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• Pandemics, natural disasters, global climate change, acts of terrorism and global conflicts may have a negative impact on our business operations.
−Removed: • We face risks, including credit risk and litigation risk, in connection with our participation in government programs enacted in response to the COVID-19 pandemic.
• Changes in our ability to use, or the terms of our use of, intellectual property owned by other third parties could have a material adverse effect on our business.
• We must effectively manage risks in connection with our information systems and those of our third-party service providers, which may experience disruption, failure, or security breaches, including those caused by cyber-attacks.
+Added: • We have identified a material weakness in our internal control over financial reporting which, if not remediated appropriately or in a timely manner, could result in a loss of investor confidence and adversely impact the trading price of our securities.
• The valuation of our investment securities, loans, and servicing rights is subject to change based on market conditions and various factors that are beyond our control.
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• We are subject to heightened regulatory requirements because our total assets exceed $10 billion.
−Removed: • Negative developments affecting the banking industry may result in additional regulations that could increase our expenses and affect our operations.
+Added: • Adverse developments or concerns affecting the financial services industry or specific financial institutions could adversely affect our financial condition and results of operations.
• We may incur increased costs to comply with privacy and data security laws.
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• Hurricanes or other adverse weather events could disrupt our operations.
−Removed: • Our failure to maintain an effective system of internal control over financial reporting could harm our business.
• Damage to our business reputation could adversely impact our business and results of operations.
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Furthermore, even if we are able to continue originating and selling SBA 7(a) loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans.
−Removed: When we sell the guaranteed portion of our SBA 7(a) loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we recognize a loss and/or recovery related to the non-guaranteed portion.
+Added: When we sell the guaranteed portion of our SBA 7(a) loans, we continue to have credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we recognize a loss and/or recovery related to the non-guaranteed portion.
However, if the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us, which could materially adversely affect our business, results of operations and financial condition.
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Disruptions to our customers could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans.
−Removed: We face risks in connection with our participation in government programs in response to the COVID-19 pandemic.
−Removed: Federal, state and local governmental authorities enacted legislation, regulations, and protocols in response to the COVID-19 pandemic.
−Removed: Our participation in and execution of any such programs may cause operational, compliance, reputational, and credit risks, which could result in litigation, governmental action or other forms of loss.
−Removed: The CARES Act temporarily added a new program titled the Paycheck Protection Program (the “PPP”) to the SBA’s 7(a) loan program.
−Removed: We were an active participant in the program originating a substantial number and principal amount of PPP loans.
−Removed: In addition, the CARES Act provided regulatory relief on deferrals offered to certain borrowers and provided six months of payment relief through the first quarter of 2021 from the SBA for certain loans guaranteed by that agency.
−Removed: We face the risk that payment deferrals and those subsidy payments made by the SBA for borrowers under its programs may skew actual indications of ability to repay.
−Removed: Banks participating in the PPP have been subject to litigation regarding the process and procedures that such banks used in processing applications for the PPP and regarding claims for fees to be paid to purported agents and other third parties, and we are exposed to the risk of litigation regarding the PPP.
−Removed: If any such litigation is not resolved in a manner favorable to us, it may result in significant financial liability or adversely affect our reputation.
−Removed: In addition, litigation can be costly, regardless of outcome.
−Removed: We also face 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 Bank.
−Removed: 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 Bank, 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 Bank.
We are dependent upon the use of intellectual property owned by third parties, and any change in our ability to use, or the terms upon which we may use, this intellectual property could have a material adverse effect on our business.
−Removed: The technology-based lending platform that is pivotal to our success is dependent on the use of the nCino Bank Operating System and Salesforce.com, Inc.’s Force.com cloud computing infrastructure platform.
−Removed: We rely on a non-exclusive license to use nCino’s platform.
−Removed: Because our license is non-exclusive, the nCino Bank Operating System is available to other lenders and nothing would prevent our competitors from developing, licensing or using similar technology.
−Removed: Our license currently expires on November 14, 2024.
−Removed: Notwithstanding the term of our agreement, our license may be terminated if we are in material breach of the license and do not cure the breach within 30 days.
−Removed: In addition, nCino relies on a license to use the Salesforce.com platform, and if nCino were unable to maintain its rights under that license, our ability to rely on the nCino license could be adversely affected.
−Removed: We can offer no assurance that we will be able to renew or maintain our license to use the nCino Bank Operating System on terms that are acceptable.
−Removed: Termination of either of these licenses or the reduction or elimination of our licensed rights may result in our having to negotiate new licenses with less favorable terms, or the inability to obtain access to such licensed technology at all.
−Removed: Similarly, Apiture, Inc.
−Removed: (“Apiture”) has provided the Bank significant engineering, development, professional and other services under an agreement to deliver the products and services that comprise our next-generation banking platform that we believe will be important for our future strategy and success.
−Removed: This banking platform enables us to offer checking and other transactional accounts to our customers.
−Removed: Offering these types of banking products to our customers presents greater and more complex operational, compliance and other risks than the risks associated with the deposit products we have offered in the past.
