5 unchanged sentences
Risks Related to Economic and Market Conditions
−Removed: The COVID-19 pandemic is adversely affecting our business, customers, employees, and third-party service providers, and the adverse impacts on our business, financial position, results of operations, and prospects could be significant.
−Removed: COVID-19 has negatively impacted global, national and local economies, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, increased unemployment levels and decreased consumer confidence, generally.
−Removed: In addition, the pandemic resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities and may result in the same or similar restrictions in the future.
−Removed: As a result, the demand for our products and services have been and may continue to be significantly impacted, which could adversely affect our revenue and results of operations.
−Removed: Furthermore, the pandemic could continue to result in the recognition of credit losses in our loan portfolios and increase our allowance for credit losses, particularly if businesses remain required to operate at diminished capacities or are required to close again, the impact on the global, national and local economies worsen, or more customers draw on their lines of credit or seek additional loans to help finance their businesses.
−Removed: Our business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with COVID-19.
−Removed: The pandemic could also affect the stability of our deposit base as well as our capital and liquidity position, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, result in lost revenue and cause us to incur additional expenses.
−Removed: Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize other-than-temporary impairments in future periods on the securities we hold as well as reductions in other comprehensive income.
−Removed: The extent of the impact of the COVID-19, including the reise of new strains thereof, on our capital, liquidity, and other financial positions and on our business, results of operations, and prospects will depend on a number of evolving factors, that cannot be predicted, including:
−Removed: • The duration, extent, and severity of the pandemic .
−Removed: COVID-19 has not been contained and could affect significantly more households and businesses.
−Removed: The duration and severity of COVID-19, including new variants thereof, continues to be impossible to predict.
−Removed: • The continued response of governmental and nongovernmental authorities .
−Removed: Authorities may continue to take action in the future directed at curtailing personal and business activity to contain COVID-19 while simultaneously deploying fiscal-and monetary-policy measures to assist in mitigating the adverse effects on individuals and businesses.
−Removed: • The effect on our customers, counterparties, employees, and third-party service providers .
−Removed: COVID-19, including new variants thereof, and its associated consequences and uncertainties may affect individuals, households, and businesses differently and unevenly.
−Removed: • The success of hardship relief efforts to bridge the gap to reopening the economy .
−Removed: government has implemented programs to directly compensate individuals and grant or loan money to businesses in an effort to provide funding while the economy is shut down.
−Removed: Many banks, including the Bank, have implemented hardship relief programs that include payment deferral and short-term funding options.
−Removed: The success of these programs could mute the effect on the Company's credit losses, which may be difficult to determine.
−Removed: The pandemic could cause us to experience higher credit losses in our lending portfolio, impairment of our goodwill and other financial assets, reduced demand for our products and services, and other negative impacts on our financial position, results of operations, and prospects.
−Removed: You should consider that the effects of COVID-19 could be particularly pronounced with respect to certain of our lending portfolios:
−Removed: • Commercial real estate-retail, including retail shopping centers , due to declining interest in such spaces by their users and declining interest in visiting large shared spaces.
−Removed: As of December 31, 2021, the retail portion of our ICRE portfolio was $795.9 million, or 8.6% of our loan portfolio.
−Removed: • Residential real estate , due to customers' potential loss of income.
−Removed: As of December 31, 2021, this portfolio was $896.1 million, or 9.6% of our loan portfolio.
−Removed: • Franchise , which primarily includes quick service and casual dining, due to stay at home orders and requirements that restaurants provide carry-out only service.
−Removed: As of December 31, 2021, this portfolio was $319.9 million, or 3.4% of our loan portfolio.
−Removed: • Hospitality , including hotel and motel lending, due to travel limitations implemented by governments and businesses as well as declining interest in travel generally.
−Removed: As of December 31, 2021, this portfolio was $326.5 million, or 3.5% of our loan portfolio.
−Removed: The cumulative effects of COVID-19 and the measures implemented by governments to combat the pandemic on mortgaged properties may cause borrowers to be unable to meet their payment obligations under mortgage loans that we hold and may result in significant losses.
−Removed: Even after COVID-19 has subsided, the U.S.
−Removed: economy will likely require time to recover, the length of which is unknown and during which the U.S.
