio.
−Removed: Generally, the value of securities moves inversely with changes in interest rates.
−Removed: The combination of these events may adversely affect the Corporation’s financial condition and results of operations.
−Removed: 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.
−Removed: In addition, in a falling rate environment or the recent pandemic-related environment where the FRB held the targeted federal funds rate near 0.00%, loans and certain investments may be prepaid sooner than the Corporation expects, which could result in a delay between when the Corporation receives the prepayment and when it is able to redeploy the funds into new interest-earning assets and in a decrease in the amount of interest income the Corporation is able to earn on those assets.
−Removed: If the Corporation is unable to manage these risks effectively, its financial condition and results of operations could be materially adversely affected.
−Removed: Any substantial, unexpected or prolonged change in market interest rates could have a material adverse effect on the Corporation’s financial condition and results of operations.
−Removed: Also, the Corporation’s interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on its balance sheet.
+Added: In recent years, the FRB implemented significant monetary tightening policies, increasing the federal funds rate by 525 basis points during 2022 and 2023, resulting in the upper bound of the federal funds rate peaking at 5.50% as of the end of 2023.
+Added: These increases also represented the fastest pace of tightening by the FRB since the 1970s.
+Added: In 2024 the FRB decreased the federal funds rate by 100 basis points, based on its perceived progress towards a dual mandate to maximize employment and maintain stable price levels.
+Added: Should the FRB determine in the future that insufficient progress has been made towards this dual mandate, they may choose to further increase interest rates.
+Added: If interest rates paid on deposits and other borrowings change at a faster rate than interest rates received on loans and other investments, net interest income, and therefore earnings, could be adversely impacted.
Risks Related to Competition
−Removed: Strong competition within the Corporation's industry and market area could limit its growth and profitability.
+Added: Strong competition within the Corporation's industry and market areas could limit its growth and profitability.
The Corporation faces substantial competition in all phases of its operations from a variety of different competitors.
5 unchanged sentences
These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties.
−Removed: The Corporation may not be able to attract and retain skilled people.
−Removed: The Corporation's success depends, in large part, on its ability to attract and retain key people.
−Removed: Competition for the best people in most activities in which the Corporation engages can be intense and it may not be able to hire people or to retain them.
−Removed: A key component of employee retention is providing a fair compensation base combined with the opportunity for additional compensation for above average performance.
−Removed: In this regard, the Corporation uses a stock-based compensation program that aligns the interest of the Corporation's executives and senior managers with the interests of the Corporation, and its shareholders.
−Removed: The Corporation's compensation practices are designed to be competitive and comparable to those of its peers, however, the unexpected loss of services of one or more of the Corporation's key personnel could have a material adverse impact on the business because it would lose the employees’ skills, knowledge of the market, and years of industry experience and may have difficulty promptly finding qualified replacement personnel.
Risks Related to Business Strategy
1 unchanged sentence
As part of the Corporation's strategy for continued growth, it may open additional branches.
−Removed: In 2021, the Corporation opened a full-service branch in Clarence, New York, and plans to open a second full-service branch in Williamsville, New York in 2024.
+Added: In 2021, the Corporation entered the Buffalo Metropolitan Area, opening a then full service branch in Clarence, New York.
+Added: In 2024, the Corporation opened a full-service branch and regional banking center in Williamsville, New York and converted its Clarence branch into administrative offices.
+Added: The Corporation anticipates it will open additional branches in Western New York.
New branches do not initially contribute to operating profits due to the impact of overhead expenses and the start-up phase of generating loans and deposits.
To the extent that additional branches are opened, the Corporation may experience the effects of higher operating expenses relative to operating income from the new operations, which may have an adverse effect on the Corporation's levels of net income, return on average equity, and return on average assets.
−Removed: In addition, the Corporation may acquire banks and related businesses that it believes provide a strategic fit with its business, such as the 2011 acquisition of FOFC and the 2013 acquisition of six branches from Bank of America.
+Added: In addition, the Corporation may acquire banks and related businesses that it believes provide a strategic fit with its business.
To the extent that the Corporation grows through acquisitions, it cannot provide assurance that such strategic decisions will be accretive to earnings.
3 unchanged sentences
These risks may include, among other things:
−Removed: its ability to realize anticipated cost savings, the difficulty of integrating operations and personnel, the loss of key employees, the potential disruption of its or the acquired company’s ongoing business in such a way that could result in decreased revenues, the inability of its management to maximize its financial and strategic position, the inability to maintain uniform standards, controls, procedures and policies, and the impairment of relationships with the acquired company’s employees and customers as a result of changes in ownership and management.
