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Item 1A. Risk Factors

2023-02-28 compared with 2022-02-28 · 105 added, 140 removed, 238 unchanged (51% of the section changed)

Risks Related to the COVID-19 Pandemic

The COVID-19 pandemic is adversely affecting the Company and its customers, counterparties, employees, and third-party service providers, and the full extent of the adverse impacts on the Company's business, financial position, results of operations, and prospects are unknown and could be significant.

The COVID-19 pandemic that has resulted in widespread volatility and deterioration in business, economic, and market conditions and household incomes, including in the Commonwealth of Massachusetts where the Company conducts nearly all of its business.

The extent of the impact of the COVID-19 pandemic on the Company's capital and liquidity, and on its business, results of operations, financial position and prospects generally will depend on a number of evolving factors, including:

The duration, extent, and severity of the pandemic and any resurgences.

COVID-19 has not yet been contained and could affect more households and businesses.

The scope and duration of the COVID-19 pandemic depends on numerous evolving factors and future developments that cannot be accurately predicted at this time, including, but not limited to:

the spread of the virus and its variants;

the extent of any resurgences;

and the distribution, efficacy, availability and public acceptance of vaccines, boosters or treatments for COVID-19.

Following any containment, there is also substantial uncertainty surrounding the pace of economic recovery and the return of business and consumer confidence.

Risks Related to the COVID-19 Pandemic and Resulting Economic Conditions

The economic effects of the COVID-19 pandemic continue to adversely affect the Company and its customers, counterparties, employees, and third-party service providers, and the full extent of the adverse impacts on the Company's business, financial position, results of operations, and prospects are unknown and could be significant.

The COVID-19 pandemic has resulted in widespread volatility and deterioration in business, economic, and market conditions and household incomes, including in the Commonwealth of Massachusetts where the Company conducts nearly all of its business, and has led to disruptions in global supply chains, inflationary pressures, increased unemployment levels and a slowdown in economic activity.

The extent of the impact of the COVID-19 pandemic and resulting economic deterioration on the Company's capital and liquidity, and on its business, results of operations, financial position and prospects generally will depend on a number of evolving factors, including:

The effect on the Company's customers, counterparties, employees, and third-party service providers.

COVID-19 and its associated consequences and uncertainties, including recent inflationary pressures, the labor market shortage, unemployment rates and supply chain disruptions, are affecting individuals, households, and businesses differently and unevenly.

Many have changed their behavior in response to governmental and nongovernmental mandates and advisories that were directed toward curtailing household and business activity to restrain their commercial and social interactions and discretionary spending.

Many have changed their behavior in response to these pressures and have limited their discretionary spending.

As a result, the Company's credit, operational, and other risks have generally increased and, for the foreseeable future, may remain elevated or increase further.

The effect on economies and markets.

Whether the actions of governmental and nongovernmental authorities will be successful in mitigating the adverse effects of COVID-19 remains unclear.

National, regional, and local economies (including the local economies in the markets areas which the Company serves) and markets have suffered disruptions and these disruptions could be long lasting.

National, regional, and local economies (including the local economies in the markets areas which the Company serves) and markets have suffered disruptions due to inflationary pressures, supply chain disruptions and market volatility, and these disruptions could be long lasting.

Governmental actions are meaningfully influencing the interest-rate environment and financial-market activity, which could adversely affect the Company's results of operations and financial condition.

During 2021, the Company saw improvements in expected overall macro-economic assumptions, continued strong asset quality metrics, and lower organic loan growth.

With the continued spread of COVID-19 in the United States, the Company's forecast of macroeconomic conditions and operating results including expected lifetime credit losses on the Company's loan portfolio, is subject to meaningful uncertainty.

Governments have taken unprecedented steps to partially mitigate the adverse effects of their containment measures.

For example, on March 27, 2020, the Coronavirus, Aid, Relief and Economic Security Act ("CARES Act") was enacted to inject more than $2 trillion of financial assistance into the U.S.

economy, primarily through loans under the Paycheck Protection Program (the “PPP”), followed by the COVID-19 Economic Relief Bill signed into law on December 27, 2020, which created a $900 billion COVID-relief and $1.4 trillion government funding package that, among other things, afforded certain businesses additional opportunities to participate in the PPP if the specified financial requirements were satisfied.

In March 2021, the American Rescue Plan Act, also referred to as the COVID-19 Stimulus Package, was enacted to inject an additional $1.9 trillion in financial relief and economic stimulus.

The Federal Reserve has taken decisive and sweeping actions as well.

Since March 15, 2020, these have included a reduction in the target range for the federal funds rate to 0 to 25 basis points, a program to purchase an indeterminate amount of Treasury securities and agency mortgage-backed securities, and numerous facilities to support the flow of credit to households and businesses.

The degree to which the Company's actions and those of governments and others will directly or indirectly assist the Company's customers, counterparties, and third-party service providers and advance the Company's business and the economy generally is not yet clear.

For example, while the Company's loan-deferral programs provided under the CARES Act may better position customers to resume their regular payments to the Company in the future and enhance the Company's brand and customer loyalty, these programs may negatively impact the Company's revenue and other results of operations at least in the near term, may produce a higher degree of enrollment and other requests for extensions and rewrites than the Company anticipated, and the Company may not be as successful as expected in managing credit risk.