−Removed: may experience a recession or market correction.
−Removed: We may continue to experience materially adverse impacts to our business as a result of any such recession or market correction.
−Removed: We continue to closely monitor COVID-19 and related risks as they evolve.
−Removed: There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the outbreak is highly uncertain and subject to change.
−Removed: The effects could have a material impact on our results of operations and heighten many of the other risk factors identified in this Item.
Weakness in the economy and in the real estate market, including specific weakness within our geographic footprint, may affect us, including requiring us to record additional loan loss provision or to charge off loans.
First Financial’s success depends, in part, on economic and political conditions, local and national, as well as governmental fiscal and monetary policies.
−Removed: Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy and other factors beyond First Financial’s control, especially in light of COVID-19, may affect its deposit levels and composition, demand for loans, the ability of borrowers to repay their loans and the value of the collateral securing the loans it makes.
+Added: Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy and other factors beyond First Financial’s control may affect its deposit levels and composition, demand for loans, the ability of borrowers to repay their loans and the value of the collateral securing the loans it makes.
Economic turmoil in different regions of the world affect the economy and stock prices in the United States, which can affect First Financial’s earnings and capital and the ability of its customers to repay loans.
−Removed: Due to First Financial's volume of real estate loans, declining real estate values could affect the value of property used as collateral as well as First Financial’s ability to sell the collateral upon foreclosure.
+Added: For example, on February 24, 2022, Russian military forces invaded Ukraine, and sustained conflict and disruption in the region have occurred and remain likely.
+Added: Although the length, impact, and outcome of the ongoing war in Ukraine is highly unpredictable, this conflict has resulted, and could continue to result, in market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences, as well as increases in cyberattacks and espionage.
+Added: The extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time.
+Added: Due to First Financial's volume of real estate loans, declining real estate values, especially in light of rising interest rates, could affect the value of property used as collateral as well as First Financial’s ability to sell the collateral upon foreclosure.
If the strength of the United States economy in general and the strength of the local economies in which we conduct operations decline, this could result in, among other things, a deterioration of credit quality or a reduced demand for credit, including a resultant effect on our loan portfolio and allowance for credit losses.
11 unchanged sentences
Changes in market interest rates or capital markets could affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital or liquidity.
−Removed: Given our business mix, and the fact that most of our assets and liabilities are financial in nature, we tend to be sensitive to market interest rate movements and the performance of the financial markets.
+Added: Given the nature of our business, and the fact that most of our assets and liabilities are financial in nature, we tend to be sensitive to market interest rate movements and the performance of the financial markets.
Our primary source of income is net interest income, which is the difference between the interest income generated by our interest-earning assets (consisting primarily of loans and, to a lesser extent, securities) and the interest expense generated by our interest-bearing liabilities.
1 unchanged sentence
If the interest we pay on deposits and other borrowings increases at a faster rate than increases in the interest we receive on loans and investments, net interest income, and, therefore, our earnings, could be affected.
−Removed: Earnings could also be affected if the interest we receive on loans and other investments falls more quickly than the interest we pay on deposits and other borrowings.
+Added: Earnings and capital levels could also be affected if the interest we receive on loans and other investments falls more quickly than the interest we pay on deposits and other borrowings.
In addition to the general impact of the economy, changes in interest rates or in valuations in the debt or equity markets could directly impact us in one or more of the following ways:
6 unchanged sentences
In addition, any substantial or prolonged change in market interest rates could affect our financial condition, results of operations and liquidity.
+Added: During 2022, the target fed funds rate increased by 425 basis points.
+Added: Because the First Financial balance sheet is asset sensitive, these interest rate increases resulted in $67.0 million of incremental net income in 2022.
+Added: Additional increases are projected for 2023, although it is not clear how much longer, or by how much, rates will rise.
We may be impacted by the transition from LIBOR as a reference rate.
−Removed: The London Interbank Offered Rate (LIBOR) is used extensively in the United States and globally as a reference rate for various commercial and financial contracts, including adjustable rate mortgages, corporate debt, interest rate swaps and other
−Removed: LIBOR is set based on interest rate information reported by certain banks, which may stop reporting such information after 2021.
−Removed: On July 27, 2017, the United Kingdom’s Financial Conduct Authority (FCA) announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.
