15 unchanged sentences
Adverse changes in the regional and general economy could reduce our growth rate, impair our ability to collect loans, and generally have a negative effect on our financial condition and results of operations.
−Removed: Public health crises , geopolitical developments, acts of terrorism, natural disasters, climate change and other external factors could harm our business.
−Removed: Public health crises, domestic or geopolitical crises, such as the current wars in Ukraine and the Middle East, political instability or civil unrest, terrorism, human error or other events outside of our control, could cause disruptions to our business or the United States' economy, resulting in potentially adverse operating results.
−Removed: Natural disasters may disrupt our operations, result in damage to our properties, reduce or destroy the value of the collateral for our loans and negatively affect the economies in which we operate.
−Removed: Climate change may worsen the severity and impact of future natural disasters and other extreme weather-related events that could cause disruption to our business and operations.
−Removed: Chronic results of climate change such as shifting weather patterns could also cause disruption to the business and operations of our customers, with potentially negative effects on our loan portfolio and growth opportunities.
−Removed: A significant natural disaster, such as a tsunami, earthquake, drought, fire or flood, where we or our customers live and do business, could have a material adverse impact on our local market areas and our ability to conduct business, especially if our insurance coverage is insufficient to compensate for losses that may occur.
−Removed: The effects of any of the foregoing factors could have a material adverse effect on our business, operations, and financial condition.
Conditions in the financial markets may limit our access to additional funding to meet our liquidity needs, which could adversely affect our earnings and capital levels.
17 unchanged sentences
Our failure to grow or retain deposits may result in a loss of market share and slower or negative loan growth, which likely would have an adverse effect on our financial condition and results of operations.
+Added: Public health crises , geopolitical developments, acts of terrorism, natural disasters, climate change and other external factors could harm our business.
+Added: Public health crises, domestic or geopolitical crises, such as the current wars in Ukraine and the Middle East, political instability or civil unrest, terrorism, human error or other events outside of our control, could cause disruptions to our business or the United States' economy, resulting in potentially adverse operating results.
+Added: Natural disasters may disrupt our operations, result in damage to our properties, reduce or destroy the value of the collateral for our loans and negatively affect the economies in which we operate.
+Added: Climate change may worsen the severity and impact of future natural disasters and other extreme weather-related events that could cause disruption to our business and operations.
+Added: Chronic results of climate change such as shifting weather patterns could also cause disruption to the business and operations of our customers, with potentially negative effects on our loan portfolio and growth opportunities.
+Added: A significant natural disaster, such as a tsunami, earthquake, drought, fire or flood, where we or our customers live and do business, could have a material adverse impact on our local market areas and our ability to conduct business, especially if our insurance coverage is insufficient to compensate for losses that may occur.
+Added: The effects of any of the foregoing factors could have a material adverse effect on our business, operations, and financial condition.
Credit and Asset Quality
27 unchanged sentences
We made changes to the program participation criteria for these loans in 2023 with the goal of reducing additional losses.
+Added: Purchases of Splash loans were suspended in August 2023.
Additional losses in our unsecured lending portfolio would negatively affect our profitability and capital.
32 unchanged sentences
Properties under construction are often difficult to sell and typically must be completed in order to be successfully sold, which also complicates the process of working out problem construction loans.
−Removed: This may require us to advance additional funds and/or contract with another builder to complete construction and assume the market risk of selling the project at a future market price, which may or may not enable us to fully recover unpaid loan funds and associated construction and liquidation costs.
+Added: Under these circumstances we may be required to advance additional funds and/or contract with another builder to complete construction and assume the market risk of selling the project at a future market price, which may or may not enable us to fully recover unpaid loan funds and associated construction and liquidation costs.
Our business may be adversely affected by credit risk associated with residential real estate.
35 unchanged sentences
Determining an allowance for credit losses on investment securities requires complex, subjective judgments about the future financial performance and liquidity of the security's issuer and underlying collateral, if any, to assess the probability of receiving all contractual principal and interest payments due, and these estimates may differ significantly from actual future performance of the security.
