What changed in this filing

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Item 1. Business

2022-03-15 compared with 2021-03-12 · 96 added, 78 removed, 632 unchanged (22% of the section changed)

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Our target clients include successful entrepreneurs, professionals and other high net worth individuals or families, along with their businesses and philanthropic organizations.

We offer our services through a branded network of boutique private trust bank offices, loan production offices, and trust offices, which we believe are strategically located in affluent and high-growth markets in fifteen locations across Colorado, Arizona, Wyoming and California.

We offer our services through a branded network of boutique private trust bank offices, loan production offices, and trust offices, which we believe are strategically located in affluent and high-growth markets in eighteen locations across Colorado, Arizona, Wyoming and California.

We generate a significant portion of our revenues from non-interest income, which we produce from our trust, investment management and other advisory services as well as through the origination and sale of mortgage loans.

The balance of our revenue is generated from net interest income, which we derive from our traditional banking products and services.

For the year ended December 31, 2020, non-interest income was $51.2 million, or 52.6% of gross revenue (which is our total income before non-interest expense, plus provision for loan losses), and net interest income was $46.1 million, or 47.4% of gross revenue.

For the year ended December 31, 2021, non-interest income was $40.2 million, or 42.1% of total income before non-interest expense and net interest income was $56.5 million, or 59.2% of total income before non-interest expense.

We believe that we have developed a unique approach to private banking to best serve our Western wealth management clients primarily as a result of the combination of the following factors:

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Wylie, and a group of local business leaders with the vision of building the best private bank for the Western wealth management client.

Since opening our first profit center in Denver, Colorado in 2004, we have grown organically primarily by establishing fifteen offices, attracting new clients and expanding our relationships with existing clients, as well as through a series of strategic acquisitions of various trust, registered investment advisory and other financial services firms.

We completed an initial public offering of our common stock on July 23, 2018.

Our common stock is listed on the NASDAQ Global Select Market under the symbol "MYFW."

Since opening our first office in Denver, Colorado in 2004, we have grown organically primarily by establishing boutique private trust bank offices, attracting new clients and expanding our relationships with existing clients, as well as through a series of strategic acquisitions of various trust, registered investment advisory, bank branch and full bank institutions, and other financial services firms.

Since we completed an initial public offering of our common stock on July 23, 2018, our common stock has been listed on the NASDAQ Global Select Market under the symbol "MYFW."

Balance Sheet Growth

Since December 31, 2017, we have increased gross loans from $813.7 million to $1.53 billion as of December 31, 2020, representing a compound annual growth rate ("CAGR") of 23.5% and we have increased total deposits from $816.1 million as of December 31, 2017 to $1.62 billion as of December 31, 2020, representing a CAGR of 25.7%.

Revenue, Expense & Pre-Tax, Pre-Provision Income Growth

Since the year ended December 31, 2017, we have increased gross revenues from $55.2 million to $97.3 million for the year ended December 31, 2020, representing a CAGR of 20.8%, while total non-interest expense increased from $49.5 million for the year ended December 31, 2017 to $59.5 million for the year ended December 31, 2020, representing a CAGR of 6.4%.

We calculate operating leverage as the ratio of gross revenue CAGR to the total non-interest expense CAGR.

For the year ended December 31, 2020, this 327.2% operating leverage has resulted in improved pre-tax, pre-provision income, which increased 5.5 times over the same time period.

For 2020, gross revenues grew $32.9 million, or 51.2%, while non-interest expense grew $5.8 million, a 10.7% increase, resulting in a 2020 operating leverage of 478.7%.

We have demonstrated significant operating leverage by growing pre-tax, pre-provision income at a faster rate than expenses.

Pre-tax, pre-provision income is not a generally accepted accounting principle ("GAAP") measure.

The nearest GAAP measure is income before income tax, which was $33.1 million for the year ended December 31, 2020.

See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

Pre-tax, pre-provision income increased from $5.8 million for the year ended December 31, 2017 to $37.7 million for the year ended December 31, 2020, as indicated in the following chart.

Since December 31, 2017, we have increased total loans from $813.7 million to $1.95 billion as of December 31, 2021, representing a compound annual growth rate ("CAGR") of 24.4% and we have increased total deposits from $816.1 million as of December 31, 2017 to $2.21 billion as of December 31, 2021, representing a CAGR of 28.2%.