−Removed: There can be no assurance that Apiture will be able to develop and support the implementation of our banking platform in a timely and cost-effective manner or that Apiture will continue to provide any services on which we rely at appropriate service levels or at prices that would be market competitive.
−Removed: We also rely on numerous other vendors and third parties to provide software and solutions comprising our banking platform.
+Added: The technology-based lending platform that is pivotal to our success is dependent on the use of intellectual property owned by third parties.
+Added: We or our vendors license the use of this intellectual property from others.
+Added: This third-party intellectual property may not continue to be available to us on commercially reasonable terms or at all.
+Added: We can offer no assurance that we will be able to renew or maintain technology licenses on terms that are acceptable.
+Added: Termination of these licenses or the reduction or elimination of our licensed rights may result in our having to negotiate new licenses with less favorable terms, or the inability to obtain access to such licensed technology at all.
+Added: We also rely on vendors and third parties to provide software and other services that are important to the operation of our next-generation banking platform.
+Added: Our future strategy and success depend on our ability to access to these technology services and successfully implement them.
If this technology is not successfully developed and implemented at our Bank, if we were to lose access to any of this technology, or if we were only able to access the technology on less favorable terms, we would not be able to offer our customers the next-generation banking platform services that we intend to offer, and our business, financial condition, results of operations and prospects could be materially and adversely affected.
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If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could materially adversely affect our business, financial condition, results of operations and prospects, as well as the value of our common stock.
+Added: We have identified a material weakness in our internal control over financial reporting which, if not remediated appropriately or in a timely manner, could result in a loss of investor confidence and adversely impact the trading price of our securities.
+Added: As disclosed in Part II - Item 9A.
+Added: Controls and Procedures, management has identified a material weakness in our internal control over financial reporting.
+Added: As a result, management concluded that our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2024.
+Added: The Company is currently working to remediate the material weakness.
+Added: However, there can be no assurance that these remediation efforts will be successful.
+Added: In addition, these remediation efforts will place a burden on management and may result in additional expenses.
+Added: If we are unable to remediate this material weakness, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, result in violations of applicable securities laws, result in an inability to meet NYSE listing requirements, negatively affect investor confidence in the accuracy and completeness of our financial statements, and adversely impact the trading price of our securities.
The fair value of our investment securities can fluctuate due to factors outside of our control.
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In addition, bank regulatory agencies periodically review our ACL and may require an increase in credit loss expense or the recognition of further loan charge-offs, based on judgments different than those of management.
−Removed: Furthermore, if any charge-offs related to loans or off-balance sheet credit exposures in future periods exceed our allowances for credit losses on loans or off-balance sheet credit exposures, we will need to recognize additional credit loss expense to increase the applicable allowance.
+Added: Furthermore, if any charge-offs related to loans or off-balance sheet credit exposures in future periods exceed our allowances for credit losses on loans or off-balance sheet credit exposures, we will need to recognize additional credit loss expense.
Any increase in the ACL on loans and/or off-balance sheet credit exposures will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our business, financial condition and results of operations.
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We anticipate that gains on the sale of loans will continue to comprise a meaningful component of our revenue in 2025.
−Removed: The determination of noncash gains is based on assumptions regarding the value of unguaranteed loans retained, servicing rights retained and deferred fees and costs.
+Added: The determination of gains is based on assumptions regarding the value of unguaranteed loans retained, servicing rights retained and deferred fees and costs.
The value of retained unguaranteed loans and servicing rights is determined as described above.
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If obtained, equity financing could be dilutive and the incurrence of debt and contingent liabilities could have a material adverse effect on our business, results of operations or financial condition.
−Removed: Our investments in financial technology companies and initiatives, including our investment in Apiture and the activities of our subsidiary Canapi Advisors, subject us to material financial, reputational and strategic risks.
+Added: Our investments in financial technology companies and initiatives, including our investment in Apiture, subject us to material financial, reputational and strategic risks.
Our investments in various financial technology companies have had a significant impact on our results of operations, and we anticipate they will continue to have a significant impact on our results of operations in the future.
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Defects in Apiture’s software offerings or delays in the development of such software could result in unforeseen costs, diversion of technical and other resources, loss of credibility with existing and potential clients or reputational harm, any of which could materially adversely affect our business, results of operations and financial condition.
−Removed: Our subsidiary Canapi Advisors is an investment advisor to Canapi Ventures, a series of funds focused on providing venture capital to new and emerging financial technology companies.
+Added: Our subsidiary Canapi Advisors was an investment advisor to Canapi Ventures, a series of funds focused on providing venture capital to new and emerging financial technology companies.
Canapi Ventures invests in early to growth-stage companies that may include companies that utilize advanced science, technology, engineering and/or mathematics to innovate in the financial technology market.
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Such companies may face intense competition, including competition from companies with greater financial resources, more extensive development, manufacturing, marketing and service capabilities and a larger number of qualified managerial and technical personnel.