In addition, while the Federal

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Reserve’s accommodative monetary policy may benefit the Company to some degree by supporting economic activity among its customers, this policy and sudden shifts in it may inhibit the Company's ability to grow or sustain net interest income and effectively manage interest-rate risk.

The duration, extent, and severity of the economic effects of the pandemic and the pace of recovery.

There remains substantial uncertainty surrounding the pace of economic recovery and the return of business and consumer confidence.

Measures taken in 2020 and 2021 to partially mitigate the adverse effects of their containment measures, including the Coronavirus, Aid, Relief and Economic Security Act ("CARES Act"), the American Rescue Plan Act, also referred to as the COVID-19 Stimulus Package, and Federal Reserve actions to reduce the target range for the federal funds rate, and to purchase Treasury securities and agency mortgage-backed securities, have been eliminated or reduced.

In 2022, in an effort to arrest inflation, the Federal Reserve began raising interest rates, ceased U.S.

Treasury securities purchases and began to reduce its holdings of these securities, and these actions may continue in 2023.

Additional factors relate to the Company's high concentration of commercial real estate loans.

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Such trends could ultimately result in a shrinkage of the commercial real estate market to the extent that there is a reduced need for office and retail space as a result of changed operating preferences, which could materially impact the Company’s results of operations and financial condition and possibly the Company’s long-term business strategy because commercial real estate loans are the Company’s largest loan category.

The Company is unable to estimate the near-term and ultimate impacts of COVID-19 on the Company's business and operations at this time.

The pandemic could cause the Company to experience higher credit losses in its lending portfolio, additional increases in the allowance for credit losses, impairment of goodwill and other financial assets, diminished access to capital markets and other funding sources, further reduced demand for the Company's products and services, and other negative impacts on the Company's financial position, results of operations, and prospects.

The Company is unable to estimate the near-term and ultimate effects of the economic impacts of the COVID-19 pandemic on the Company's business and operations at this time.

The pandemic and the resulting economic effects could cause the Company to experience higher credit losses in its lending portfolio, additional increases in the allowance for credit losses, impairment of goodwill and other financial assets, diminished access to capital markets and other funding sources, further reduced demand for the Company's products and services, and other negative impacts on the Company's financial position, results of operations, and prospects.

In addition, while the Company continues to anticipate that its capital and liquidity positions will be sufficient, sustained adverse effects may impair these positions, prevent the Company from satisfying its minimum regulatory capital ratios and other supervisory requirements, and result in downgrades in its credit ratings.

The COVID-19 pandemic and related governmental mandates and advisories also have necessitated changes in the way the Company and its third party service providers continue operations, and the length of time that it may be required to operate under these circumstances, as well as the potential for conditions to worsen or for significant disruptions to occur, remains unpredictable.

All of these risks and uncertainties can be expected to persist at least until the pandemic is demonstrably and sustainably contained and consumer and business confidence recover.

COVID-19 and the volatile economic conditions stemming from it could also precipitate or contribute to the other risk factors identified in this Report, which in turn could materially adversely affect the Company's business, financial position, results of operations, prospects , and its stock price, and may also affect the Company's business in a manner that is not presently known to it or that the Company currently does not consider to present significant risks to its business, financial position, results of operations or prospects .

The Company has a high concentration of commercial loan balances and exposures within industries negatively impacted by the COVID-19 pandemic and continued weaknesses in these sectors could result in additional credit losses in this portfolio.

The Company’s commercial loan portfolio is subject to greater credit risk as a result of the COVID-19 pandemic, and sustained weaknesses could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which, accordingly, could have a material adverse effect on the Company’s business, financial condition and results of operations.

Commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic, and the federal banking regulatory agencies have expressed concerns about weaknesses in the current commercial real estate market.

Although management enhanced monitoring of loan portfolios in industries identified as being most affected, management is unable to predict or estimate the full impact of all industries affected by the pandemic.

Our prior participation in the SBA PPP may expose the Company to additional litigation risk from its customers or other parties regarding the processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties, which could have a significant adverse impact on the Company's business, financial position, results of operations, and prospects.

The CARES Act included a loan program administered through the SBA referred to as the PPP.

Under the PPP, including its expansion in 2021, small businesses, other entities and individuals could apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria.

The Company was a participating lender in the PPP and through December 31, 2021, originated over 9,800 PPP loans totaling approximately $1.2 billion, of which $216.2 million remain outstanding.

The Company may be exposed to the risk of litigation, from both clients and non-clients in connection with its participation in the PPP, regarding its process and procedures used in processing applications for the PPP.

If any such litigation

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is filed against the Company and is not resolved in a manner favorable to the Company, it may result in significant financial liability or adversely affect the Company's reputation.

In addition, litigation can be costly, regardless of outcome.

Any financial liability, litigation costs or reputational damage caused by PPP-related litigation could have a material adverse impact on the Company's business, financial position, results of operations and prospects.

The Company may have a credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced by the Company, such as an issue with the eligibility of a borrower to receive a PPP loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP, or as a result of a civil or criminal enforcement action against borrowers who obtained loans through fraud or other misconduct.