Revenue, Expense, and Income Growth

Since the year ended December 31, 2017, we have increased total income before non-interest expense from $54.5 million to $95.4 million for the year ended December 31, 2021, representing a CAGR of 15.0%, while total non-interest expense increased from $49.5 million for the year ended December 31, 2017 to $68.1 million for the year ended December 31, 2021, representing a CAGR of 8.3%.

We calculate operating leverage as the ratio of total income before non-interest expense CAGR to the total non-interest expense CAGR.

For the year ended December 31, 2021, this 180.6% operating leverage has resulted in improved income before income tax, which increased 4.4 times over the same time period.

We have demonstrated significant operating leverage by growing income before income tax at a faster rate than expenses.

Our Business Strategy

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● Deepening Existing Client Relationships.

We deliver our services though our fifteen local boutique private trust bank offices, loan production offices, and trust offices.

We deliver our services though our eighteen local boutique private trust bank offices, loan production offices, and trust offices.

This allows us to use multi-discipline sales and client service teams, in-market, to ensure we are meeting each client’s comprehensive set of needs.

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Our consumer lending products include residential first mortgage loans, originated loans for our own portfolio, as well as those for which we conduct mortgage banking activities whereby we originate and sell, servicing-released, whole loans in the secondary market.

Our mortgage banking loan sales activities are primarily directed at originating single family mortgages, which generally conform to Fannie Mae guidelines and are delivered to the investor shortly after funding.

Our mortgage banking loan sales activities are primarily directed at originating single family mortgages, which generally conform to Fannie Mae and Freddie Mac guidelines and are delivered to the investor shortly after funding.

Additionally, we offer installment loans and lines of credit, typically to facilitate investment opportunities for consumer clients whose financial characteristics support the request.

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PPP loans that are fully guaranteed by the SBA are classified within this line item.

Commercial and Industrial (C&I) .

Commercial and Industrial .

We originate commercial and industrial loans, including working capital lines of credit, permanent working capital term loans, business asset loans, acquisition, expansion and development loans, and other loan products, primarily in our target markets.

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These loans are primarily dependent on the strength of the industries of the related borrowers and the success of their businesses.

Construction and Development (C&D) .

Construction and Development .

We originate loans to finance the construction of residential and non-residential properties.

Construction and development loans are generally collateralized by first liens on real estate and usually have floating interest rates.

Our construction and development loans typically have maturities of up to two years

depending on factors such as the type and size of the development and the financial strength of the borrower/guarantor, and are typically structured with an interest only construction period.

Our construction and development loans typically have maturities of up to two years depending on factors such as the type and size of the development and the financial strength of the borrower/guarantor, and are typically structured with an interest only construction period.

These loans are underwritten to either mature at the completion of construction, or transition to a traditional amortizing commercial real estate facility with the terms and characteristics in line with other commercial real estate loans we hold in our portfolio.

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The risks created by such concentrations have been considered by management in the determination of the adequacy of the allowance for loan losses.

As of December 31, 2020, management believes the allowance for loan losses is adequate to absorb probable losses in our loan portfolio.

As of December 31, 2021, management believes the allowance for loan losses is adequate to absorb probable incurred losses in our loan portfolio.

Sound risk management practices and appropriate levels of capital are essential elements of the commercial real estate lending program.

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Such loan policies include maximum amortization schedules and loan terms for each category of loans collateralized by liens on real estate.

In addition, our loan policies

provide guidelines for personal guarantees;

In addition, our loan policies provide guidelines for personal guarantees;

an environmental review;

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These local teams have personal and professional networks and relationships with centers of influence to market our wealth advisory products and services.

As of December 31, 2020, total AUM was $6.26 billion, an increase of $67.0 million, or 1.1%, compared to $6.19 billion as of December 31, 2019.

The completion of the sale of the Los Angeles-based fixed income portfolio management team in 2020 resulted in a decrease of $330.6 million in Investment Agency balances.

As of December 31, 2021, total AUM was $7.35 billion, an increase of $1.10 billion, or 17.5%, compared to $6.26 billion as of December 31, 2020.

As of December 31, 2021, we provided fiduciary and advisory services on $7.35 billion of trust and investment management assets, as shown below:

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Typically, loans with a fixed interest rate of greater than 10 years are available-for-sale and sold on the secondary market.