+Added: We may incur losses due to direct and indirect minority investments in fintech and specialty finance companies.
+Added: We have and may continue to make minority investments in fintech and specialty finance companies or make investments in funds that do the same.
+Added: For example, we currently have investments in Canapi Venture Fund, LP, BankTech Ventures, LP and JAM FINTOP Blockchain, LP to strategically invest in fintech-related businesses.
+Added: In addition, we have invested in Meriwether Group Capital Hero Fund LP, Meriwether Group Capital, LLC and The Meriwether Group, LLC, which provide funding and services to lower-middle market businesses and entrepreneurs.
+Added: We generally are not able to influence the activities of companies or funds in which we invest and may suffer losses due to these activities.
+Added: For example, in 2021 we entered into a joint venture with Quin Ventures, Inc.
+Added: and Peace of Mind, Inc., which ultimately resulted in the Company writing off the related investment.
+Added: In addition, the companies or funds we invest in may have economic or business interests, values, or goals that are inconsistent or conflict with ours, which could damage our reputation or business.
+Added: Additionally, the companies or funds we invest in may experience financial difficulties, default on their obligations, diminished liquidity or insolvency;
+Added: or our management team’s distraction relative to the potential financial benefit may be disproportional.
+Added: If the companies we invest in, directly or indirectly, seek additional financing in the future to fund their growth strategies, these financing transactions may result in dilution to our ownership stakes and these transactions may occur at lower valuations than the investment transaction through which we acquired such ownership interest, which could significantly decrease the fair value of our investment in those entities.
+Added: We may also be unable to dispose of our minority investments within our contemplated time horizon or at all or withdraw our investment from funds in which we participate.
+Added: Our inability to dispose of our minority investment in an entity, a downward adjustment to or impairment of an equity investment or our inability to access funds otherwise invested could adversely impact our business, financial condition, results of operations, or cash flows.
If our real estate owned is not properly valued or declines further in value, our earnings could be reduced.
41 unchanged sentences
Interest rates are highly sensitive to many factors beyond our control, including general economic conditions and policies of various governmental and regulatory agencies, particularly the Federal Reserve.
−Removed: The Federal Reserve slowed its increases to the federal funds target rate in 2023, with the most recent increase occurring in July 2023.
−Removed: When the Federal Reserve Board increases the Fed Funds rate, overall interest rates will likely rise, which may negatively impact housing markets by reducing refinancing activity and new home purchases.
−Removed: A rising or elevated interest rate environment may also adversely affect the U.S.
+Added: The Federal Reserve decreased the federal funds target rate beginning in September 2024, with the most recent decrease occurring in December 2024.
+Added: When the Federal Reserve Board decreases the Fed Funds rate, overall interest rates will likely fall, which may positively impact housing markets by increasing refinancing activity and new home purchases.
+Added: A falling interest rate environment may also positively affect the U.S.
economy and, as a result, our business as a whole.
−Removed: The Federal Reserve has communicated that the economic outlook continues to be uncertain, and while it has stated that rates may decrease later in 2024, there can be no assurance of the timing or amount of any future rate adjustments.
+Added: However, there can be no assurance of the timing or amount of any future rate adjustments.
Further, there can be no assurance regarding any forecasts or predictions about the effect that any future rate adjustment may have on our results of operations.
3 unchanged sentences
(iv) the ability of our borrowers to repay adjustable or variable rate loans;
−Removed: and (v) the average duration of our mortgage-backed securities portfolio and other interest-earning assets.
+Added: and (v) the average duration of our MBS portfolio and other interest-earning assets.
If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected.
Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings.
−Removed: Additional changes in interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations or by reducing our margins and profitability.
+Added: Increases in interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations or by reducing our margins and profitability.
Our net interest margin is the net interest income divided by average interest-earning assets.
