4 unchanged sentences
Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system.
−Removed: The recent high-profile bank failures involving Silicon Valley Bank, Signature Bank and First Republic Bank have generated significant market volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.
−Removed: These market developments have negatively impacted customer confidence in the safety and soundness of regional banks.
+Added: The recent high-profile bank failures involving Silicon Valley Bank, Signature Bank and First Republic Bank have generated significant market volatility among publicly traded bank holding companies.
+Added: These market developments have negatively impacted customer confidence of the safety and soundness in the financial securities industry.
As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.
−Removed: While the Department of the Treasury, the Federal Reserve, and the FDIC have made statements ensuring that depositors of these recently failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in regional banks and the banking system more broadly.
−Removed: Rising interest rates have decreased the value of the Company’s securities portfolio, and the Company would realize losses if it were required to sell such securities to meet liquidity needs.
−Removed: As a result of inflationary pressures and the resulting rapid increases in interest rates over the last year, the trading value of previously issued government and other fixed income securities has declined significantly.
−Removed: These securities make up a majority
−Removed: of the securities portfolio of most banks in the U.S., including the Company’s.
−Removed: While the Company does not currently intend to sell these securities, if the Company were required to sell such securities to meet liquidity needs, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability.
−Removed: While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs.
−Removed: Furthermore, while the Federal Reserve Board has announced a Bank Term Funding Program available to eligible depository institutions secured by U.S.
−Removed: treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral at par, to mitigate the risk of potential losses on the sale of such instruments, there is no guarantee that such programs will be effective in addressing liquidity needs as they arise.
−Removed: Any regulatory examination scrutiny or new regulatory requirements arising from the recent events in the banking industry could increase the Company’s expenses and affect the Company’s operations.
−Removed: The Company also anticipates increased regulatory scrutiny – in the course of routine examinations and otherwise – and new regulations directed towards banks of similar size to the Company, designed to address the recent negative developments in the banking industry, all of which may increase the Company’s costs of doing business and reduce its profitability.
−Removed: Among other things, there may be an increased focus by both regulators and investors on deposit composition and the level of uninsured deposits.
−Removed: As primarily a commercial bank, the Company has a high degree of uninsured deposits compared to larger national banks or smaller community banks with a stronger focus on retail deposits.
−Removed: As a result, the Company could face increased scrutiny or be viewed as higher risk by regulators and the investor community.
−Removed: We could experience an unexpected inability to obtain needed liquidity which could adversely affect our business, financial condition, and results of operation.
−Removed: Liquidity measures the ability to meet current and future cash flow needs as they become due.
−Removed: The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits, and to take advantage of interest rate market opportunities and is essential to a financial institution’s business.
−Removed: The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets, and its access to alternative sources of funds.
−Removed: The bank failures in March 2023 exemplify the potential serious results of the unexpected inability of insured depository institutions to obtain needed liquidity to satisfy deposit withdrawal requests, including how quickly such requests can accelerate once uninsured depositors lose confidence in an institutions ability to satisfy its obligations to depositors.
−Removed: We seek to ensure our funding needs are met by maintaining a level of liquidity through asset and liability management.
−Removed: If we become unable to obtain funds when needed, it could have a material adverse effect on our business, financial condition, and results of operations.
+Added: While the Department of the Treasury, the Federal Reserve, and the FDIC have made statements ensuring that depositors of these recently failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in the banking system more broadly.
+Added: In addition, the banking operating environment and public trading prices of banking institutions can be highly correlated, in particular during times of stress, which could adversely impact the trading prices of our common stock.
+Added: These recent events may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies or result in the impositions of restrictions through supervisory or enforcement activities, including higher capital requirements, which could have a material impact on our business.
+Added: The cost of resolving the recent bank failures may prompt the FDIC to increase its premiums above the recently increased levels or to issue additional special assessments.
+Added: Rising interest rates have decreased the value of the Company’s securities portfolio, and the Company could realize losses if it were required to sell such securities to meet liquidity needs.
+Added: As a result of inflationary pressures and the resulting rapid increases in interest rates over the last year, the fair value of our securities classified as available-for-sale has declined, resulting in unrealized losses embedded in accumulated other comprehensive loss as a part of shareholders’ equity.
+Added: If the Company were required to sell such securities to meet liquidity needs, including in the event of deposit outflows or slower deposit growth, it may incur losses.
+Added: The loss of our deposit clients or substantial reduction of our deposit balances could force us to fund our business with more expensive and less stable funding sources.
+Added: As of June 30, 2023, deposits from our top 100 client relationships accounted for, in the aggregate, 21.93% of our total deposits.
+Added: The deposits not insured by the FDIC (approximately $776.1 million of uninsured deposits, or 35.27%, of our total deposits of $2.2 billion at June 30, 2023) could present a heightened risk of withdrawal, if such depositors materially decreased the volume of those deposits and it could reduce our liquidity.
+Added: We have traditionally obtained funds through deposits for use in lending and investment activities.
+Added: The interest rates stated for borrowings typically exceed the interest rates paid on deposits.
+Added: Deposit outflows can occur for a number of reasons, including;
+Added: clients may seek investments with higher yields, clients with uninsured deposits may seek greater financial security during prolonged periods of volatile and unstable market conditions.
+Added: If a significant portion of our deposits were withdrawn, we may need to rely more heavily on more expensive borrowings and other sources of funding to fund our business and meet withdrawal demands, adversely affecting our net interest margin.
+Added: The occurrence of any of these events could materially and adversely affect our business, results of operations and financial condition.
+Added: Changes in economic, market and political conditions can adversely affect our operating results and financial condition.
+Added: We are subject to macroeconomic and interest rate risk due to domestic and global economic instability that has resulted in higher inflation than the United States has experienced in more than 40 years.
+Added: The global economic impact from the geopolitical events in Europe that is contributing to rising energy and commodity prices, as well as the on-going supply chain disruptions have resulted in inflationary pressures and increases to prevailing interest rates.
+Added: The Federal Reserve’s Open Market Committee (“FOMC”) raised the target range for the federal funds rate from 5.00% - 5.25% to 5.25% - 5.50% on July 26, 2023, resulting in a cumulative increase of 375 basis points from July of 2022.
+Added: These recent increases in prevailing interest rates and the expectation that further increases are likely will impact both our customers and many aspects of our business.
+Added: Higher interest rates will not only impact the interest we receive on loans and investment securities and the amount of interest we pay our depositors, but could also impact our ability to grow loans and deposits.
+Added: Rising interest rates, higher commodity prices, and supply chain issues and an overall slowdown in economic growth could also impact the fair value of our assets and adversely impact our asset quality.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
−Removed: During the three months ended March 31, 2023, the Company did not repurchase or retire any shares.
+Added: None to report.
DEFAULTS UPON SENIOR SECURITIES
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.