−Removed: If Canapi Advisors is unable to successfully identify investment opportunities, it will likely lose the capital that it invests on behalf of the fund’s investors, including the capital that we invest, which would have a materially adverse effect on our results of operations, our reputation and our ability to raise successive funds for similar purposes.
Many of the financial technology companies in which we invest directly present risks similar to those in which Canapi Ventures invests.
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Our investments and/or financings in certain tax-advantaged projects may not generate returns as anticipated and may have an adverse impact on our financial results.
−Removed: We invest in and/or finance certain tax-advantaged projects promoting renewable energy sources.
+Added: We invest in and/or finance certain tax-advantaged projects promoting renewable energy sources and affordable housing for low- and moderate-income tenants.
Our investments in these projects are designed to generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, over specified time periods.
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In the first quarter of 2023, the Company and the Bank each first exceeded $10 billion in total assets.
−Removed: As of December 31, 2023, the Company and the Bank had total assets of $11.27 billion and $11.21 billion, respectively, ending their first four consecutive quarters of reported assets in excess of $10 billion.
+Added: As of December 31, 2024, the Company and the Bank had total assets of $12.94 billion and $12.86 billion, respectively.
As a result, we are subject to additional requirements including, but not limited to, establishing a dedicated risk committee of our Board, calculating our FDIC deposit insurance assessment using the large bank pricing rule and more frequent regulatory examinations.
−Removed: In preparation for these additional compliance obligations, we have incurred significant expenses and expect to continue to incur expenses to address heightened regulatory requirements.
+Added: We have incurred significant expenses in connection with these compliance obligations and expect to continue to incur expenses to address heightened regulatory requirements.
These additional regulatory requirements and increased compliance expenses could have a material adverse effect on our business, financial condition and results of operations.
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Any future special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could have an adverse effect on our business, financial condition and results of operations.
−Removed: Negative developments affecting the banking industry have eroded customer confidence in the banking system and may result in additional regulations that could increase the Company’s expenses and affect its operations.
−Removed: High-profile bank failures in 2023 generated significant market volatility among publicly traded bank holding companies, such as the Company.
−Removed: These market developments negatively impacted customer confidence in the banking system.
−Removed: As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.
−Removed: In connection with these high-profile bank failures, uncertainty and concern has been, and may be in the future, compounded by advances in technology that increase the speed at which deposits can be moved, as well as the speed and reach of media attention, including social media, and its ability to disseminate concerns or rumors, in each case potentially exacerbating liquidity concerns.
−Removed: While the Department of the Treasury, the Federal Reserve, and the FDIC have made statements ensuring that depositors of these failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence.
−Removed: As a result of these events, the Company anticipates increased regulatory scrutiny—in the course of routine examinations and otherwise—and new regulations, all of which may increase the Company’s costs of doing business and reduce its profitability.
−Removed: Among other things, there may be an increased focus by both regulators and investors on deposit composition and the level of uninsured deposits.
+Added: Adverse developments or concerns affecting the financial services industry or specific financial institutions could adversely affect our financial condition and results of operations.
+Added: Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar events, have in the past and may in the future lead to erosion of customer confidence in the banking system, deposit volatility, liquidity issues, stock price volatility, increased regulatory scrutiny and other adverse developments.
+Added: Similarly, inflation and rapid increases in interest rates have led to a decline in the fair value of previously issued government securities with interest rates below current market interest rates.
+Added: Any sale of investment securities that are held in an unrealized loss position by financial institutions for liquidity or other purposes will cause actual losses to be realized.
+Added: There can be no assurance that there will not be bank failures or issues such as liquidity concerns in the broader financial services industry or in the U.S.
+Added: financial system as a whole.
+Added: Adverse financial market and economic conditions can exert downward pressure on stock prices, security prices, and credit availability for financial institutions without regard to their underlying financial strength.
+Added: Any of these impacts, or any other impacts resulting from the events described above, could have a material adverse effect on our liquidity and our current and/or projected business operations and financial condition and results of operations.
We may incur increased costs to comply with privacy and data security laws and regulations and, to the extent we fail to comply, we could be subject to government enforcement actions, private claims and litigation, adverse publicity, loss of customers, and other negative outcomes.
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Weather events could cause a disruption in our day-to-day business activities and could have a material adverse effect on our business, results of operations and financial condition.
−Removed: If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results.
−Removed: As a result, current and potential shareholders could lose confidence in our financial reporting which would harm our business and the trading price of our securities.
−Removed: If we identify material weaknesses in our internal control over financial reporting or are otherwise required to restate our financial statements, we could be required to implement expensive and time-consuming remedial measures and could lose investor confidence in the accuracy and completeness of our financial reports.
−Removed: We may also face regulatory enforcement or other actions, including the potential delisting of our securities from the NYSE.
−Removed: This could have a material adverse effect on our business, financial condition and results of operations, and could subject us to litigation.
Changes in accounting standards and management’s selection of accounting methods, including assumptions and estimates, could materially impact our financial statements.
9 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.