In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded, or serviced by the Company, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from the Company, which could adversely impact the Company's business, financial position, results of operations and prospects.

COVID-19 and the volatile economic conditions stemming from it, or any future outbreak of a COVID-19 variant that results in widespread control measures, could also precipitate or contribute to the other risk factors identified in this Report, which in turn could materially adversely affect the Company's business, financial position, results of operations, prospects , and its stock price, and may also affect the Company's business in a manner that is not presently known to it or that the Company currently does not consider to present significant risks to its business, financial position, results of operations or prospects .

Risks Related to Changes in Interest Rates

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Particularly in a decreasing interest rate environment, prepayments may result in proceeds having to be reinvested at a lower rate than the loan or mortgage-backed security being prepaid.

Potential sovereign debt defaults may severely impact global and domestic economies and may lead to significantly tighter liquidity and impact the availability of credit.

Economic growth may slow down and the national or global economy may experience additional downturns, including recessionary periods.

Conversely, in a period of rising interest rates such as the current interest rate environment, the interest income earned on the Company’s assets may not increase as rapidly as the interest that the Company pays on its liabilities.

Additionally, increases in interest rates may decrease loan demand or make it more difficult for borrowers to repay variable rate loans.

Potential sovereign debt defaults, actions that the U.S.

government may take to avoid exceeding the debt ceiling, or uncertainties surrounding the debt ceiling and the federal budget may severely impact global and domestic economies and may lead to significantly tighter liquidity and impact the availability of credit.

Economic growth may continue to slow down and the national or global economy may experience additional downturns, including recessionary periods.

Market disruption, including potential disruption resulting from inflation and global supply chain interruption, government and central bank policy actions designed to counteract the effects of recession, changes in investor expectations regarding compensation for market risk, credit risk and liquidity risk and changing economic data could impact both the volatility and magnitude of the directional movements of interest rates.

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In addition, federal and state regulators periodically review the Company’s allowance for credit losses and may require it to increase its allowance for credit losses or recognize further loan charge-offs.

Material additions to the allowance

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would materially decrease the Company’s net income and would have an adverse effect on the Company's results of operations or financial condition.

Material additions to the allowance would materially decrease the Company’s net income and would have an adverse effect on the Company's results of operations or financial condition.

A significant amount of the Company’s loans are concentrated in the Bank’s geographic footprint and adverse conditions in this geographic footprint could negatively impact its results of operations.

Substantially all of the loans the Company originates are secured by properties located in, or are made to businesses that operate in, Massachusetts and, to a lesser extent, Rhode Island.

Substantially all of the loans the Company originates are secured by properties located in, or are made to businesses that operate in, Massachusetts and, to a

lesser extent, Rhode Island.

Because of the current concentration of the Company’s loan origination activities in its geographic footprint, in the event of adverse economic conditions impacting the region (including, but not limited to, increased unemployment, downward pressure on the value of residential or commercial real estate, or political or business developments that may affect the ability of property owners and businesses to make payments of principal and interest on the underlying loans in the Bank’s geographic footprint), the Company would likely experience higher rates of loss and delinquency on its loans than if its loan portfolio were more geographically diversified, which could have an adverse effect on the Company's results of operations or financial condition.

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Any change in the industry practices, laws, regulations or accounting standards and failure by the Company to comply with such changes, or a change in regulators’ supervisory policies or examination procedures, whether by the Massachusetts Commissioner of Banks, the FDIC, the Federal Reserve, other state or federal regulators, the U.S.

Congress, or the Massachusetts legislature could have a material adverse effect on the Company’s

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business, financial condition, results of operations, and cash flows.

Congress, or the Massachusetts legislature could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows.

Additionally, aspects of current or proposed regulatory or legislative changes to laws applicable in the financial services industry, including the adoption of new rules or more aggressive examination and enforcement by the Company’s regulators over its overdraft protection practices, have led certain banking organizations to modify their overdraft protection programs, including the imposition of overdraft transaction fees.

These competitive pressures from the Company’s peers could cause the Company to modify its program and practices in ways that may negatively impact the profitability of the Company’s business activities and expose it to increased business and compliance costs, which, in turn could have an adverse effect on the Company’s financial condition and results of operations.

The Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose non-discriminatory lending and other requirements on financial institutions.

Department of Justice and other federal agencies, including the FDIC and Consumer Financial Protection Bureau ("CFPB"), are responsible for enforcing these laws and regulations.

A successful challenge to an institution’s performance under the Community Reinvestment Act ("CRA") and other fair lending laws and regulations could result in, among other sanctions, the required payment of damages and civil monetary penalties, injunctive relief, imposition of restrictions on acquisitions and restrictions on expansion.

These competitive pressures from the Company’s peers could cause the Company to modify its program and practices in ways that

may negatively impact the profitability of the Company’s business activities and expose it to increased business and compliance costs, which, in turn could have an adverse effect on the Company’s financial condition and results of operations.

The costs of compliance with fair lending laws or negative outcomes with respect to challenges of the Company’s compliance with such laws, inclusive of laws impacting banks exceeding $10 billion in total assets, could have a material adverse effect on the Company’s business, financial condition or results of operations or could damage the Company’s reputation.

