6 unchanged sentences
Our enterprise risk process covers each of the following areas.
−Removed: The COVID-19 pandemic may adversely affect our business
−Removed: Unexpected and unprecedented changes have occurred since early 2020 as the result of COVID-19.
−Removed: The World Health Organization declared the situation a global pandemic.
−Removed: The pandemic created significant market volatility, economic uncertainty, and disruption to normal business operations around the world, with slowdowns and shutdowns affecting entire industries.
−Removed: The extent to which COVID-19 impacts our business will depend on future developments, which remain uncertain and cannot be predicted.
−Removed: We expect the significance of the COVID-19 pandemic, including the extent of its effect on our financial and operational results, to be dictated by, among other factors, its duration, the success of efforts to contain it, and the impact of actions taken in response.
−Removed: Uncertainty created by the COVID-19 pandemic is pervasive, and has impacted our financial results, operations, customers, vendors, and various areas of risk.
−Removed: Areas of risk may include, but are not limited to, cybersecurity, credit, interest rate, litigation, and risk related to vendor services.
−Removed: With the uncertainty created by COVID-19, it's challenging to determine the full impact on our ongoing financial and operational results.
−Removed: We continue to closely monitor external events and are in continual discussion with our customers to assess, prepare, and respond to conditions as they evolve.
−Removed: Changes in credit quality and required allowance for loan and lease losses
+Added: Changes in credit quality and required allowance for credit losses
To manage the credit risk arising from lending activities, our most significant source of credit risk, we maintain sound underwriting policies and procedures.
1 unchanged sentence
These valuation allowances take into consideration various factors including, but not limited to, local, regional, and national economic conditions.
−Removed: We maintain an ALLL to reserve for estimated incurred loan losses within our loan portfolio.
−Removed: The level of the ALLL reflects our evaluation of industry concentrations;
+Added: We maintain an ACL to reserve for estimated expected credit losses within our loan portfolio.
+Added: The level of the ACL reflects our evaluation of industry concentrations;
specific credit risks;
2 unchanged sentences
and economic, political and regulatory conditions.
−Removed: The determination of the appropriate level of the ALLL inherently involves a high degree of subjectivity and requires us to make significant estimates, all of which may undergo material changes.
+Added: The determination of the appropriate level of the ACL inherently involves a high degree of subjectivity and requires us to make significant estimates, all of which may undergo material changes.
Changes in economic conditions
3 unchanged sentences
Our success depends primarily on the general economic conditions of the State of Michigan and the specific local markets in which we operate.
−Removed: We provide banking and financial services to customers located primarily in the Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan.
+Added: We provide banking and financial services to customers located primarily in the Bay, Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan.
The local economic conditions in these areas have a significant impact on the demand for our products and services, as well as the ability of our customers to repay loans, the value of the collateral securing loans, and the stability of our deposit funding sources.
−Removed: A significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, international or domestic occurrences, a health crisis,
−Removed: unemployment, changes in securities markets or other factors could impact these local economic conditions and, in turn, could have a material adverse effect on our financial condition and results of operations.
+Added: A significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, international or domestic occurrences, a health crisis, unemployment, changes in securities markets or other factors could impact these local economic conditions and, in turn, could have a material adverse effect on our financial condition and results of operations.
Interest rate risk
7 unchanged sentences
The value of investment securities may be negatively impacted by fluctuations in the market
−Removed: A volatile, illiquid market or decline in credit quality could require us to recognize an OTTI loss related to the investment securities held in our portfolio.
−Removed: We consider many factors in determining whether an OTTI exists including the length of time and extent to which fair value has been less than cost, the investment credit rating, and the probability that the issuer will be unable to pay the amount when due.
+Added: A volatile, illiquid market or decline in credit quality could require us to recognize credit-related impairment to the investment securities held in our portfolio.
+Added: We consider many factors in determining whether a credit-related impairment exists including the length of time and extent to which fair value has been less than cost, the investment credit rating, and the probability that the issuer will be unable to pay the amount when due.
The presence of these factors could lead to impairment charges.
