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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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Compliance Risk – the risk of additional action by our regulators or additional regulation that could hinder our ability to do business profitably.
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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. 
+Added: The Bancorp is subject to liquidity risk in its operations, which could adversely affect the ability to fund various obligations.
+Added: Liquidity risk is the possibility of being unable to meet obligations as they come due, pay deposits when withdrawn, capitalize on growth opportunities as they arise, or pay dividends because of an inability to liquidate assets or obtain adequate funding on a timely basis, at a reasonable cost and within acceptable risk tolerances.
+Added: Liquidity is derived primarily from retail deposit growth and retention, principal and interest payments on loans and investment securities, net cash provided from operation, and access to other funding sources.
+Added: Liquidity is essential to our business.
+Added: We must maintain sufficient funds to respond to the needs of depositors and borrowers.
+Added: An inability to raise funds through deposits, borrowings, the sale or pledging as collateral of loans and other assets could have a material adverse effect on our liquidity.
+Added: Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general.
+Added: Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity due to a market downturn, failures of other financial institutions which reduces overall market confidence in the banking and financial services industry, or regulatory action that limits or eliminates our access to alternate funding sources.
+Added: Our ability to borrow could also be impaired by factors that are nonspecific to us, such as severe disruption of the financial markets or negative expectations about the prospects for the financial services industry, as evidenced by the recent failures of certain depository institutions and the resulting market turmoil and volatility stemming from such failures.
+Added: Unrealized losses in the Bancorp ’
+Added: s investment portfolio could affect liquidity.
+Added: As market interest rates increased during 2022 and continued into the early months of 2023, the Bancorp has experienced increased unrealized losses within its investment portfolio.
+Added: The Bancorp’s investment portfolio consists of federal funds, interest bearing balances in other financial institutions, U.S.
+Added: government securities, federal agency obligations, obligations of state and local municipalities, and corporate securities.
+Added: All of the instruments held in the Bancorp’s investment portfolio are designated as available-for-sale, and many of these instruments are particularly sensitive to interest rate fluctuations, especially long-term fixed-income securities, including U.S.
+Added: Treasury notes and bonds and corporate and municipal bonds.
+Added: As of December 31, 2022, the Bancorp held approximately $227.7 million of municipal securities within the investment portfolio, which comprised approximately 61.3% of the portfolio, and approximately $134.1 million of collateralized mortgage obligations and residential mortgage-backed securities within the portfolio, which comprised approximately 36.2% of the portfolio.
+Added: From December 31, 2021 to December 31, 2022, the investment portfolio experienced unrealized losses of approximately $90.0 million, which coincided with an increase by the Federal Reserve in the federal funds target rate from 0.25% as of December 31, 2021 to 4.50% as of December 31, 2022.
+Added: The increase in unrealized losses is reflected in Accumulated Other Comprehensive Income (Loss) (AOCI) on the Bancorp’s balance sheet and reduces the Bancorp’s book capital and tangible common equity ratio.
+Added: However, unrealized losses do not affect the Bancorp’s regulatory capital ratios.
+Added: Management continues to actively monitor the investment portfolio and does not currently anticipate the need to realize losses from the investment portfolio, and it is unlikely the Bancorp will be required to sell the securities before recovery of their amortized cost bases, which may be at maturity.
+Added: However, the Bancorp’s access to liquidity sources could be affected by unrealized losses if securities within the investment portfolio must be sold at a loss or tangible capital ratios decline from an increase in unrealized losses or realized credit losses.
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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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 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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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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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, 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.
−Removed: 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.
+Added: While economic conditions have improved, significant challenges remain, including continued elevated inflation levels and recent uncertainty in the financial institutions industry.
+Added: As a result, 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:
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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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Future economic conditions in our market area will depend on factors outside of our control, such as political and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in government, military, and fiscal policies, and inflation.
+Added: Concern by customers over deposit insurance may cause a decrease in deposits and changes in the mix of funding sources available to the Bancorp.
+Added: With increased concerns regarding certain recent high profile bank failures, customers increasingly are concerned about the extent to which their deposits are insured by the FDIC.
+Added: Customers may have insecurity regarding the extent to which their deposits exceed the current FDIC deposit insurance threshold of $250,000 per depositor and therefore are uninsured.
+Added: The FDIC has extended deposit insurance relief to uninsured depositors in certain recent high profile bank failures, but there is no assurance the FDIC will extend such relief in connection with any other failure of a financial institution, which may cause uncertainty among customers regarding the safety of their deposits.
+Added: Customers may withdraw deposits in an effort to ensure the amount they have on deposit with their bank is fully insured and some may seek deposit products or other bank savings and investment products that are collateralized.
+Added: Decreases in deposits and changes in the mix of funding sources, particularly in light of recent high profile bank failures and customers’
+Added: responses to such events, may adversely affect the Bancorp’s liquidity, funding costs, and net income.
Turmoil in the financial markets could result in lower fair values for our investment securities.
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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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There is no assurance that any such losses would not materially and adversely affect our results of operations or earnings.
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+Added: In addition, failures of other financial institutions, including regional and community banks, could decrease customer confidence in the banking industry as a whole and community banks in particular.
+Added: Reduced confidence in the financial institutions sector could result in customer disintermediation and the loss of deposit and borrowing relationships, among other effects, which could result in a material adverse effect on the Bancorp’s financial condition and results of operations.
Risks Related to the Bancorp ’
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These broad market fluctuations may adversely affect our stock price, notwithstanding our operating results.
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The trading volume in the Bancorp ’
19 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.