The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose non-discriminatory lending and other requirements on financial institutions.

Department of Justice and other federal agencies, including the FDIC and the Consumer Financial Protection Bureau ("CFPB"), are responsible for enforcing these laws and regulations.

A successful challenge to an institution’s performance under the CRA and other fair lending laws and regulations could result in, among other sanctions, the required payment of damages and civil monetary penalties, injunctive relief, imposition of restrictions on acquisitions and restrictions on expansion.

Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation.

The costs of defending, and any adverse outcome from, any challenge with respect to our compliance with fair lending laws could damage our reputation or could have a material adverse effect on our business, financial condition or results of operations.

The Company is subject to heightened regulatory requirements and expectations, increased supervision and increased costs because the Company’s total assets exceed $10 billion .

Because the Company’s total assets exceed $10 billion, the Company and the Bank are subject to heightened requirements under the Dodd-Frank Act and its implementing regulations.

The Company is subject to additional regulatory requirements and expectations, increased supervision and increased costs, including:

supervision, examination and enforcement by the CFPB with respect to consumer financial protection laws;

annual stress testing using assumptions for baseline, adverse and severely adverse scenarios;

a modified methodology for calculating FDIC insurance assessments and potentially higher assessment rates;

enhanced supervision as a larger financial institution;

and a cap on the interchange fees that may be charged in certain electronic debit and prepaid card transactions under the Durbin Amendment to the Dodd-Frank Act.

With respect to deposit-taking activities, banks with more than $10 billion in assets are subject to two primary requirements.

The first is a deposit assessment based on a scorecard issued by the FDIC which considers, among other things, the Bank’s CAMELS rating, results of asset-related stress testing and funding-related stress, as well as the use of core deposits, among other things.

Depending on performance results under that scorecard, the total base assessment rate is between 1.5 to 40 basis points.

Any increase in the Bank’s deposit insurance assessments may result in an increased expense related to the use of deposits as a funding source.

The second requirement eliminates the exemption from the requirements of the Federal Reserve’s rules on interchange transaction fees for debit cards.

As a result, since July 1, 2020, the Bank has been limited to receiving no more than $0.21 plus 5 basis points of the transaction plus a $0.01 fraud adjustment for an interchange transaction fee for debit card transactions.

This reduction in the amount of interchange fees received has reduced the Company's revenues.

The Company’s regulators may also consider compliance with heightened regulatory requirements when examining its operations generally or considering any request for regulatory approval made by the Company or Bank, which may delay or otherwise impact needed regulatory approvals.

The Company has hired additional personnel and implemented structural initiatives to address heightened regulatory requirements and expectations and in the future may need to hire additional personnel, design and implement additional internal controls and structural initiatives, or otherwise commit additional significant financial resources to regulatory compliance, any of which could have a significant impact on the Company's business, financial condition or results of operations.

The impact of changes to the Internal Revenue Code or federal, state or local taxes may adversely affect the Company’s financial results or business.

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Changes to and replacement of the LIBOR Benchmark Interest Rate may adversely affect the Company’s business, financial condition, or results of operations.

The 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 derivatives.

On July 27, 2017, the Financial Conduct Authority (FCA), a regulator of financial services firms in the United Kingdom, announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.

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On November 30, 2020 the Federal Reserve Board, the FDIC and the OCC jointly announced that entering into new contracts using LIBOR as a reference rate after December 31, 2021, would create a safety and soundness risk.

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.

In the United States, efforts to identify a set of alternative U.S.

dollar reference interest rates are ongoing, and the Alternative Reference Rates Committee of the Federal Reserve has recommended the use of a Secured Overnight Funding Rate (“SOFR”), which is a backward looking secured rate as opposed to a forward looking unsecured rate.

The Company has established a working group to guide its transition from LIBOR.

The working group has identified all LIBOR-related loan contracts and determined which will require amended language to incorporate an alternative reference rate.

Additionally, all contracts executed subsequent to December 31, 2021 will be written with non-LIBOR terms.

After December 31, 2021, the ICE Benchmark Administration Limited (the “IBA”), the administrator of LIBOR, ceased publishing one-week and two-month USD LIBOR, in addition to certain other non-USD tenors.

The IBA expects to continue to publish all remaining USD LIBOR tenors through June 30, 2023, with the overnight and 12-month tenors ceasing immediately thereafter and the one-month, three-month and six-month tenors becoming non-representative from that date.

In the United States, the Alternative Reference Rates Committee of the Federal Reserve has recommended the use of a Secured Overnight Funding Rate (“SOFR”), which is a backward looking secured rate as opposed to a forward looking unsecured rate, as a replacement for LIBOR, and the Company has selected SOFR as its preferred replacement index rate.

The Adjustable Interest Rate (LIBOR Act), which was signed into law on March 15, 2022, provides that a LIBOR-based benchmark in any contract that contains no or inadequate “fallback provisions” will be automatically replaced, once LIBOR ceases to be published, by a benchmark replacement selected by the Federal Reserve.

On December 16, 2022, the Federal Reserve adopted a final rule implementing the LIBOR Act that, among other things, identifies the applicable SOFR-based benchmark replacements under the LIBOR Act.