18 unchanged sentences
The impact of any changes to laws and regulations or other actions by regulatory agencies may negatively impact us or our ability to increase the value of our business.
−Removed: Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution, and the appropriateness of an institution’s ALLL.
−Removed: Future regulatory changes or accounting pronouncements may increase our regulatory capital requirements or adversely affect
−Removed: our regulatory capital levels.
+Added: Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution, and the appropriateness of an institution’s ACL.
+Added: Future regulatory changes or accounting pronouncements may increase our regulatory capital requirements or adversely affect our regulatory capital levels.
Additionally, actions by regulatory agencies or significant litigation against us could require the dedication of significant time and resources to respond to those actions and may lead to penalties.
7 unchanged sentences
Goodwill represents the excess of the amounts paid to acquire subsidiaries over the fair value of their net assets at the date of acquisition.
−Removed: The majority of the recorded goodwill is related to acquisitions of other banks, which were subsequently merged into Isabella Bank.
+Added: The majority of the recorded goodwill is related to past acquisitions of other banks, which were subsequently
+Added: merged into Isabella Bank.
If it is determined that the goodwill is impaired, we must write-down the goodwill by the amount of the impairment.
6 unchanged sentences
The process of diminishing or removing banks as intermediaries in financial transactions could result in the loss of fee income, as well as the loss of customer deposits and income generated from those deposits.
−Removed: Unauthorized disclosure of sensitive or confidential client or customer information, whether through cyber attacks, breach of computer systems or other means
−Removed: Our products, services and systems are accessed through critical company or third-party operations.
−Removed: This involves the storage, processing and transmission of sensitive data, including proprietary or confidential data, regulated data, and personal information of employees and customers.
−Removed: Successful breaches, employee wrongdoing, or human or technological error could result in unauthorized access to, disclosure, modification, misuse, loss, or destruction of company, customer, or other third party data or systems.
−Removed: Examples include theft of sensitive, regulated, or confidential data, including personal information;
−Removed: loss of access to critical data or systems through ransomware, destructive attacks, or other means;
−Removed: and business delays, service or system disruptions, or denials of service.
−Removed: Cybersecurity incidents have increased in number and severity and it is expected that these trends will continue.
−Removed: Should we, or third parties we do business with, fall victim to successful cyber attacks or experience other cybersecurity incidents, including the loss of personally identifiable customer or other sensitive data, the result could severely damage our reputation, expose us to the risks of litigation and liability, disrupt our operations, and increase cybersecurity or other insurance premiums.
−Removed: We have cybersecurity insurance, in the event a cybersecurity attack were to occur, covering expenses related to notification, credit monitoring, investigation, crisis management, public relations, and legal advice.
−Removed: In addition, we maintain insurance to cover restoration of data, certain physical damage, or third-party injuries caused by potential cybersecurity incidents.
−Removed: However, damage and claims arising from such incidents may not be covered or may exceed the amount of any insurance available.
−Removed: Insurance policies are reviewed annually in detail.
−Removed: A strong reputation is vital and requires utmost protection.
−Removed: An operating incident, significant cybersecurity disruption, or other adverse events may have a negative impact on our reputation which could make it more difficult for us to compete successfully for new opportunities, obtain necessary regulatory approvals, or severely reduce consumer demand for our products.
Our estimates and assumptions may be incorrect
2 unchanged sentences
Actual results could differ from estimates.
−Removed: For further discussion regarding significant accounting estimates, see “Note 1 – Nature of Operations and Summary of Significant Accounting Policies” of “Notes to Consolidated Financial Statements” in Item 8.
+Added: For further discussion regarding significant accounting estimates, see “Note 1 – Significant Accounting Policies” of “Notes to Consolidated Financial Statements” in Item 8.
Financial Statements and Supplementary Data.
+Added: Unauthorized disclosure of sensitive or confidential client or customer information, whether through cyber attacks, breach of computer systems or other means
+Added: Cybersecurity.
Disruption of infrastructure
5 unchanged sentences
Additionally, changes to our articles of incorporation must be approved by a two-thirds majority vote of our shareholders.
−Removed: Unresolved Staff Comments.
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.