+Added: its ability to realize anticipated cost savings, the difficulty of integrating operations and personnel, conversion of core systems, the loss of key employees, the potential disruption of its or the acquired company’s ongoing business in such a way that could result in decreased revenues, the inability of its management to maximize its financial and strategic position, the inability to maintain uniform standards, controls, procedures and policies, and the impairment of relationships with the acquired company’s employees and customers as a result of changes in ownership and management.
Risks Related to Laws and Regulations
13 unchanged sentences
government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits.
−Removed: Throughout 2022 and 2023, the FRB increased the upper bound of the federal funds rate by 525 basis points, which increased market rates dramatically.
These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits.
Their use also affects interest rates charged on loans or paid on deposits, as well as the value of the Corporation's investment securities.
+Added: The monetary policies of the FRB may be affected by certain policy initiatives of the new Administration, which has announced tariffs on certain U.S.
+Added: trading partners (and has indicated additional tariffs and retaliatory tariffs against U.S.
+Added: trading partners may be announced in the future) and has implemented stricter immigration policies.
+Added: Although forecasts have varied, many economists are projecting that such policy initiatives may halt productivity growth and reduce available labor, creating inflationary pressures.
+Added: Under such a scenario, the FRB may decide to maintain the federal funds rate at a relatively elevated
+Added: level for a prolonged period of time.
+Added: The extent and timing of the new Administration’s policy changes and their impact on the policies of the FRB, as well as the Corporation’s business and financial results, are uncertain at this time.
The monetary policies and regulations of the FRB have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future.
4 unchanged sentences
On June 24, 2021, the Bank and the New York State Department of Financial Services agreed to the settlement provisions set forth in a Consent Order pertaining to alleged violations of New York’s Fair Lending Law and the federal Equal Credit Opportunity Act relating to the Bank’s indirect automobile lending program.
−Removed: The Bank agreed to pay restitution to impacted borrowers of $53,000 and a civil monetary penalty of $350,000 to the New York State Department of Financial Services.
The Bank has been informed by the NYSDFS that the Bank has satisfied all of its obligations under the 2021 Consent Order related to the Bank's indirect automobile lending program.
20 unchanged sentences
In establishing a provision for income tax expense, the Corporation must make judgments and interpretations about the application of these inherently complex tax laws to its business activities, as well as the timing of when certain items may affect taxable income.
−Removed: The provision for income taxes is composed of current and deferred taxes.
−Removed: Deferred taxes arise from differences between assets and liabilities measured for financial reporting versus income tax return purposes.
−Removed: Deferred tax assets are recognized if, in the Corporation's judgment, their realizability is determined to be more likely than not.
−Removed: The Corporation performs regular reviews to ascertain the realizability of its deferred tax assets.
−Removed: These reviews include the Corporation's estimates and assumptions regarding future taxable income, which incorporates various tax planning strategies.
Risks Related to Operational Matters
7 unchanged sentences
Recent economic conditions and heightened legislative and regulatory scrutiny of the financial services industry, among other developments, have increased our level of risk.
−Removed: In addition in March 2023, the failures of Silicon Valley Bank, Signature Bank and First Republic Bank resulted in decreased confidence in banks among depositors and other investors.
+Added: In addition, the spring 2023 failures of Silicon Valley Bank, Signature Bank, and First Republic Bank resulted in decreased confidence in banks among depositors and other investors.
Accordingly, if we are unable to fully anticipate or manage these risks, we could incur losses, impacting our results of operations and financial condition.
−Removed: We face significant operational risks because the financial services business involves a high volume of transactions.
+Added: We face significant operational risks because the financial services business involves a high volume of transactions, and these operational risks may be magnified through the use of automated processing.
We operate in diverse markets and rely on the ability of our employees and systems to process a high number of transactions.
Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud by employees or persons outside our company, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery.
−Removed: Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits.
+Added: The Corporation uses automated processing enhance operational efficiencies by decreasing the level of manual inputs required to perform routine processes.
+Added: Automated processes are initially programmed by employees who predefine the rules and logic for each task.
+Added: Any errors in initial programming may lead to rapid propagation of errors in the dependent automated processes.
+Added: Insurance coverage may not be available for certain operational losses, or where available, such losses may exceed insurance limits.