Our mortgage banking loan sales activities are primarily directed at

originating single family mortgages that are priced and underwritten to conform to previously agreed criteria before loan funding and are delivered to the investor shortly after funding.

Our mortgage banking loan sales activities are primarily directed at originating single family mortgages that are priced and underwritten to conform to previously agreed criteria before loan funding and are delivered to the investor shortly after funding.

The level of future loan originations, loan sales and loan repayments depends on overall credit availability, the interest rate environment, the strength of the general economy, local real estate markets and the housing industry, and conditions in the secondary loan sale market.

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government agencies, corporate or sponsored entities, including mortgage-backed securities, collateralized mortgage obligations, sub-debt bonds, and mutual funds.

We participate in the Mortgage Partnership Finance ("MPF") Program and are required to maintain an investment in Federal Home Loan Bank of Topeka ("FHLB") stock, which investment is based on the level of our FHLB borrowings.

We participate in the Mortgage Partnership Finance Program ("MPF") and are required to maintain an investment in Federal Home Loan Bank of Topeka ("FHLB") stock, which investment is based on the level of our FHLB borrowings.

Our board of directors has the overall responsibility for the investment portfolio, including approval of our investment policy.

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Enterprise Technology

We continue to make investments in our information technology systems as we adapt to the changing technology, online and mobile, and other platform needs and wants of our clients.

We believe that this investment is essential to our ability to offer new products and optimize overall client experience, provide opportunities for future growth and acquisitions, and provide a control structure that supports our operations.

We leverage the experience of a third-party service provider to provide managed information technology services, enhance our IT security, and deliver the technical expertise around network design and architecture required to operate effectively.

We continue to make investments in our information technology systems as we adapt to the changing security, technology, online and mobile, and other platform delivery needs and wants of our clients.

We leverage the experience of a third-party managed service provider for information technology services, to augment security, and to deliver the technical expertise around network architecture required to operate securely with optimal efficiency.

The majority of our systems are hosted by third-party service providers.

The scalability of this infrastructure supports our growth strategy.

In addition, the tested capability of these vendors to switch over to replicated systems should allow us to recover our systems, provide redundancy and manage business continuity and resiliency effectively in case of a disaster event.

In addition, business resiliency testing and planning ensures the capability of critical vendors to fail over to fully-hot replicated systems that provide complete redundancy in the event of a disaster.

Enterprise Risk Management

We place significant emphasis on our holistic approach to integrated risk management that provides oversight, control, and discipline to support strategic initiative and business objectives and to promote a risk-aware culture.

implemented the COSO 2017 ERM Framework in 2018 and utilize this framework to govern the process of anticipating, identifying, assessing, managing, optimizing, and monitoring risks within the organization.

We have developed an Enterprise Risk Management ("ERM") Committee that oversees our ERM program.

We utilize the COSO 2017 ERM Framework to govern the process of anticipating, identifying, assessing, managing, optimizing, and monitoring risks within the organization.

Our Enterprise Risk Management ("ERM") Committee oversees our ERM program.

This group contains key members of management including the Chief Executive Officer and the Chief Financial Officer.

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We believe our integrated and high-touch service offering, along with our sophisticated relationship-oriented approach sets us apart from our competitors.

Human Capital

Human Capital Overview

As of December 31, 2021, we had 313 associates.

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Associates are our trusted partner both within their teams and with our clients as we build a partnership for generations to come.

We provide extensive training to our associates in an effort to ensure that our clients receive superior service and that our risks are well managed.

We offer a total rewards program which includes competitive compensation, incentives, and health benefits.

None of our associates are represented by any collective bargaining unit or are parties to a collective bargaining agreement.

We believe that our strong relationships with our associates are central to establishing the corporate culture we need to serve our clients and our communities well.

We are committed to implementing diverse, equitable and, inclusive (DEI) policies and practices across the Company.

Our corporate values speak directly to the spirit of inclusion as well as the importance of embracing diversity and equitable practices.

We believe in a corporate culture where all people are empowered to reach their full potential through autonomy, mastery, and purpose.

The Company’s Board of Directors fosters this belief by ensuring that strategies are adopted that result in the Company understanding both associate performance and engagement at every level.

