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The COVID-19 pandemic and the resulting containment measures have resulted in widespread economic and financial disruptions that have adversely affected, and are likely to continue to adversely effect, our customers and other businesses in our market area, as well as counterparties and third-party vendors.
−Removed: We continue to see the impact of the pandemic on our business, which we expect may potentially worsen, particularly since there remains ongoing uncertainty as to how long the COVID-19 pandemic and related containment measures will continue, both in our market area and the rest of the country.
+Added: We continue to see the impact of the pandemic on our business, which may potentially worsen, particularly since there remains ongoing uncertainty as to how long the COVID-19 pandemic and related containment measures will continue, both in our market area and the rest of the country.
This impact has been, in certain areas, and could continue to be significant, adverse and potentially material.
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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: While there is no shortage of loan demand in current market conditions, the quality of many of the loans available is such that we may have to make trade-off decisions between reaching target loan origination quantities to keep up with our loan growth objectives and maintaining certain target levels of loan quality to protect our credit quality and portfolio.
+Added: There can be no guarantee that any decisions made in this regard will be successful or lead to our achieving our long-term loan growth and credit quality objectives.
+Added: If we are too conservative with loan quality, we may not be able to keep up with our peer competitors in terms of loan growth, and if we are too focused on loan growth, our credit quality risk profile may result in material negative impacts on our overall financial performance and results.
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.
−Removed: 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.
−Removed: 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.
+Added: industry’s most clearly impacted by the pandemic are the Accommodation and Food Service industry, exposure to which represents 9 % o f our loan portfolio as of June 30, 2021, and the Retail Trade industry, which represents 1% o f our loan portfolio as of June 30, 2021.
+Added: In addition, approximately 7% o f our loan portfolio as of June 30, 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 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.
+Added: Despite high home sales volumes and our strong performance in gains from residential mortgage loans for the first half of 2021, such volumes and performance are not stable and economic conditions may 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 33% consisting of commercial real estate and real estate construction loans, and 83% 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: • Increased Demands on Capital and Liquidity .
−Removed: We have experienced increased volume of loan originations, particularly SBA loans pursuant to the PPP created by recent legislation.
−Removed: Certain of these SBA loans have mandated interest rates that are lower than our usual rates and may not be purchased by the SBA or other third parties within expected timeframes.
−Removed: In addition, borrowers may draw on existing lines of credit or seek additional loans to finance their businesses.
−Removed: 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.
• PPP Administration and Compliance .
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These actions will likely result in increased spending on our business continuity efforts, such as technology and readiness procedures for returning to our offices.
−Removed: We could also experience an increased strain on our risk management policies, including, but not limited to, the effectiveness and accuracy of our models, given the lack of data inputs and comparable precedent.
+Added: We could also experience an increased strain on our risk management policies, as remote working may impact some employees abilities to comply with certain policies.
Further, technology in employees' homes may not be as robust as in our offices and could cause the networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices.
The continuation of these work-from-home measures also introduces additional operational risk, including related to the effectiveness of our anti-money laundering and other compliance programs, as well as increased cybersecurity risk.
−Removed: 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: 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
+Added: our operations and the operations of any impacted customers.
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.
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.
−Removed: There is no guarantee that we will be successful in gaining or maintaining a competitive edge against our
−Removed: 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.
+Added: There is no guarantee that we will be successful in gaining or maintaining a competitive edge against our 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.