What changed in this filing

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Item 1A. Risk Factors

2022-03-30 compared with 2021-03-22 · 41 added, 81 removed, 256 unchanged (32% of the section changed)

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The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.

Also, please read “Cautionary Note Regarding Forward-Looking Statements.”

Also, please read “

Cautionary Note Regarding Forward-Looking Statements.

Risks Related to Our Business

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Among the risks we face are the following:

Credit Risk –

the risk that loan customers or other parties will be unable to perform their contractual repayment obligations.

Market Risk –

the risk that changes in market rates and prices will adversely affect our financial condition and results of operations.

Liquidity Risk –

the risk that the Bancorp or the Bank will have insufficient cash or access to cash to meet its operating needs.

Operational Risk –

the risk of financial and reputational loss resulting from fraud, inadequate or failed internal processes, cyber-security breaches, people and systems, or external events.

Economic Risk –

the risk that the economy in our markets could decline, resulting in increased unemployment, decreased real estate values, and increased loan charge-offs.

Compliance Risk –

the risk of additional action by our regulators or additional regulation that could hinder our ability to do business profitably.

Regulatory Risk –

the risk presented by the need to comply with all laws, rules, and regulations from multiple regulatory agencies, including but not limited to the FDIC, the Consumer Financial Protection Bureau, the IDFI, the FRB, and the U.S.

Department of Labor.

Fiduciary Risk –

the risk of failing to act in our fiduciary capacity in the best interests of the grantors and beneficiaries of trust accounts and benefit plans. 

The effects of the outbreak and continued spread of the novel coronavirus (“COVID-19”), or an outbreak of another highly infectious or contagious disease, may adversely affect our business activities, financial condition and results of operations.

In December 2019, COVID-19 was reported in China, and, in March 2020, the World Health Organization declared it a pandemic.

On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency.

The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments ordered non-essential businesses to close and residents to shelter in place at home.

While many of these measures have been lifted or eased since the beginning of the pandemic and economic growth is beginning to recover, the pandemic resulted in an unprecedented slow-down in economic activity and a related increase in unemployment.

Since the COVID-19 outbreak, the stock markets have experienced high levels of volatility at times and, in particular, many bank stocks have declined in value.

In response to the COVID-19 outbreak, the FRB has reduced the benchmark federal funds rate to a target range of 0% to 0.25%, and the yields on 10- and 30-year treasury notes have declined to historic lows.

Various state governments and federal agencies are encouraging lenders to provide forbearance and other relief to borrowers (e.g., waiving late payment and other fees).

The federal banking agencies have encouraged financial institutions to prudently work with affected borrowers and recently passed legislation has provided relief from reporting loan classifications due to modifications related to the COVID-19 outbreak.

Certain industries have been particularly hard-hit, including the travel and hospitality, restaurant, and retail industries.

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In addition, the spread of COVID-19 has caused us to modify our business practices, including remote employee work locations, restrictions on employee travel, mask and social distancing guidelines for our employees, and the cancellation or postponement of physical participation in meetings, events, and conferences.

We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, and business partners.

There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19 or will otherwise be satisfactory to government authorities and regulators.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business.

The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be fully reopened in our market areas.

As a result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a significant effect on our business, financial condition, liquidity, and results of operations:

Demand for our products and services may decline, making it difficult to grow assets and income.

If the economies in the Bank’s market areas are unable to fully reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased provisions for loan losses, charge-offs, and reduced income.

Collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase.

The Bank’s allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income.

The net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to the Bank.

As a result of the decline in the FRB’s target federal funds rate, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread, and correspondingly reducing our net income.

A material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend.

Our wealth management revenues may decline with continuing market volatility.

We rely on third party vendors for certain critical services, and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on the Bank.

FDIC premiums may increase if the agency experiences additional resolution costs. 

Credit Risk – the risk that loan customers or other parties will be unable to perform their contractual repayment obligations.

Market Risk – the risk that changes in market rates and prices will adversely affect our financial condition and results of operations.

Liquidity Risk – the risk that the Bancorp or the Bank will have insufficient cash or access to cash to meet its operating needs.

Operational Risk – the risk of financial and reputational loss resulting from fraud, inadequate or failed internal processes, cyber-security breaches, people and systems, or external events.

Economic Risk – the risk that the economy in our markets could decline, resulting in increased unemployment, decreased real estate values, and increased loan charge-offs.

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Moreover, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with the Bancorp and the Bank for many years.

The Bancorp has put in place measures such as remote work to protect the health and safety of our employees.

The unanticipated loss or unavailability of key employees due to the outbreak could harm our ability to operate our business or execute our business strategy.

However, the Bancorp has an appropriate emergency succession plan in place, which is reviewed and approved annually by the Bancorp’s board of directors.

Any one or a combination of the factors identified above may remain prevalent for a significant period of time and could negatively impact our business, financial condition, and results of operations and prospects even after the COVID-19 outbreak has subsided.

The extent to which the COVID-19 outbreak impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can fully resume.