8 unchanged sentences
As a result of the exceptionally low interest rate environment in the years prior to 2022, a high percentage of our deposits were composed of deposits bearing no or a relatively low rate of interest and having a shorter duration than our assets.
−Removed: We will likely incur a higher cost of funds to retain these deposits in the current elevated interest rate environment.
+Added: We would likely incur a higher cost of funds to retain these deposits in an elevated interest rate environment.
If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, would be adversely affected.
33 unchanged sentences
We may not be able to attract or maintain clients seeking larger loans or may not be able to sell participations in these loans on terms we consider favorable.
−Removed: We operate in a highly regulated environment and may be adversely affected by changes in laws and regulations and the impact of consent orders to which we are subject.
+Added: We operate in a highly regulated environment and may be adversely affected by changes in laws and regulations.
We are subject to extensive examination, supervision and comprehensive regulation by the Federal Reserve, the FDIC as insurer of our deposits, and by the DFI.
3 unchanged sentences
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on an institution’s operations, require additional capital, reclassify assets, determine the adequacy of an institution’s allowance for credit losses on loans and determine the level of deposit insurance premiums assessed.
+Added: For example, in November 2023, the Bank entered into a consent order with the FDIC in connection with certain deficiencies in the Bank's compliance program.
+Added: The consent order was terminated on October 23, 2024.
Any future changes to the laws, rules and regulations applicable to us could make compliance more difficult and expensive, or otherwise adversely affect our business, financial condition or prospects.
−Removed: On November 21, 2023, the Bank entered into a consent order ("Order") with the FDIC, the Bank's primary regulator.
−Removed: The Order, which will remain effective until modified, suspended or terminated by the FDIC, requires the Board and senior management to:
−Removed: Review, revise, develop, and/or implement, as necessary, a sound risk-based compliance management system, including a written compliance program, policies, and training designed to effect compliance with all applicable consumer protection laws, a consumer complaint monitoring process, and a monitoring program designed to detect and correct compliance weaknesses;
−Removed: Hold Bank management accountable for failing to adhere to consumer protection laws and the Bank’s policies and procedures;
−Removed: Review and analyze the resources, management, and staffing necessary (i) for compliance with all consumer protection laws, (ii) to manage and supervise the Bank’s compliance program, (iii) to provide sufficient oversight over third-party relationships and products and services offered by or through third-party relationships, and (iv) to appropriately address certain prior violations and compliance issues;
−Removed: Review, revise, develop, and/or implement, as necessary, effective independent audit coverage of the Bank’s compliance program.
We are also subject to tax, accounting, securities, insurance, monetary laws and regulations, rules, standards, policies, and interpretations that control the methods by which financial institutions conduct business.
5 unchanged sentences
however, no assurance can be given as to whether such changes will occur or what may result from such changes.
−Removed: The CFPB, which was created under the Dodd-Frank Act, has issued, and continues to issue, rules related to consumer protection, including The Truth in Lending Act and the Real Estate Settlement Procedures Act Integrated Disclosure (TRID), which combines certain disclosures that consumers receive in connection with applying for and closing a mortgage loan.
−Removed: These CFPB rules, including rules generally prohibiting creditors from extending mortgage loans without regard for the consumer's ability to repay, may adversely affect the volume of mortgage loans that we underwrite and subject us to increased potential liabilities related to such residential loan origination activities.
−Removed: The CFPB has adopted a number of additional requirements and issued additional guidance, including with respect to indirect auto lending, appraisals, escrow accounts and servicing, each of which may entail increased compliance costs.
General Risk Factors
26 unchanged sentences
We may also expand our digital footprint through partnerships with and investments in fintech companies.
−Removed: The new technology and start-up companies we invest in may not be as successful as anticipated or may fail, resulting a total loss of our related investment.
+Added: The new technology and start-up companies we invest in may not be as successful as anticipated or may fail, resulting in a total loss of our related investment.
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.