We continue to take steps to expand our role as an employer that champions diversity, equity, and inclusion grounded in and by our core values.

In 2020, we established a DEI Task Force, led by our CEO, to develop and support DEI programs and policies.

We established six subcommittees devoted to carrying out our goal of fostering a diverse, equitable, and inclusive Company and workforce.

In addition, we are members of Colorado Inclusive Economy, a business-led non-profit focused on promoting effective DEI initiatives.

The Company has invested in developing the necessary formal infrastructure to ensure fair pay across job classes and our geographic footprint.

It has also adopted and enforces codes of conduct that establish principles of integrity, respect, and excellence at all levels of the Company.

Learning and Development

We provide extensive training to our associates in an effort to ensure that our clients receive superior service and that our risks are well managed.

Learning and development opportunities consist of leadership development programs, communication courses, and technical development training (to name a few) as part of our goal to provide associates meaningful work with a sense of mastery, autonomy, and purpose.

Our strategic commitment to learning and development ensures the Company’s leadership and management teams continue to grow at a pace consistent with our financial growth goals.

Compensation and Benefits

We offer a total rewards program to attract and retain team-oriented, respectful, problem solvers.

Our compensation program includes competitive salary/hourly pay and incentive pay in the form of an annual bonus and stock awards to officers and certain members of the management team.

In addition, the Company offers a 401(k) Plan with an employer matching contribution.

Further, we offer a number of healthcare and insurance options, health savings accounts, paid time off, and paid family leave time for all associates.

Core Values and Culture

Developing and maintaining a strong, healthy culture is a key strategic focus as we continue to grow both organically and through acquisition.

Our core values reflect our continued focus to maintain a highly-engaged team.

Problem solver – Being a Problem solver at First Western means that when we see a problem, we see opportunity.

We pick it up and we address it, and if appropriate, work to create or improve the “FW Way” for that type of issue.

Team oriented – Team oriented at First Western means using our teammates to deliver the best possible results for our stakeholders.

Our structure, with local teams and central experts, is designed to serve clients that have assets, liabilities, families, businesses, and long term goals that each require different types of expertise.

Respectful – For First Westerners, Respectful means valuing the unique knowledge and experiences each stakeholder brings to a discussion.

We appreciate the different value that each of us brings to First Western and treasure that expertise.

Adaptive – First Westerners have an Adaptive, entrepreneurial spirit.

When our world changes, we change to take advantage of new opportunities.

We are always looking for ways to improve processes, products, and services.

Client focused – First Western’s fiduciary DNA guides us to act in the client’s interest while protecting the Bank.

Our clients know that as their trusted partner, FW has the strength and sophistication to help them for generations.

Available Information

The Company files reports, proxy statements and other information with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Electronic copies of

our SEC filings are available to the public at the SEC’s website at https://www.sec.gov.

Electronic copies of our SEC filings are available to the public at the SEC’s website at https://www.sec.gov.

You may also obtain copies of our annual, quarterly and special reports, proxy statements and certain other information filed by the Company with the SEC, as well as amendments thereto, free of charge from the Company’s website, https://myfw.gcs-web.com/investor-relations.

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The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S.

banks ("Basel III Rules") has been fully phased in.

The Basel III Rules require banks and bank holding companies, including the Company and the Bank, to maintain four minimum capital standards:

(1) a Tier 1 capital to adjusted total assets ratio, or leverage capital ratio, of at least 4.0%;

(2) a Tier 1 capital to risk-weighted assets ratio, or Tier 1 risk-based capital ratio, of at least 6.0%;

(3) a total capital (Tier 1 plus Tier 2) to risk-weighted assets ratio, or total risk-based capital ratio, of at least 8.0%;

and (4) a common equity tier 1 ("CET1") capital to risk-weighted assets ratio, or CET1 risk-based capital ratio, of at least 4.5%.

The Basel III Capital Rules also call for bank holding companies and banks to maintain a "capital conservation buffer"

on top of the minimum risk-based capital requirements.

The buffer must be composed of CET1 capital.

This buffer is intended to help to ensure that banking organizations conserve capital when it is most needed, allowing them to better weather periods of economic stress.

The buffer is 2.5% of risk-weighted assets.

banks ("Basel III Rules") have been fully phased in.