For derivative contracts, International Swap Dealers Association ("ISDA") has developed fallback language for swap agreements and established a protocol to allow counterparties to modify legacy trades to include the new fallback language.

The Company has executed agreements with the majority of its customers to adopt the fallback language protocol.

The Company continues to consider a replacement index for 2022 and beyond.

The Company has established a working group to guide its transition from LIBOR.

The Company ceased originating any LIBOR-based products as of December 31, 2021 and all contracts executed subsequent to December 31, 2021 will be written with SOFR-based terms.

The working group has identified all LIBOR-related loan contracts and determined which will require amended language to incorporate the alternative reference rate, and the Company has executed agreements with the majority of its customers to adopt the fallback language protocol.

Although the Company has incorporated LIBOR replacement language in many of its governing documents, the Company 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.

The transition from LIBOR could create considerable costs and additional risk for the Company.

As proposed alternative rates are calculated differently, payments under contracts referencing new rates will differ from those referencing LIBOR.

The transition will change the Company’s market risk profiles, requiring changes to risk and pricing models, valuation tools, product design and hedging strategies.

As SOFR is calculated differently from LIBOR, payments under contracts referencing SOFR-based rates will differ from those referencing LIBOR.

The transition could change the Company’s market risk profiles, requiring changes to risk and pricing models, valuation tools, product design and hedging strategies.

Further, the Company’s failure to adequately manage the transition process with its customers could impact its reputation.

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If such claims and legal actions are not resolved in a manner favorable to the Company, they may result in financial liability and/or adversely affect the market perception of the Company and its products and services.

This may also impact customer demand for the Company’s products and services.

This may also impact customer demand

for the Company’s products and services.

Any financial liability or reputational damage could have a material adverse effect on the Company’s business, financial condition and results of operations.

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economy or certain sectors thereof and, thus, could adversely impact the Company's business, financial condition and results of operations.

In addition, to the extent changes in the global political environment, including the Russia-Ukraine conflict, have a negative impact on the Company or on the markets in which the Company operates, business, results of operations and financial condition could be materially and adversely impacted in the future.

In addition, to the extent changes in the global political environment, including the Russia-Ukraine conflict, have had and may continue to have a negative impact on the Company or on the markets in which the Company operates, business, results of operations and financial condition could be materially and adversely impacted in the future.

The Company may not be able to detect money laundering and other illegal or improper activities fully or on a timely basis, which could expose it to additional liability and could have a material adverse effect on the Company.

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In addition, the Company’s business and reputation could suffer if customers use its banking network for money laundering or illegal or improper purposes.

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Risks Related to the Company's Strategic Activities

Part of the Company’s business strategy is growth through acquisitions, and the failure to execute effectively on acquisitions could have an impact on its earnings and results of operations.

Part of the Company’s business strategy is growth through acquisitions, and the failure to execute effectively on acquisitions could have an impact on the Company's earnings and results of operations.

While focusing on organic growth, the Company's strategy also includes, in part, growth through acquisitions.

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Any possible acquisition may be subject to regulatory approval, and there can be no assurance that the Company will be able to obtain any such approval in a timely manner or at all.

The Company may not realize the value of strategic investments and strategic initiatives that we pursue and such investments and initiatives could divert resources or introduce unforeseen risks to the Company’s business.

The Company may not realize the value of strategic investments and strategic initiatives that it pursues and such investments and initiatives could divert resources or introduce unforeseen risks to the Company’s business.

The Company may execute strategic initiatives or make other strategic investments in businesses, products, technologies or platforms to enhance or grow its business.

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The Company’s securities portfolio performance in difficult market conditions could have adverse effects on the Company’s results of operations.

Generally Accepted Accounting Principles ("GAAP"), the Company measures expected credit losses on its securities portfolios in accordance with the CECL methodology, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, the Company’s ability and intent to hold investments until a recovery of amortized cost, as well as other factors.

Under accounting principles generally accepted in the United States of America ("GAAP"), the Company measures expected credit losses on its securities portfolios in accordance with the CECL methodology, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, the Company’s ability and intent to hold investments until a recovery of amortized cost, as well as other factors.

Adverse developments with respect to one or more of these factors could require the Company to recognize an allowance for credit losses, with the credit related portion of the reduction in the value required to be recognized as a charge to the Company’s earnings.

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The Company evaluates goodwill using a combined qualitative and quantitative impairment approach.

A significant and sustained decline in the Company’s stock price

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and market capitalization, a significant decline in the Company’s expected future cash flows, a significant adverse change in the business climate, slower growth rates or other factors could result in a finding of impairment of goodwill or other intangible assets.

A significant and sustained decline in the Company’s stock price and market capitalization, a significant decline in the Company’s expected future cash flows, a significant adverse change in the business climate, slower growth rates or other factors could result in a finding of impairment of goodwill or other intangible assets.

If the Company were to conclude that a future write-down of goodwill or other intangible assets is necessary, then the Company would record the appropriate charge to earnings, which could have material adverse effect on the Company's results of operations or financial condition.

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These assessments consider the performance of the associated business and its ability to generate future taxable income.