This risk of loss also includes the potential legal actions that could arise as a result of operational deficiencies or as a result of non-compliance with applicable regulatory standards or customer attrition due to potential negative publicity.
1 unchanged sentence
The Corporation continually encounters technological change and the failure to understand and adapt to these changes could adversely affect its business.
−Removed: The banking industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.
−Removed: Technology has lowered barriers to entry and made it possible for "non-banks" to offer traditional bank products and services using innovative technological platforms such as fintech and blockchain.
−Removed: These "digital banks" may be able to achieve economies of scale and offer better pricing for banking products and services than the Corporation can.
+Added: The banking industry continues to undergo rapid technological changes with frequent introductions of new technology-driven products and services, most recently including the proliferation of artificial intelligence based solutions.
+Added: Technology has lowered barriers to entry and made it possible for "non-banks" to offer traditional bank products and services using innovative technological platforms such as those developed by fintech and blockchain companies.
+Added: These "non-banks" may be able to achieve economies of scale and offer better pricing for banking products and services than the Corporation can.
The Corporation's future success will depend, in part, on the ability to address the needs of customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in operations.
−Removed: Many competitors have substantially greater resources to invest in technological improvements.
−Removed: There can be no assurance that the Corporation will be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to customers.
+Added: Many competitors may have substantially greater resources to invest in technological improvements, including those related to artificial intelligence.
+Added: Although the Corporation has made investments related to automated processing, as described above, other emerging technologies, there can be no assurance that the Corporation will be able to effectively implement new technology-driven products and services, be successful in marketing such products and services to customers, or realize operational efficiencies from such efforts.
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on the Corporation's business and, in turn, its financial condition and results of operations.
14 unchanged sentences
The Corporation's vendors, service providers, and other third parties may expose the Corporation to risk as a result of human error, misconduct, malfeasance, or a failure or breach of systems, networks, and infrastructure.
+Added: We expect third-party vendors, or a subcontractor thereof, to increasingly incorporate artificial intelligence embedded solutions into their product offerings and operational workflows.
+Added: Biased, inaccurate, or misleading outputs from artificial intelligence based solutions used by third parties may not be easily detectable by the Corporation, and may compromise our ability to rely on the products or services of contracted third parties.
As a result, the Corporation’s ability to conduct business may be adversely affected by any significant disruptions to third parties with whom the Corporation interacts or relies upon.
3 unchanged sentences
A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability, or reducing a liability.
−Removed: The Corporation has established detailed policies and control procedures that are intended to ensure that these critical accounting estimates and judgments are well controlled and applied consistently.
−Removed: In addition, these policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner.
+Added: The Corporation has established detailed policies and control procedures that are intended to ensure these critical accounting estimates and judgments are well controlled and applied consistently.
+Added: In addition, these policies and procedures are intended to ensure the process for changing methodologies occurs in an appropriate manner.
Because of the uncertainty surrounding its judgments and the estimates pertaining to these matters, actual outcomes may be materially different from amounts previously estimated.
12 unchanged sentences
Financial counterparties expose the Corporation to risks.
−Removed: The Corporation has increased its use of derivative financial instruments, primarily interest rate swaps, which exposes it to financial and contractual risks with counterparty banks.
+Added: The Corporation's use of derivative financial instruments, primarily interest rate swaps, exposes it to financial and contractual risks with counterparty banks.
The Corporation maintains correspondent bank relationships, manages certain loan participations, engages in securities transactions, and engages in other activities with financial counterparties that are customary to its industry.
16 unchanged sentences
These kinds of events could interrupt the Corporation's operations, particularly its ability to deliver deposit and other retail banking services to its customers and as a result, the Corporation's business could suffer serious harm.
−Removed: While the Corporation maintains adequate insurance against property and casualty losses arising from most natural disasters, and it has successfully overcome the challenges caused by past flooding in Central New York, there can be no assurance that it will be as successful if and when disasters occur.
−Removed: Additionally, global markets may be adversely affected by natural disasters, the emergence of widespread health emergencies or pandemics, such as COVID-19, cyber-attacks or campaigns, military conflict such as the current conflict between Russia and Ukraine, terrorism, or other geopolitical events.
+Added: While the Corporation maintains adequate insurance against property and casualty losses arising from most natural disasters, and it has successfully overcome the challenges caused by past flooding in Central New York, there can be no assurance that it will be as successful if and when future disasters occur.