−Removed: On November 30, 2020, to facilitate an orderly LIBOR transition, the OCC, the FDIC, and the Federal Reserve Board jointly announced that entering into new contracts using LIBOR as a reference rate after December 31, 2021, would create a safety and soundness risk.
−Removed: On March 5, 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative immediately after December 31, 2021, in the case of 1-week and 2-month LIBOR, and immediately after June 30, 2023, in the case of the remaining LIBOR settings.
−Removed: In the United States, efforts to identify a set of alternative U.S.
−Removed: dollar reference interest rates are ongoing, and the Alternative Reference Rate Committee (ARRC) has recommended the use of a Secured Overnight Funding Rate (SOFR).
+Added: The London Interbank Offered Rate (LIBOR) has been used extensively in the United States and globally as a benchmark for various commercial and financial contracts, including adjustable rate mortgages, corporate debt, interest rate swaps and other derivative financial instruments.
+Added: LIBOR is set based on interest rate information reported by certain banks, which are set to stop reporting such information after June 30, 2023.
+Added: In the United States, the Alternative Reference Rate Committee (ARRC) has endorsed the use of a Secured Overnight Funding Rate (SOFR) as the set of alternative United States dollar reference interest rates.
SOFR is different from LIBOR in that it is a backward looking secured rate rather than a forward looking unsecured rate.
These differences could lead to a greater disconnect between our costs to raise funds for SOFR as compared to LIBOR.
−Removed: For cash products and loans, ARRC has also recommended Term SOFR, which is a forward looking SOFR based on SOFR futures and may in part reduce differences between SOFR and LIBOR.
+Added: For cash products and loans, ARRC has also recognized Term SOFR, which is a forward looking SOFR based on SOFR futures and may in part reduce differences between SOFR and LIBOR.
There are operational issues which may create a delay in the transition to SOFR or other substitute indices, leading to uncertainty across the industry.
2 unchanged sentences
The working group has also developed and implemented flexible language regarding reference rates for all new loan products and agreements.
−Removed: First Financial continues to consider a replacement index for 2022 and beyond.
−Removed: Until this replacement rate is identified and all agreements have been addressed, we will continue to have a significant number of loans, derivative contracts, borrowings and other financial instruments with attributes that are directly or indirectly dependent on LIBOR.
−Removed: The transition from LIBOR could create considerable costs and additional risk for us.
−Removed: Since proposed alternative rates are calculated differently, payments under contracts referencing new rates will differ from those referencing LIBOR.
−Removed: The transition will change our market risk profiles, requiring changes to risk and pricing models, valuation tools, product design and hedging strategies.
−Removed: Further, our failure to adequately manage this transition process with our customers could impact our reputation.
−Removed: Although we are currently unable to assess what the ultimate impact of the transition from LIBOR will be, any market-wide transition away from LIBOR could adversely affect our business, financial condition and results of operations.
+Added: First Financial ceased originating any loans that reference LIBOR at the beginning of 2022 and is in the process of amending all existing loan documents that reference LIBOR as the index rate to allow for the substitution of Term SOFR or another reference rate and does not anticipate any material issues with transitioning away from LIBOR by June 30, 2023.
Declining values of real estate, increases in unemployment, insurance market disruptions and the related effects on local economies may increase our credit losses, which could negatively affect our financial results.
3 unchanged sentences
Additionally, increases in unemployment also may affect the ability of certain clients to repay loans and the financial results of commercial clients in localities with higher unemployment, may result in loan defaults and foreclosures and may impair the value of our collateral.
−Removed: This is especially relevant in light of the impact COVID-19 has had on national and local economies.
+Added: This is especially relevant in light of the sustained inflation and rising interest rates experienced in 2022.
Loan defaults and foreclosures are unavoidable in the banking industry, and we try to limit our exposure to this risk by monitoring carefully our extensions of credit.
10 unchanged sentences
We may classify additional financial assets or financial liabilities at fair value in the future.
+Added: The economic impact of COVID-19 or any other pandemic could adversely affect our business, financial condition, liquidity, and results of operations .
+Added: COVID-19 has negatively impacted global, national and local economies, disrupted global supply chains, created significant volatility and disruption in financial markets.