If the information available to the Company at the time of assessment indicates there is a greater than 50% chance that the Company will not realize the deferred tax asset benefit, the Company is required to establish a valuation allowance for the deferred tax asset and reduce its future deferred tax assets to the amount the Company believes could be realized.

deferred tax asset and reduce its future deferred tax assets to the amount the Company believes could be realized.

Recording such a valuation allowance could have a material adverse effect on the Company's results of operations or financial condition.

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Certain accounting policies require the use of estimates and assumptions that may affect the value of the Company’s assets and liabilities and results of operations.

The Company identified the accounting policies regarding the allowance for credit losses, security valuations and allowance for credit losses, goodwill and other intangible assets, and income taxes to be critical because these policies require management to make difficult, subjective and complex judgments, estimates and assumptions about matters that are inherently uncertain.

The Company identified the accounting policies regarding the allowance for credit losses, security valuations and allowance for credit losses, business combinations, and income taxes to be critical because these policies require management to make difficult, subjective and complex judgments, estimates and assumptions about matters that are inherently uncertain.

Under each of these policies, it is possible that materially different values and results of operations would be reported under different conditions, different judgments, or different estimates or assumptions.

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Additionally, significant changes to GAAP may require costly technology changes, additional training and personnel, and other expenses that could materially adversely affect the Company’s results of operations.

Changes in debt and equity markets or economic downturns could affect the level of assets under management and the demand for other fee-based services.

Changes in debt and equity markets or economic downturns could affect the level of assets under administration and the demand for other fee-based services.

Economic downturns could affect the volume of income earned from and demand for fee-based services.

Revenues from the investment management business depend in large part on the level of assets under management and administration.

Market volatility that results in customers liquidating investments, as well as lower asset values, can reduce the level of assets under management and administration and decrease the Company's investment management and administration revenues, which could materially adversely affect the Company's results of operations.

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Revenues from the investment management business depend in large part on the level of assets under administration.

Market volatility that results in customers liquidating investments, as well as lower asset values, can reduce the level of assets under administration and decrease the Company's investment management revenues, which could materially adversely affect the Company's results of operations.

Risks Related to Information Security and Technology

Evolving information technologies, the need to mitigate against and react to cyber-security risks, and electronic fraud risks require significant resources, and the Company remains subject to cyber-security risks and electronic fraud.

The need to mitigate against and react to cyber-security risks, and electronic fraud risks require significant resources, and system failure, a cyber-security attack or electronic fraud could subject the Company to increased operating costs as well as litigation and other liabilities.

The risk of electronic fraudulent activity within the financial services industry, especially in the commercial banking sector, due to cyber-attacks (crime committed through or involving the internet, such as phishing, hacking, denial of service attacks, stealing information, unauthorized intrusions into internal systems or the systems of the Company's third-party vendors) could adversely impact the Company’s operations or damage its reputation.

The Company's information technology infrastructure and systems may be vulnerable to cyber-terrorism, computer viruses, system failures and other intentional or unintentional interference, fraud and other unauthorized attempts to access or interfere with the systems.

The Company regularly collects, processes, transmits and stores confidential information regarding its customers and employees.

In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on the Company’s behalf.

The Company's information technology infrastructure and systems may be vulnerable to cyber-terrorism, computer viruses, damage from physical theft, fire, power loss, telecommunications failure or a similar catastrophic event, system failures and other intentional or unintentional interference, fraud and other unauthorized attempts to access or interfere with the systems.

Information security risks have increased because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks.

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There can be no assurance that the precautions the Company takes to seek to manage cyber risk related to third-party service providers will be effective or prevent a cyber-attack that could expose the Company to significant operational costs and damages or reputational harm.

Although the Company maintains an insurance policy that it believes provides sufficient coverage at a manageable expense for an institution of the Company’s size and scope with similar technological systems, there can be no assurance that this policy will afford coverage for all possible losses or would be adequate to cover all financial losses, damages, penalties, including lost revenues, should the Company experience any system failure or cyber-attack in one or more Company or third-party systems.

The Company’s risk-based technology and systems or the personnel who monitor such technology and systems may not identify and prevent or effectively mitigate successful cyber-attacks when they occur.

Significant operational costs and damages or reputational harm may occur if the Company fails to identify and prevent or effectively mitigate, or there is a delay in identifying, a cyber-attack on its systems, or those of its third-party service providers.

Legislation and regulation in the area of cyber-security and data privacy have been increasing in recent years, and although the Company makes and will continue to make reasonable efforts to comply with all applicable laws and regulations, there can be no assurance that the Company will not be subject to regulatory action or monetary penalties in the event of an incident.

The Company relies on its systems, employees and certain service providers, and if the Company experiences a system failure or if the Company's security measures are compromised or inadequate, the operations could be disrupted or the customer data could be improperly divulged.

Any breach, damage or failure that causes an interruption in operations could have a material adverse effect on the Company’s financial condition and results of operations due to the time and money needed to correct the issue.

Computer break-ins, phishing and other disruptions could also jeopardize the security of information stored in and transmitted through Company computer systems and network infrastructure, which may result in litigation or significant liability to the Company and may cause existing and potential customers to refrain from doing business with the Company.

Finally, depending on the type of incident, banking regulators may impose restrictions on the Company’s business and consumer laws may require reimbursement of customer losses.