The Basel III Rules require banks and bank holding companies, including the Company and the Bank, to maintain minimum capital amounts and ratios.

These ratios are common equity Tier 1 capital ("CET1"), Tier 1 capital and total capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations), and Tier 1 capital (as defined in the regulations) to average assets (as defined in the regulations).

The final rules of Basel III also established a "capital conservation buffer"

of 2.5% above new regulatory minimum capital ratios, which are fully effective following minimum ratios:

(i) a CET1 ratio of 7.0%;

(ii) a Tier 1 capital ratio of 8.5%;

and (iii) a total capital ratio of 10.5%.

Banks are subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if their capital level falls below the buffer amount.

These limitations establish a maximum percentage of eligible retained income that can be utilized for such activities.

The Basel III Capital Rules also attempt to improve the quality of capital by implementing changes to the definition of capital.

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Pursuant to the CARES Act, the federal banking agencies authorities adopted an interim rule, which temporarily reduced the Community Bank Leverage Ratio to 8%.

This provision terminated on December 31, 2020.The Company and the Bank have not made an election to use the community bank leverage ratio framework but may make such an election in the future if determined to be possible and advantageous.

This provision terminated on December 31, 2020.

The Company and the Bank have not made an election to use the community bank leverage ratio framework but may make such an election in the future if determined to be possible and advantageous.

Regulation of the Company

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Acquisitions.

The BHC Act, Section 18(c) of the Federal Deposit Insurance Act, as amended ("FDIA"), the Colorado Banking Code and other federal and state statutes regulate acquisitions of commercial banks and their holding

The BHC Act generally limits acquisitions by bank holding companies to commercial banks and companies engaged in activities that the Federal Reserve has determined to be so closely related to banking as to be a proper incident thereto.

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In 2009, the Federal Reserve issued a supervisory letter providing greater clarity to its policy statement on the payment of dividends by bank holding companies.

In this letter, the Federal Reserve stated that when a holding company’s

board of directors is deciding on the level of dividends to declare, it should consider, among other factors:

In this letter, the Federal Reserve stated that when a holding company’s board of directors is deciding on the level of dividends to declare, it should consider, among other factors:

(i) overall asset quality, potential need to increase reserves and write down assets, and concentrations of credit;

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The Consumer Financial Protection Bureau ("CFPB") has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks.

The CFPB is authorized to issue rules for both bank and non-bank companies that offer consumer financial products and services, subject to consultation with the prudential banking

The CFPB is authorized to issue rules for both bank and non-bank companies that offer consumer financial products and services, subject to consultation with the prudential banking regulators.

In general, however, banks with assets of $10 billion or less, such as the Bank, will continue to be examined for consumer compliance by their primary federal bank regulator.

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The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity management planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyber-attack involving destructive malware.

A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address

rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack.

A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack.

If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties.

In June 2016, the FDIC introduced its Information Technology Risk Examination (InTREx) Program based on the Uniform Rating System for Information Technology (URSIT) and includes core modules for Audit, Management, Development and Acquisition, and Support and Delivery component ratings.

In November 2019, the FFIEC also released updated examination procedures regarding overall business continuity management ("BCM").

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The BCM procedures describe principles and practices for information technology ("IT") and operations designed to achieve safety and soundness, consumer financial protection, and compliance with applicable laws, regulations, and rules.

Continued testing, training, and program updates ensure appropriate response to cyber and non-cyber, human and non-human disaster events.

The Company had a robust pandemic plan at the time of COVID-19, which covered similar disaster events and included detailed preparation, training and testing that had been conducted over multiple years prior to COVID-19.

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As such, the Company was poised to react successfully to the pandemic event.

2018 Regulatory Reform

The Regulatory Relief Act, which was designed to ease certain restrictions imposed by the Dodd-Frank Act, was enacted on May 24, 2018.

Most of the provisions of the Regulatory Relief Act can be grouped into five general areas:

mortgage lending;

certain regulatory relief for "community"

enhanced consumer protections in specific areas, including subjecting credit reporting agencies to additional requirements;

certain regulatory relief for large financial institutions, including increasing the threshold at which institutions are classified a systemically important financial institutions (from $50 billion to $250 billion) and therefore subject to stricter oversight, and revising the rules for larger institution stress testing;

and certain changes to Federal securities regulations designed to promote capital formation.

