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This impact has been, in certain areas, and could continue to be significant, adverse and potentially material.
−Removed: The full extent of this
−Removed: impact, and the resulting impact on our business, financial condition, liquidity and results of operations, remains inestimable at this time, and will depend on a number of evolving factors and future developments beyond our control and that we are unable to predict, including the duration, spread and severity of the pandemic;
+Added: The full extent of this impact, and the resulting impact on our business, financial condition, liquidity and results of operations, remains inestimable at this time, and will depend on a number of evolving factors and future developments beyond our control and that we are unable to predict, including the duration, spread and severity of the pandemic;
the nature, extent and effectiveness of containment measures;
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It is also possible that any adverse impacts of the pandemic and containment measures may continue once the pandemic is controlled and the containment measures are lifted.
−Removed: Many of the risks described in the risk factors and other cautionary language included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and in other periodic and current reports filed by the Company with the Securities and Exchange Commission will likely be exacerbated, and the impact of such risks will likely be magnified, as a result of the COVID-19 pandemic.
+Added: Many of the risks described in the risk factors and other cautionary language included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and current reports filed by the Company with the Securities and Exchange Commission will likely be exacerbated, and the impact of such risks will likely be magnified, as a result of the COVID-19 pandemic.
We expect the negative impacts of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations to be the most severe in the following areas:
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The significant disruption resulting from the COVID-19 pandemic has been materially affecting the businesses of our customers and of their customers, which impacts their creditworthiness, their ability to pay amounts owed to us and our ability to collect those amounts.
−Removed: Among the industry’s most clearly impacted by the pandemic are the Accommodation and Food Service industry, exposure to which represents 10.2% of our loan portfolio as of September 30, 2020, and the Retail Trade industry, which represents 1.3% of our loan portfolio as of September 30, 2020.
−Removed: In addition, approximately 6% of our loan portfolio as of September 30, 2020 is secured by commercial real estate loans secured by restaurants, hotels or retail properties.
+Added: Further, volatile and unpredictable ongoing market conditions, both as a result of impacts from the COVID-19 pandemic and otherwise, may negatively impact our ability to achieve our long-term loan growth objectives.
+Added: As loan volume represents our largest contributor to our net interest income, such market conditions, including a continuation of the historically low interest rate environment, may have a material negative impact on our loan credit quality, our short-term and long-term strategy and our results of operations.
+Added: Among the industry’s most clearly impacted by the pandemic are the Accommodation and Food Service industry, exposure to which represents 10.7% of our loan portfolio as of March 31, 2021, and the Retail Trade industry, which represents 1.3% of our loan portfolio as of March 31, 2021.
+Added: In addition, approximately 5.9% of our loan portfolio as of March 31, 2021 is secured by commercial real estate loans secured by restaurants, hotels or retail properties.
These areas may have a longer recovery period than other industries.
−Removed: Despite high home sales volumes and our strong performance in gains from residential mortgage loans for the quarter ended September 30, 2020, such volumes and performance are not stable and economic conditions are may likely result in future material declines in real estate values and home sales volumes, and an increase in tenants failing to make or deferring rent payments.
+Added: Despite high home sales volumes and our strong performance in gains from residential mortgage loans for the quarter ended March 31, 2020, such volumes and performance are not stable and economic conditions are may likely result in future material declines in real estate values and home sales volumes, and an increase in tenants failing to make or deferring rent payments.
A large portion of our loan portfolio is related to real estate, with 57% consisting of commercial real estate and real estate construction loans, and 79% of our loans being secured by real estate.
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In the event of foreclosure, it is unlikely that we will be able to sell the foreclosed property at a price that will allow us to recoup a significant portion of the delinquent loan.
−Removed: • Allowance for Credit Losses .
−Removed: As discussed in the Management’s Discussion and Analysis, we began using a new credit reserving methodology known as the CECL methodology effective January 1, 2020.
−Removed: Our ability to accurately forecast future losses under that methodology may be impaired by the significant uncertainty surrounding the pandemic and containment measures and the lack of a comparable precedent.
−Removed: For the three and nine months ended September 30, 2020, after the initial adjustment to the allowance for credit losses as of January 1, 2020 and the additional adjustments as of March 31, 2020 and June 30, 2020, we further increased the allowance for credit losses by $6.6 million and $40.7 million, respectively, inclusive of $156 thousand of allowance for credit losses on AFS debt securities recorded in the third quarter of 2020.
−Removed: We may need to record additional provisions for credit losses in future, as the COVID-19 pandemic continues to evolve, and our losses on our loans and other exposures could exceed our allowance.
• Increased Demands on Capital and Liquidity .
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These factors may result in reduced levels of capital and liquidity being available to originate more profitable loans, which will negatively impact our ability to serve our existing customers and our ability to attract new customers.
+Added: • PPP Administration and Compliance .
+Added: Due to the short timeframe between the passing of the CARES Act and the beginning of the PPP, there continues to be some ambiguity in the laws, rules and guidance regarding the day-to-day mechanics and operations of the program, and particularly how banks should administer the program as we move into the loan forgiveness stage.
+Added: There is no guarantee that the Bank will, in all instances, be able to avoid potential processing issues, administrative pitfalls or other obstacles that may present from time to time, and any such issues, pitfalls or other obstacles that arise may result in adverse impacts on our operational and strategic objectives.
+Added: Further, due to the “first come first served” nature of the PPP, the loans originated under this program may present potential fraud risk and operational risk, increasing the risk that loan forgiveness may not be obtained by the borrowers and that the government guaranty may not be honored.
+Added: In particular, there is risk that some borrowers may not qualify for the loan forgiveness feature due to the conduct of the borrower after the loans were originated.
+Added: These factors may result in us having to hold a significant amount of these low-yield loans in our portfolio for an extended period of time, which may negatively impact our broader business performance and results of operations.
• Deposit Business .
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Our net interest income, lending activities, deposits and profitability have been and could continue to be negatively affected by volatility in interest rates caused by uncertainties stemming from the COVID-19 pandemic.
−Removed: March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25 percent.
+Added: In March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25 percent.
A prolonged period of extremely volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies.
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These cyber risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers.
+Added: Furthermore, while our current plans to return to our offices remain fluid as federal, state and local guidelines continue to evolve, the execution of these plans, and in particular, any delays in executing such plans, may negatively impact our ability to attract and retain qualified personnel.
+Added: Even after the market fully recovers from the impacts of the COVID-19 pandemic, differences in the demands, expectations and priorities of the workforce may require us to rethink and amend our recruiting and retention strategies in order to attract and keep new employees.
+Added: There is no guarantee that we will be successful in gaining or maintaining a competitive edge against our
+Added: peer banks in terms of hiring new talent in the near or long term, and any failure to do so may materially impact our business operations and long-term growth.
• External Vendors and Service Providers .
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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.