The Company continually encounters technological change.

The failure to understand and adapt to these changes could negatively impact the Company's business, financial condition and results of operations.

Financial services industries continually experience rapid technological change with frequent introductions of new technology-driven products and services.

An effective use of technology can increase efficiency, enable financial institutions to better serve customers, and reduce costs.

Additionally, as a result of COVID-19 and the related shift toward remote banking, customers have become more reliant on, and their expectations have increased with respect to, new technology-driven products and services.

In addition, technology has lowered barriers to entry and made it possible for "non-banks" to offer traditional bank products and services using innovative technological platforms such as fintech and blockchain.

These "digital banks" may be able to achieve economies of scale and offer better pricing than the Company offers for banking products and services, and they may have fewer regulatory burdens than traditional banks such as the Company.

However, some new technologies needed to compete effectively result in incremental operating costs and capital investments.

The Company's future success depends in part upon its ability to continue to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in operations.

Many of the Company's competitors, because of their larger size and available capital, have substantially greater resources to invest in technological improvements.

The Company may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers within the same time frame as its large competitors or within the time frame expected by its customers.

Failure to successfully keep pace with technological change affecting the financial services industry could lead to loss of customers and could have a material adverse impact on the Company's business and, in turn, its financial condition and results of operations.

The Company is subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or an incident involving personal, confidential or proprietary information of individuals could damage the Company’s reputation and otherwise adversely affect the Company’s results of operations and financial condition.

The Company regularly collects, processes, transmits and stores confidential information regarding its customers and employees.

In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on the Company’s behalf.

Legislation and regulation governing the privacy and protection of personal information of individuals (including customers, employees, suppliers and other third parties) have been evolving, expanding and increasing in complexity in recent years, and although the Company makes and will continue to make reasonable efforts to comply with all applicable laws and regulations, there can be no assurance that the Company will not be subject to regulatory action or monetary penalties in the event of an incident.

For example, the Company is subject to the Gramm-Leach-Bliley Act which, among other things:

(i) imposes certain limitations on the ability to share nonpublic personal information about customers with nonaffiliated third parties;

(ii) requires that the Company provide certain disclosures to customers about its information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with nonaffiliated third parties (with certain exceptions);

and (iii) requires that the Company develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on its size and complexity, the nature and scope of its activities, and the sensitivity of customer information processed by the Company, as well as plans for responding to data security breaches.

Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach.

Ensuring that the collection, use, transfer and storage of personal information by the Company complies with all applicable laws and regulations can increase costs.

Furthermore, the Company may not be able to ensure that all of its customers, suppliers, counterparties and other third parties have appropriate controls in place to protect the confidentiality of information exchanged with them, particularly where such information is transmitted by electronic means.

If personal, confidential or proprietary information of customers or others were to be mishandled or misused, the Company could be exposed to litigation or regulatory sanctions under personal information laws and regulations.

Concerns regarding the effectiveness of our measures to safeguard personal information, or even the perception that such measures are inadequate, could cause the Company to lose customers or potential customers and thereby reduce revenues.

Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject the Company to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage the Company’s reputation and otherwise adversely affect the Company’s results of operations and financial condition.

The Company’s controls and procedures may be inadequate, and failure to comply with controls and procedures or related regulations could have a material adverse effect on the Company's business, results of operations and financial condition.

The Company faces the risk that the design of its controls and procedures, including those designed to mitigate the risk of fraud by employees or outside third parties, may be inadequate or be circumvented, thereby causing delays or failures in detection of errors or inaccuracies in data and information.

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Any failure or circumvention of the Company's controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company's business, results of operations and financial condition.

Since the onset of the COVID-19 pandemic, certain of the Company’s employees have been working remote and/or hybrid, which arrangements contribute to heightened cybersecurity, information security and operational risks.

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but the Company is continually monitoring and assessing the impact of the COVID-19 pandemic on the Company’s internal control over financial reporting to minimize any impact on the design and operating effectiveness.

The Company may also be subject to disruptions of the systems arising or originating from third party services providers or from events that are wholly or partially beyond the Company's control (including, for example, electrical, internet or telecommunications outages), which may adversely impact the Company's ability to provide service to customers and result in loss, cost and expense or liability.

Additionally, the Company's risk exposure to security matters has increased as the Company has increased in size and prominence in the financial services industry and may further increase in the future, as the Company continues to grow and expands its internet-based and mobile banking tools and products and services, and as a consequence of the risk inherent in system and customer account conversions associated with the integration of acquisition targets.

The Company is further exposed to the risk that external service providers may be unable to fulfill their contractual obligations on matters of internet security and adequacy of services.

(The Company's third party service providers are subject to many, if not all, of the same risks, including internet vulnerability and fraud operational errors by their respective employees.) The Company's due diligence on service providers and other vendor management risk migration activities designed to mitigate service provider risk may not provide full protection against all risks, and the Company's (or service providers) business continuity plans, risk management processes and procedures or security systems (including security against cyber-crime) could be inadequate.

While the Company maintains a control framework designed to monitor service provider risks, the failure of a service provider to perform in accordance with the contracted arrangements and, if applicable, under service level agreements could be disruptive to the Company's operations, which could have a material adverse impact on the Company's financial condition or results of operations.