Some of the key provisions of the Regulatory Relief Act as it relates to community banks and bank holding companies include, but are not limited to:

(i) designating mortgages held in portfolio as "qualified mortgages"

for banks with less than $10 billion in assets, subject to certain documentation and product limitations;

(ii) exempting banks with less than $10 billion in assets (and total trading assets and trading liabilities of 5% or less of total assets) from Volcker Rule requirements relating to proprietary trading;

(iii) simplifying capital calculations for banks with less than $10 billion in assets by requiring the federal banking agencies to establish a community bank leverage ratio of tangible equity to average consolidated assets of not less than 8% or more than 10%, and provide that banks that maintain tangible equity in excess of such ratio will be deemed to be in compliance with risk-based capital and leverage requirements;

(iv) assisting smaller banks with obtaining stable funding by providing an exception for reciprocal deposits from FDIC restrictions on acceptance of brokered deposits;

(v) raising the eligibility threshold for use of short-form Call Reports from $1 billion to $5 billion in assets;

(vi) clarifying definitions pertaining to high volatility commercial real estate loans ("HVCRE"), which require higher capital allocations, so that only loans with increased risk are subject to higher risk weightings;

(vii) directing the Federal Reserve to raise the asset threshold of the Policy Statement from $1 billion to $3 billion;

and (viii) raising the consolidated asset threshold from $1 billion to $3 billion for eligible banks to undergo 18-month examination cycles rather than annual cycles.

Anti-Money Laundering Act of 2020

On January 1, 2021, Congress enacted the National Defense Authorization Act (NDAA), which included significant reforms to the U.S.

anti-money laundering (AML) regime.

The NDAA includes the Anti-Money Laundering Act of 2020 (AML Act) and, within the AML Act, the Corporate Transparency Act (CTA).

The AML Act seeks to strengthen, modernize, and streamline the existing AML regime by promoting innovation, regulatory reform, and industry engagement through forums, such as the Bank Secrecy Act Advisory Group (BSAAG) and FinCEN Exchange.

The Act also calls for FinCEN to work closely with regulatory, national security, and law enforcement partners to identify risks and priorities and provide valuable feedback to the financial industry.

The CTA establishes uniform beneficial ownership reporting requirements for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States.

Many provisions of the AML Act and the CTA require rulemaking or periodic reporting to Congress on implementation efforts, assessments, and findings.

Some of the key requirements of the AML Act requires FinCEN to:

(1) establish standards for the reporting of information on beneficial ownership, build an IT system to collect and secure the data, and create access protocols;

(2) establish national anti-money laundering and countering the financing of terrorism priorities;

(3) Enhancement of whistleblower provisions to provide for a robust whistleblower program and new anti-retaliation protections;

(4) Review, and revise as appropriate, Currency Transaction Report (CTR) and Suspicious Activity Report (SAR) reporting requirements, and other existing Bank Secrecy Act (BSA) regulations and guidance;

and (6) require law enforcement reporting to FinCEN on the use of BSA data, and establish procedures for additional feedback between FinCEN and financial institutions on the usefulness of SARs, and semi-annual publication of review of SAR activity and other BSA reports, including threat patterns, trends, and typologies.

Banks are not required to incorporate the AML/CFT Priorities into their risk-based BSA compliance programs until the effective date of the final revised regulations.

Nevertheless, in preparation for any new requirements when those final rules are published, the Bank is considering how it will incorporate the AML/CFT Priorities into its risk-based BSA compliance program, by assessing the potential related risks associated with the products and services it offers the customers it serves, and the geographic areas in which it operates.

Changing Regulatory Structure and Future Legislation and Regulation

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Among the means available to the Federal Reserve to affect the money supply are open market operations in United States government securities, changes in the discount rate on member bank borrowings, and changes in reserve requirements against member bank deposits.

These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged on loans or paid on deposits.

These means are used in varying combinations to influence overall financial stability of the economy which in turn stimulates need for growth and distribution of bank loans, investments, and deposits, and their use may affect interest rates charged on loans or paid on deposits as well as overall risk for banks and in turn, bank holding companies.

The Federal Reserve’s monetary policies have materially affected the operating results of commercial banks in the past and are expected to continue to do so in the future.

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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 1. Business