Even after the COVID-19 outbreak has subsided, we may continue to experience significant impacts to our business as a result of the virus’s regional, national, and global economic impact, including the availability of credit, adverse impacts on our liquidity, and any recession that has occurred or may occur in the future.

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.

We do not yet know the full extent of the impacts on our business, our operations or the global economy as a whole.

That being said, we believe the Bancorp and the Bank are well prepared for the economic and social consequences of the COVID-19 global pandemic. 

Compliance Risk – the risk of additional action by our regulators or additional regulation that could hinder our ability to do business profitably.

Regulatory Risk – the risk presented by the need to comply with all laws, rules, and regulations from multiple regulatory agencies, including but not limited to the FDIC, the Consumer Financial Protection Bureau, the IDFI, the FRB, the SEC, and the U.S.

Department of Labor.

Fiduciary Risk – the risk of failing to act in our fiduciary capacity in the best interests of the grantors and beneficiaries of trust accounts and benefit plans. 

Above average interest rate risk associated with fixed-rate loans may have an adverse effect on our financial position or results of operations.

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We may be required to increase our allowance for loan losses, thus reducing earnings.

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Commercial business lending may expose the Bancorp to increased lending risks.

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Although commercial business loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation value of these assets in the event of a borrower default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories and equipment may be obsolete or of limited use, among other things.

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Commercial real estate lending may expose the Bancorp to increased lending risks.

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The profitability of participating in specific programs may vary depending on a number of factors, including our administrative costs of originating and purchasing qualifying loans and our costs of meeting such criteria.

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Our mortgage lending profitability could be significantly reduced as changes in interest rates could affect mortgage origination volume and pricing for selling mortgages on the secondary market.

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The occurrence of operational interruption, cyber incident, or a deficiency in the cyber security of our technology systems (internal or outsourced) could negatively impact our financial condition or results of operations.

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We have policies and procedures expressly designed to prevent or limit the effect of a failure, interruption, or security breach of our systems and maintain cyber security insurance.

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If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition, and results of operations.

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We depend on outside third parties for processing and handling of our records and data.

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Such disruption or breach of security may have a material adverse effect on our financial condition and results of operations.

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We continually encounter technological change.

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Any future acquisition, particularly the acquisition of a significantly troubled institution or an institution of comparable size to us, may require us to raise additional capital in order to obtain regulatory approval and/or to remain well capitalized.

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Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance.

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In the course of our business, we may own or foreclose and take title to real estate, and could be subject to environmental liabilities with respect to these properties (including liabilities for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination), or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property.

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We are exposed to intangible asset risk in that our goodwill may become impaired.

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In addition, a failure to deliver appropriate standards of service and quality, or a failure or perceived failure to treat customers and clients fairly, can result in customer dissatisfaction, litigation, privacy breach, and heightened regulatory scrutiny, all of which can lead to lost revenue, higher operating costs, and harm to our reputation.

Adverse publicity about NWIN, whether or not true, may result in harm to our existing business, customer relationships and prospects.

Adverse publicity about the Bancorp, whether or not true, may result in harm to our existing business, customer relationships and prospects.

Should any events or factors that can undermine our reputation occur, there is no assurance that the additional costs and expenses that we may need to incur to address the issues giving rise to the reputational harm would not adversely affect our earnings and results of operations.

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exposure to potential asset quality issues of the target company;

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potential disruption to our business;

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As a result, merger or acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving the payment of cash or the issuance of our debt or equity securities may occur at any time.

Acquisitions typically involve the payment of a premium over book and market values, and, therefore, some dilution of our tangible book value and net income per common share may occur in connection with any future transaction.

Acquisitions typically involve the payment of a premium over book, and, therefore, some dilution of our tangible book value and net income per common share may occur in connection with any future transaction.

To the extent we were to issue additional shares of common stock in any such transaction, our current shareholders would be diluted and such an issuance may have the effect of decreasing our stock price, perhaps significantly.

Furthermore, 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 a material adverse effect on our financial condition and results of operations.

In addition, merger and acquisition costs incurred by NWIN may temporarily increase operating expenses.

In addition, merger and acquisition costs incurred by the Bancorp may temporarily increase operating expenses.

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Risks Related to the Banking Industry

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In addition, unemployment increased significantly during that period, which further contributed to the adverse business environment for households and businesses.

While economic conditions have improved during the second half of 2020, there can be no assurance that the economic recovery will continue, and future deterioration would likely exacerbate the adverse effects of recent difficult market conditions on us and others in the financial institutions industry.

While economic conditions have improved, there can be no assurance that the economic recovery will continue, and future deterioration would likely exacerbate the adverse effects of recent difficult market conditions on us and others in the financial institutions industry.

Market stress could have a material adverse effect on the credit quality of our loans, and therefore, our financial condition and results of operations as well as other potential adverse impacts including:

There could be an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility, and widespread reduction of business activity generally.

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There could be an increase in write-downs of asset values by financial institutions, such as the Bank.

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The process we use to estimate losses inherent in our loan portfolio requires difficult, subjective, and complex judgments.