+Added: The extent to which COVID-19 will continue to impact our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted.
+Added: As of December 31, 2022, we hold and service PPP loans.
+Added: In the event there was a deficiency in the manner in which we originated, funded or serviced PPP loans, the SBA may deny its liability under the guaranty for the PPP Loans, reduce the amount of the guaranty, or, if the SBA has already paid under the guaranty, seek recovery of any loss related to the deficiency.
Risks Related to Our Business
1 unchanged sentence
Since lending is one of our primary business activities, the credit quality of our portfolio can have a significant impact on our earnings.
−Removed: We estimate and establish reserves for credit risks and probable incurred credit losses inherent in our loan portfolio.
+Added: We estimate and establish reserves for credit risks we reasonably expect to occur over the expected life of our loan portfolio.
This process, which is critical to our financial results and condition, requires difficult, subjective and complex judgments, including reviews of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans.
10 unchanged sentences
Our allowance for credit losses may prove to be insufficient to absorb losses in our loan portfolio.
−Removed: We maintain an allowance for credit losses that we believe is a reasonable estimate of the expected losses within the CECL model.
+Added: We maintain an allowance for credit losses that we believe is a reasonable estimate of the expected losses over the expected life of the loan portfolio based on a CECL model.
We believe that our allowance for credit losses is maintained at a level adequate to absorb expected losses over the life of the loans in the loan portfolio as of the corresponding balance sheet date.
11 unchanged sentences
If the methodologies and assumptions we use in the CECL model prove to be incorrect, or inadequate, the allowance for credit losses may not be sufficient, resulting in the need for additional allowance for credit losses to be established, which could have a material adverse impact on our financial condition and results of operations.
−Removed: We adopted the CECL accounting guidance in 2020 and recognized a one-time cumulative effect adjustment to our allowance for credit losses
−Removed: and retained earnings as of January 1, 2020.
+Added: We adopted the CECL accounting guidance in 2020 and recognized a one-time cumulative effect adjustment to our allowance for credit losses and retained earnings as of January 1, 2020.
Concurrent with the enactment of the CARES Act, federal bank regulatory agencies issued an interim final rule that delays the estimated impact on regulatory capital resulting from the adoption of CECL.
4 unchanged sentences
In 2021, we were able to reverse previous provision expense of $19.0 million as the credit conditions related to COVID-19 were not as significant as originally anticipated.
−Removed: However, depending upon future COVID-19 variants and circumstances, we may incur significant provision expense for credit losses in future periods.
+Added: In 2022, we recorded $6.7 million of provision expense as our loan portfolio grew and the overall duration of the portfolio extended due to rising interest rates.
+Added: Depending upon future COVID-19 variants and circumstances, as well as broader macroeconomic shifts, we may incur significant provision expense for credit losses in future periods.
Projections for new business initiatives and strategies may prove inaccurate.
1 unchanged sentence
The Bank makes certain projections and develops plans and strategies for its banking and financial products.
−Removed: If we do not accurately determine demand for our banking and financial products, it could result in us incurring significant expenses without the anticipated increases in revenue, which could result in a material effect on the Bank’s business.
+Added: If we do not accurately determine demand for our banking and financial products, it could result in us incurring significant expenses without the anticipated increases in revenue, which could result in a material effect on the Bank’s business and/or capital.
We may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could harm our liquidity, results of operations and financial condition.
4 unchanged sentences
If the level of repurchase and indemnity activity becomes material, our liquidity, results of operations and financial condition may be affected.
−Removed: Competition in the financial services industry is intense and could result in our losing business or experiencing reduced margins.
+Added: Competition in the financial services industry is intense and could result in our losing business and/or key personnel or experiencing reduced margins.
We operate in a highly competitive industry that could become even more competitive as a result of legislative, regulatory and technological changes, and continued consolidation.
4 unchanged sentences
These developments may significantly change the competitive environment in which we conduct business.
−Removed: Some of our competitors have greater financial resources and/or face fewer regulatory constraints.
+Added: Some of our competitors have greater financial resources and/or face fewer regulatory constraints, such as Financial Technology Companies, or FinTechs.
Credit unions that compete with us have regulatory and other advantages that allow them to price products and services more competitively.