+Added: Additionally, global markets may be adversely affected by natural disasters, the emergence of widespread health emergencies or pandemics, cyber-attacks or campaigns, military conflict, terrorism, or other geopolitical events.
Global market disruptions may affect our business liquidity.
3 unchanged sentences
The national economy continues to experience elevated levels of inflation.
−Removed: As of December 31, 2023, the year over year consumer price index (“CPI”) increase was 3.4%, primarily driven by increases in food and energy prices.
−Removed: The FOMC of the FRB's preferred measure of inflation, the year over year personal consumption expenditures index ("PCE"), excluding food end energy, increased 2.9%.
−Removed: As a result, the FRB raised benchmark interest rates by 100 basis points in 2023 to combat continued inflation.
−Removed: High inflation, if sustained, could have an adverse effect on our business.
−Removed: The recent increase in interest rates in response to elevated levels of inflation has decreased the fair value of our securities portfolio, resulting in an increase in unrealized losses recorded in accumulated other comprehensive income on the shareholders’ equity section of our balance sheet.
+Added: As of December 31, 2024, the year over year consumer price index (CPI) increase was 2.9%, primarily driven by housing and transportation costs.
+Added: The FOMC of the FRB, which sets the federal funds rate, has a preferred measure of inflation, the year over year change in personal consumption expenditures index (PCE), excluding food and energy, referred to as core PCE, which increased 2.8%.
+Added: Levels of inflation remain above the FRB long term target of 2.0%, which may result in the FOMC keeping the federal funds rate elevated.
+Added: Tariffs, federal government trade policy and fiscal initiatives, and labor market pressures may continue to adversely impact inflation levels.
+Added: Higher inflation, if sustained, could have an adverse effect on our business.
+Added: Increases in interest rates in response to elevated levels of inflation has decreased the fair value of our available for sale securities portfolio, resulting in an increase in unrealized losses recorded in accumulated other comprehensive income.
In addition, inflation-driven increases in our levels of non-interest expense could negatively impact our results of operations.
−Removed: High inflation and increasing interest rates could also cause increased volatility in the business environment, which could adversely affect loan demand and borrowers’ ability to repay loans.
−Removed: The geographic concentration of the Corporation's market in upstate New York makes it more sensitive to adverse changes in regional conditions than larger or more geographically diversified competitors.
+Added: Higher inflation and an elevated interest rate environment may also cause increased volatility in the business environment, which could adversely affect loan demand and borrowers’ ability to make repayments.
+Added: The geographic concentration of the Corporation's markets in upstate New York makes it more sensitive to adverse changes in regional conditions than larger or more geographically diversified competitors.
The Corporation's physical branch network, and by extension its lending footprint, is significantly concentrated in the upstate region of New York State.
−Removed: A deterioration in local economic conditions or in the residential or commercial real estate markets within our footprint could have an adverse effect on the quality of our loan portfolios, demand for our products and services, the ability of borrowers to timely repay loans, and the value of the collateral securing loans.
−Removed: If demographic, employment, or other growth in our market is negative for an extended period, subsequent income levels, deposits, and real estate development could be adversely impacted.
+Added: A deterioration in local economic conditions or in the residential or commercial real estate markets within our footprint could have an adverse effect on the quality of our loan portfolios, demand for our products and services, the ability of borrowers to make timely loan repayments, and the value of the collateral securing loans.
+Added: If demographic, employment, or other growth factors in our market areas deteriorate for an extended period, subsequent income levels, deposits, and real estate development could be adversely impacted.
Some of our larger competitors that are more geographically diverse may be better able to manage and mitigate risks posed by adverse conditions impacting only local or regional markets.
+Added: The Corporation may not be able to attract and retain skilled people.
+Added: The Corporation's success depends, in large part, on its ability to attract and retain key people.
+Added: Competition for the best people in most activities in which the Corporation engages can be intense and it may not be able to hire people or retain them.
+Added: A key component of employee retention is providing a fair compensation base combined with the opportunity for additional compensation for above average performance.
+Added: In this regard, the Corporation uses a stock-based compensation program that aligns the interest of the Corporation's executives and senior managers with the interests of the Corporation, and its shareholders.
+Added: The Corporation's compensation practices are designed to be competitive and comparable to those of its peers, however, the unexpected loss of services of one or more of the Corporation's key personnel could have a material adverse impact on the business because it would lose the employees’ skills, knowledge of the market, and years of industry experience and may have difficulty promptly finding qualified replacement personnel.
Risks Relating to Ownership of Our Common Stock
23 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.