Certain of the Company’s employees work remotely and/or hybrid, which arrangements may contribute to heightened cybersecurity, information security and operational risks.

The Company has not experienced any material impact to the Company’s internal control over financial reporting due to the fact that most of the Company’s employees responsible for financial reporting are working remotely and/or hybrid, but the Company is continually monitoring and assessing the impact of remote or hybrid work policies on the Company’s internal control over financial reporting to minimize any impact on the design and operating effectiveness.

In addition, while the Company maintains a control framework designed to monitor service provider risks, including those relating to internet vulnerability fraud and operational errors of employees, the failure of a service provider to perform in accordance with the contracted arrangements could be disruptive to the Company's operations, which could have a material adverse impact on the Company's financial condition or results of operations, and the Company’s (or the service provider’s) business continuity plans, risk management processes and procedures or security systems may not adequately mitigate such risk.

Risks Related to Liquidity

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Consumers and businesses also may change their behavior on their own as a result of these concerns.

The Company and its customers will need to respond to new laws and regulations as

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well as consumer and business preferences resulting from climate change concerns.

The Company and its customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns.

The Company and its customers may face cost increases, asset value reductions, operating process changes, and the like.

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Investors, investor advocacy groups and investment funds are also increasingly focused on these practices, especially as they relate to the environment, climate change, diversity and inclusion, workplace conduct and human capital management.

Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, our ability to do business with certain customers, vendors, suppliers or other third parties, and our stock price.

These stakeholders often have differing priorities and expectations regarding ESG issues.

The consideration of ESG factors in making investment and voting decisions is relatively new.

Accordingly, the frameworks and methods for assessing ESG policies are not fully developed, vary considerably among the investment community, and will likely continue to evolve over time.

Moreover, the subjective nature of methods used by various stakeholders to assess a company with respect to ESG criteria could result in erroneous perceptions or a misrepresentation of our actual ESG policies and practices.

Organizations that provide ratings information to investors on ESG matters may also assign unfavorable ratings to the Company.

Certain clients might also require that the Company implement additional ESG procedures or standards in order to continue to do business with them.

The Company could also face negative publicity or reputational harm based on the identity of those with whom we choose to do business.

Increased ESG-related compliance costs could result in increases to our overall operational costs, which could impact our profitability.

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Mergers and acquisitions of financial institutions within the Company’s market area may occur, which could add more competitive pressure as the Company would be competing with the resultant larger financial institutions with greater financial resources on a combined basis.

Additionally, the Company's market share and income may be adversely affected by its inability to successfully compete against larger and more

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diverse financial service providers.

Additionally, the Company's market share and income may be adversely affected by its inability to successfully compete against larger and more diverse financial service providers.

If the Company is unable to compete effectively, it may lose market share or fail to maintain its market share, and income generated from loans, deposits, and other financial products may decline.

The Company continually encounters technological change.

The failure to understand and adapt to these changes could negatively impact the Company's business.

Financial services industries continually experience rapid technological change with frequent introductions of new technology-driven products and services.

An effective use of technology can increase efficiency, enable financial institutions to better serve customers, and reduce costs.

Additionally, as a result of COVID-19, customers have become more reliant on, and their expectations have increased with respect to, new technology- driven products and services.

However, some new technologies needed to compete effectively result in incremental operating costs and capital investments.

Many of the Company's competitors, because of their larger size and available capital, have substantially greater resources to invest in technological improvements.

The success of the Company is dependent on the Company's ability to attract, hire and retain certain key personnel.

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The Company’s continued ability to compete effectively depends on its ability to attract new employees and to retain and motivate its existing key employees.

Competition for the best people in the Company’s markets and businesses can be intense, and the Company may not be able to hire people or to retain them, in particular due to an increasingly competitive labor market.

The labor market continues to experience elevated levels of turnover in the aftermath of the COVID-19 pandemic and the Company has been impacted by an extremely competitive labor market, including increased competition for talent across all aspects of the Company’s business, as well as increased competition with non-traditional competitors, such as fintech companies.

Employers are offering increased compensation and opportunities to work with greater flexibility, including remote work, on a permanent basis.

These can be important factors in a current employee’s decision to leave the Company as well as in a prospective employee’s decision to join the Company.

As competition for skilled professionals remains intense, the Company may have to devote significant resources to attract and retain qualified personnel, which could negatively impact earnings.

Natural disasters, severe weather, public health crises or other catastrophic or man-made events could have an adverse effect on the Company's business or results of operations.

The nature and level of such natural disasters, public health crises, such as pandemics or epidemics, or man-made events, including political events such as war, civil unrest or terrorist attacks, and other catastrophic events cannot be predicted.

Such events can disrupt operations, result in damage to properties and negatively affect the local economies in the markets where the Company operates.

Such events can disrupt operations, result in damage to

properties and negatively affect the local economies in the markets where the Company operates.

The Company's borrowers may suffer property damage, experience interruption of their businesses or lose their jobs, which may negatively impact the ability of these borrowers to make deposits with the Company or repay their loans or negatively impact values of collateral securing loans, any of which could result in losses and increased provisions for credit losses.

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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