−Removed: As a result of these various sources of competition, we could lose business to competitors or be forced to price products and services on less advantageous terms to retain or attract clients, either of which could affect our profitability.
+Added: As a result of these various sources of competition, we could lose loan, deposit, or other types of business to competitors or be forced to price products and services on less advantageous terms to retain or attract clients, either of which could affect our profitability.
The principal bases for competition are pricing (including the interest rates charged on loans or paid on interest bearing deposits), product structure, the range of products and services offered, and the quality of customer service (including convenience and responsiveness to customer needs and concerns).
The ability to access and use technology is an increasingly important competitive factor in the financial services industry, and it is a critically important component to customer satisfaction as it affects our ability to deliver the right products and services.
−Removed: For example, digital or cryptocurrencies, blockchain, and other “fintech” technologies that are designed to enhance transactional security have the potential to disrupt the
−Removed: financial industry, change the way banks do business, and reduce the need for banks as financial deposit-keepers and intermediaries.
+Added: For example, digital or cryptocurrencies, blockchain, and other FinTech technologies that are designed to enhance transactional security have the potential to disrupt the financial industry, change the way banks do business, and reduce the need for banks as financial deposit-keepers and intermediaries.
+Added: Another increasingly competitive factor in the financial services industry is the competition to attract and retain talented employees across many of our business and support areas, many of whom are key to executing our strategic plan and to maintaining relationships with the customers and communities they serve.
+Added: This competition could lead to adverse effects on our business, financial condition, or operating results and could also cause us to not pursue certain business opportunities.
Failure to adequately address the competitive pressures we face could make it harder for us to attract and retain customers across our businesses.
Similarly, meeting these competitive pressures could require us to incur significant additional expense, to reevaluate the number of branches through which we serve our customers, or to accept risk beyond what we would otherwise view as desirable under the circumstances.
−Removed: In addition, competitive pressure to increase rates on deposits or decrease rates on loans could reduce our net interest margin with a resulting negative impact on our net interest income.
+Added: In addition, in our interest rate sensitive business, pressure to increase rates on deposits or decrease rates on loans could reduce our net interest margin with a resulting negative impact on our net interest income.
Clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding.
9 unchanged sentences
At December 31, 2022, we had $3.2 billion in assets under management.
−Removed: A sharp decline or heightened volatility in the stock market could negatively impact the amount of assets under management and thus subject our earnings to additional risks and uncertainties.
+Added: A sharp decline or heightened volatility in the stock market could negatively impact the value of investments held by the bank's wealth management clients, which in turn impacts the amount of assets under management and subjects our earnings to additional risks and uncertainties.
+Added: As our wealth management business grows, we may also face operational risk resulting from inadequate or failed internal processes, systems or errors, and regulatory risk, which could result in penalties or restrictions due to non-compliance with laws and regulations.
Our foreign exchange business is largely dependent upon a small number of large clients and market volatility.
1 unchanged sentence
Bannockburn’s business model relies, to some extent, upon a small number of large clients engaged in foreign currency transactions.
−Removed: The loss of one or more of these large client would adversely affect the revenue derived from Bannockburn.
−Removed: Additionally, foreign currency transactions increase as market volatility increases.
+Added: The loss of one or more of these large clients would adversely affect the revenue derived from Bannockburn.
+Added: Additionally, foreign currency transactions historically increase as market volatility increases.
Sustained periods of stability in global financial markets could adversely affect Bannockburn’s revenue.
+Added: Other risks and uncertainties related to our foreign exchange business include the risk that foreign exchange rates may move in an unfavorable direction, leading to losses for the bank;
+Added: the risk that a client may default on its payment obligations, resulting in losses for the bank;
+Added: the risk that our systems for managing foreign exchange market activities could be inadequate or fail as a result of processes, systems or human error;
+Added: and the risk of regulatory penalties or restrictions due to non-compliance with laws and regulations related to foreign exchange transactions.
+Added: Our foreign exchange business is also susceptible to the risk that political events or changes in government policies could negatively impact the bank's matched book business.
Negative public opinion could damage our reputation and impact business operations and revenues.
As a financial institution, our earnings and capital are subject to risks associated with negative public opinion.
