What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-11-09 compared with 2021-08-09 · 31 added, 10 removed, 59 unchanged (41% of the section changed)

21 unchanged sentences

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.

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.

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.

Among the 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 September 30, 2021, and the Retail Trade industry, which represents 1% o f our loan portfolio as of September 30, 2021.

In addition, approximately 7% o f our loan portfolio as of September 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.

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.

Despite high home sales volumes and our strong performance in gains from residential mortgage loans for the first three quarters of 2021, 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 33% consisting of commercial real estate and real estate construction loans, and 83% of our loans being secured by real estate.

3 unchanged sentences

• PPP Administration and Compliance .

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.

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.

15 unchanged sentences

We rely on business processes and branch activity that largely depend on people and technology, including access to information technology systems as well as information, applications, payment systems and other services provided by third parties.

In response to COVID-19, we have modified our business practices by directing a portion of our employees to work remotely from their homes to minimize interruptions to our operations.

These actions will likely result in increased spending on our business continuity efforts, such as technology and readiness procedures for returning to our offices.

In response to COVID-19, the Company implemented a remote working strategy for many of its employees This action may result in increased spending on our business continuity efforts, such as technology and readiness procedures for returning to our offices.

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.

1 unchanged sentence

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.

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.

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.

Furthermore, while the Company's non-branch personnel returned to work on a "hybrid" basis on November 1, 2021, state and local guidelines continue to evolve, and the operation of a hybrid workplace 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.

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.

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 .

8 unchanged sentences

We also face an increased risk of litigation and governmental and regulatory scrutiny as a result of the effects of the pandemic on market and economic conditions and actions governmental authorities take in response to those conditions, as detailed in the Note 1 to the Consolidated Financial Statements.

Litigation and regulatory actions, possibly including enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.

In the normal course of our business, we are named as a defendant in various legal actions, arising in connection with our current and/or prior business activities or public disclosures.

Legal actions could include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages.

Further, we may be subject to regulatory enforcement actions.

We are also, from time to time, the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by various agencies and other bodies regarding our current and/or prior business activities.

Additionally, we also from time to time receive demand letters from shareholders, and such letters may lead to these shareholders filing claims or derivative suits against us if our engagement with such shareholders ends in a failure to successfully negotiate a settlement.

The Company has received various document requests and subpoenas from securities and banking regulators and U.S.

Attorney’s offices in connection with investigations, which the Company believes relate to the Company's identification, classification and disclosure of related party transactions;

the retirement of certain former officers and directors;

and the relationship of the Company and certain of its former officers and directors with a local public official, among other things.

The Company is currently defending against shareholder litigation.

Any such legal or regulatory actions may subject us to substantial compensatory or punitive damages, significant fines, penalties, obligations to change our business practices, required changes in our senior officers, or other requirements resulting in increased expenses, diminished income and damage to our business.

Our involvement in any such matters, whether tangential or otherwise, and even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management attention from the operation of our business.

Further, any settlement, regulatory order or agreement, informal enforcement action, or adverse judgment in connection with any formal or informal proceeding or investigation by government agencies may result in adverse audit findings, or additional litigation, investigations or proceedings as other parties, including other litigants and/or government agencies begin independent reviews of the same activities.

As a result, the outcome of legal and regulatory actions could have a material adverse effect on our business, results of operations, financial condition and stock price, including in any particular reporting period.

Further, in such matters, it is inherently difficult to determine whether any loss is probable or whether it is possible to estimate the amount of any reasonably possible loss.

We cannot predict with certainty if, how or when such proceedings will be resolved or what the eventual fine, penalty or other relief, conditions or restrictions, if any, may be, particularly for actions that are in their early stages of investigation.

We may be required to pay fines or civil money penalties, or make other payments in connection with certain of these issues.

This uncertainty makes it difficult to estimate probable losses, which, in turn, can lead to substantial disparities between the reserves we may establish for such proceedings and the eventual settlements, fines, or penalties.

While the Company and Bank carry insurance to protect us from material outlays (excluding regulatory fees and penalties), such insurance may not always fully or even substantially cover such outlays, and any adverse determinations in such actions could have a material adverse effect on our business, financial condition, results of operations and stock price.

In the event such insurance is exhausted, any additional fees, costs, expenses and penalties incurred would be borne by the Company and could have a material adverse effect on our business, financial condition, results of operations and stock price.

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