This process includes analysis of economic conditions and the impact of these economic conditions on borrowers’

ability to repay their loans.

This process includes analysis of economic conditions and the impact of these economic conditions on borrowers’ ability to repay their loans.

The process could no longer be capable of accurate estimation and may, in turn, impact its reliability.

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The Bank could be required to pay significantly higher FDIC premiums in the future if losses further deplete the Deposit Insurance Fund.

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If the issuer defaults on its payments, it may result in the recognition of OTTI or a total loss, which could have a material adverse effect on our financial condition and results of operations.

We face strong competition in all phases of our business from other banks, financial institutions, and non-banks.

We face strong competition in all phases of our business from other banks, financial institutions, and  

The banking and financial services business in our market areas is highly competitive.

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Many of these competitors are not subject to the same regulatory restrictions that we are and may be able to compete more effectively as a result.

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Also, technology and other changes have lowered barriers to entry and made it possible for customers to complete financial transactions using neo-banks, non-banks, and financial technology (“FinTech”) companies that historically have involved banks at one or both ends of the transaction.

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A related risk is the migration of bank personnel away from the traditional bank environments into neo-banks, FinTech companies, and other non-banks.

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Increased competition in our market may result in a decrease in the amounts of our loans and deposits, reduced spreads between loan rates and deposit rates or loan terms that are more favorable to the borrower.

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Increased competition for bank acquisitions may slow the Bancorp’s ability to grow earning assets at comparable historical growth rates.

We are subject to federal regulations that seek to protect the Deposit Insurance Fund and the depositors and borrowers of the Bank, and our federal regulators may impose restrictions on our operations that are detrimental to holders of the Bancorp’s common stock.

s common stock.

We are subject to extensive regulation, supervision, and examination by the FRB, IDFI, and FDIC, our primary regulators.

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Any new or acquired branches will be subject to regulatory approval, and there can be no assurance that we will succeed in securing such approvals.

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The soundness of other financial institutions could adversely affect us.

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There is no assurance that any such losses would not materially and adversely affect our results of operations or earnings.

Risks Related to the Bancorp’s Common Stock

An investment in the Bancorp’s common stock is not an insured deposit.

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Risks Related to the Bancorp ’

s Common Stock

An investment in the Bancorp ’

s common stock is not an insured deposit.

The Bancorp’s common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund, or by any other public or private entity.

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As a result, if you acquire the Bancorp’s common stock, you could lose some or all of your investment.

T he price of our common stock may fluctuate, sometimes significantly, and this may make it difficult for you to resell our common stock at times or at prices you find attractive.

Although our common stock is quoted on the OTC Pink Marketplace, our stock price constantly changes, and we expect our stock price to continue to fluctuate in the future.

The price of our common stock may fluctuate, sometimes significantly, and this may make it difficult for you to resell our common stock at times or at prices you find attractive.

Although our common stock is listed on the Nasdaq Capital Market, our stock price constantly changes, and we expect our stock price to continue to fluctuate in the future.

Our stock price is impacted by a variety of factors, some of which are beyond our control.

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our past and future dividend practices;

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our creditworthiness;

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These broad market fluctuations may adversely affect our stock price, notwithstanding our operating results.

The trading volume in the Bancorp’s common stock is less than that of other larger financial institutions.

Although the Bancorp’s common stock is quoted on the OTC Pink Marketplace, the trading volume in the common stock may be less than that of other, larger financial services companies.

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The trading volume in the Bancorp ’

s common stock is less than that of other larger financial institutions.

Although the Bancorp’s common stock is listed on the Nasdaq Capital Market, the trading volume in the common stock may be less than that of other, larger financial services companies.

A public trading market having the desired characteristics of depth, liquidity, and orderliness depends on the presence in the marketplace of willing buyers and sellers of the Bancorp’s common stock at any given time.

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During any period of lower trading volume of the Bancorp’s common stock, significant sales of shares of the Bancorp’s common stock, or the expectation of these sales, could cause the Bancorp’s common stock price to fall.

The Bancorp’s Articles of Incorporation, Indiana law, and certain banking laws may have an anti-takeover effect.

The Bancorp ’

s Articles of Incorporation, Indiana law, and certain banking laws may have an anti-takeover effect.

Provisions of the Bancorp’s Articles of Incorporation, the Indiana Business Corporation Law, and the federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire the Bancorp, even if doing so would be perceived to be beneficial by the Bancorp’s shareholders.

The combination of these provisions could have the effect of inhibiting a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of the Bancorp’s common stock.

The Bancorp may issue additional securities, which could dilute the ownership percentage of holders of the Bancorp’s common stock.

The Bancorp may issue additional securities, which could dilute the ownership percentage of holders of the Bancorp ’

s common stock.

The Bancorp may issue additional securities to, among other reasons, raise additional capital or finance acquisitions, and, if it does, the ownership percentage of holders of the Bancorp’s common stock could be diluted potentially materially.

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Not applicable.

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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.

What changed 10-K

Item 1A. Risk Factors