−Removed: Negative public opinion could result from our actual or alleged conduct in any number of activities, including lending practices, the failure of any of our products or services to meet our clients’ expectations or applicable regulatory requirements, corporate governance and acquisitions, social media and other marketing activities, the implementation of environmental, social and governance practives or actions taken by government regulators and community organizations in response to any of the foregoing.
+Added: Negative public opinion could result from our actual or alleged conduct in any number of activities, including lending practices, the failure of any of our products or services to meet our clients’ expectations or applicable regulatory requirements, corporate governance and acquisitions, social media and other marketing activities, and the implementation of environmental, social and governance practices or actions taken by government regulators and community organizations in response to any of the foregoing.
Negative public opinion could affect our ability to attract and/or retain clients, could expose us to litigation and regulatory action, and could have a material adverse effect on our stock price or result in heightened volatility.
6 unchanged sentences
service provider could affect our business to the extent such difficulties result in the interruption or discontinuation of services provided by that party.
−Removed: Further, the operations of our third-party vendors could fail or otherwise become delayed as a result of COVD-19 and any new variants thereof.
A cybersecurity breach of a vendor's system may result in theft of our data or disruption of business processes.
6 unchanged sentences
We are exposed to many types of operational risk, including the risk of fraud by employees and outsiders, clerical and record-keeping errors, and computer/telecommunications systems malfunctions.
−Removed: Our businesses are dependent on our ability to process a large number of increasingly complex transactions.
+Added: Our business is dependent on our ability to process a large number of increasingly complex transactions.
If any of our financial, accounting or other data processing systems fail or have other significant shortcomings, we could be affected.
20 unchanged sentences
Moreover, as technology and cyberattacks change over time, we must continually monitor and change systems to guard against new threats.
−Removed: We may not know of and be able to guard against a new threat until after an
−Removed: attack has occurred.
+Added: We may not know of and be able to guard against a new threat until after an attack has occurred.
Congress and the legislatures of states in which we operate regularly consider legislation that would impose more stringent data privacy requirements.
15 unchanged sentences
Limitations on our ability to receive dividends from our subsidiaries or an inability to increase liquidity through additional borrowings, or inability to maintain, renew or replace existing credit facilities, could have a material effect on our liquidity and on our ability to pay dividends on our common shares and interest and principal on our debt.
−Removed: As of December 31, 2021, we had indebtedness of $706.0 million.
+Added: As of December 31, 2022, we had indebtedness of $1.6 billion.
Disruptions in our ability to access capital markets on desirable terms may affect our capital resources, liquidity and business.
14 unchanged sentences
Numerous facts and circumstances are considered when evaluating the carrying value of our goodwill.
−Removed: One of those considerations is our market capitalization, evaluated over a reasonable period of time, in relation to the aggregate estimated fair value of the reporting unit.
+Added: One of those considerations is our market capitalization, which is evaluated over a reasonable period of time and compared to the aggregate estimated fair value of the reporting unit.
While this comparison provides some relative market information regarding the estimated fair value of our reporting unit, it is not determinative and needs to be evaluated in the context of the current economic and political environment.
8 unchanged sentences
Potential acquisitions may disrupt our business and dilute shareholder value, and we may not be able to successfully consummate or integrate such acquisitions.
−Removed: Acquiring other banks, businesses, or branches involves various risks commonly associated with acquisitions, including, among other things:
+Added: We may acquire other financial institutions, or branches or assets of other financial institutions, in the future.
+Added: We may also open new branches and enter into new lines of business or offer new products or services.
+Added: Any such expansion of our business will involve a number of expenses and risks, which may include:
+Added: • the time and expense associated with identifying and evaluating potential expansions;
+Added: • the potential inaccuracy of estimates and judgments used to evaluate credit, operations, management and market risk with respect to the target company;
• potential exposure to unknown or contingent liabilities of the target company;
10 unchanged sentences
Acquisitions could involve the payment of a premium over book and market values, and, therefore, dilution of our tangible book value and net income per common share may occur in connection with any such transaction.
−Removed: Furthermore, any difficulty integrating businesses acquired as a result of a merger or acquisition and the failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have an impact on our liquidity, results of operations and financial
−Removed: condition and any such integration could divert management’s time and attention from managing our company in an effective manner.
+Added: Furthermore, any difficulty integrating businesses acquired as a result of a merger or acquisition and the failure to realize the expected revenue increases, cost savings, increases in geographic or product presence,
+Added: and/or other projected benefits from an acquisition could have an impact on our liquidity, results of operations and financial condition and any such integration could divert management’s time and attention from managing our company in an effective manner.
Any merger or acquisition opportunity that we decide to pursue will ultimately be subject to regulatory approval or other closing conditions.
4 unchanged sentences
Accounting policies and processes are fundamental to how we record and report our financial condition and results of operations.
−Removed: Management must exercise judgment in selecting and applying many of these accounting policies and processes so they comply with Generally Accepted Accounting Principles in the United States.
+Added: Management must exercise judgment in selecting and applying many of these accounting policies and processes so they comply with GAAP in the United States.
Management has identified certain accounting policies as being critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments and contingencies.
3 unchanged sentences
Because of the uncertainty surrounding our judgments and the estimates pertaining to these matters, we cannot guarantee that we will not be required to adjust accounting policies or re-state prior period financial statements.
−Removed: See the “Critical Accounting Policies” in the Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 1- Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements, in our 2021 Annual Report to Shareholders (included within Exhibit 13 to this Form 10-K) for more information.
+Added: See the “Critical Accounting Estimates” in the Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 1- Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements, in our 2022 Annual Report to Shareholders (included within Exhibit 13 to this Form 10-K) for more information.
Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition.
−Removed: From time to time, the FASB and SEC change the financial accounting and reporting standards that govern the preparation of our financial statements.
+Added: From time to time, the FASB, SEC and other regulatory agencies change the financial accounting and reporting guidance that governs the preparation of our financial statements.
These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
24 unchanged sentences
These actions could impact the Company and the Bank in a variety of ways, including subjecting us to fines, restricting our ability to pay dividends, precluding mergers or acquisitions, limiting our ability to offer certain products or services, or imposing additional capital, operating, or oversight requirements.
+Added: Additionally, actions by regulatory agencies against us could cause us to devote significant time and resources to defending our business and may lead to penalties that materially affect us and our shareholders.
+Added: Even the reduction of regulatory restrictions could have an adverse effect on us and our shareholders if such lessening of restrictions increases competition within our industry or our market area.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
−Removed: Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (ESG) practices and disclosure.
+Added: Financial institutions are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (ESG) practices and disclosure.
Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
7 unchanged sentences
A default, or threatened default, of a large institution could negatively impact the entire financial system, and could expose us to credit risk in the event of default of our counterparty or client.
−Removed: In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due us.
+Added: In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not
+Added: sufficient to recover the full amount of the financial instrument exposure due us.
There is no assurance that any such losses would not affect our financial condition or results of operations.
1 unchanged sentence
Our success depends, in part, on our ability to adapt products and services to evolving industry standards.
−Removed: There is increasing pressure to provide products and services at lower prices, which can reduce net interest income and noninterest income from
−Removed: fee-based products and services.
+Added: There is increasing pressure to provide products and services at lower prices, which can reduce net interest income and noninterest income from fee-based products and services.
In addition, the widespread adoption of new technologies, including digital or cryptocurrencies, blockchain, and other “fintech” technologies, could require us to make substantial capital expenditures to modify or adapt existing products and services or develop new products and services.
5 unchanged sentences
The resultant changes in interest rates can also materially affect the value of certain financial assets we hold, such as debt securities.
−Removed: The policies of the Federal Reserve Board can adversely affect borrowers,adn increase default risk on their loans.
+Added: For example, in 2022, the Federal Reserve Open Markets Committee increased the target fed funds rate by 425 basis points resulting in the Bank's net interest margin on a fully tax equivalent basis increasing from 3.31% to 3.77% comprised of a 71 basis point increase in earning asset yields and a 36 basis point increase in total cost of interest-bearing liabilities.
+Added: At the same time, accumulated other comprehensive loss increased from $0.4 million in 2021 to $358.7 million in 2022, driven by a decline in the valuation of available for sale securities.
+Added: The policies of the Federal Reserve Board can adversely affect borrowers, and increase default risk on their loans.
Changes in Federal Reserve Board policies are beyond our control and difficult to predict;
8 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.