What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-03-13 compared with 2024-03-12 · 37 added, 15 removed, 370 unchanged (12% of the section changed)

68 unchanged sentences

During 2023, the high-profile failures of several depository institutions negatively impacted customer confidence in the safety and soundness of some regional and community banks.

As a result, we face that risk that customers may prefer to maintain deposits with larger financial institutions or invest in fixed income securities instead of deposits with the Bank, either of which could materially adversely impact our liquidity, cost of funding, capital, and results of operations.

As a result, we face that the risk that customers may prefer to maintain deposits with larger financial institutions or invest in fixed income securities instead of deposits with the Bank, either of which could materially adversely impact our liquidity, cost of funding, capital, and results of operations.

In response to the failures of other depository institutions, we may face increased regulation and supervisory oversight, higher capital or liquidity requirements or a heightened risk of regulatory enforcement activities, any of which could have a material impact on our business.

4 unchanged sentences

Unfavorable or uncertain economic and market conditions in these areas could lead to credit quality concerns related to repayment ability and collateral protection as well as reduced demand for the products and services we offer.

The impact of the Biden administration’s policy changes regarding international trade, tariffs, renewable energy, immigration, domestic taxation, among other actions and policies of the current administration, may have on economic and market conditions is uncertain.

The impact of the Trump administration’s policy changes regarding international trade, tariffs, renewable energy, immigration, domestic taxation, among other actions and policies of the current administration, may have on economic and market conditions is uncertain.

In addition, concerns about the performance of international economies, especially in Europe and emerging markets, and economic conditions in Asia can impact the economy and financial markets here in the U.S.

15 unchanged sentences

These risks may increase in the future as we continue to increase mobile payments and other internet-based product offerings and expand our internal usage of web-based products and applications.

The continued evolution and increased usage of artificial intelligence technologies may further increase these risks.

Other potential attacks have attempted to obtain unauthorized access to confidential information, steal money, or manipulate or destroy data, often through the introduction of computer viruses or malware, cyber-attacks and other means.

10 unchanged sentences

We have a continuing need for technological change, and we may not have the resources to effectively implement new technology or we may experience operational challenges when implementing new technology.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services, including the use of artificial intelligence and machine learning to interact with customers and review to review and analyze data.

In addition to allowing us to better serve customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs.

4 unchanged sentences

Accordingly, a risk exists that we will not be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to our customers.

The use of artificial intelligence in our marketplace may result in reputational harm or liability, or could otherwise adversely affect our business.

Artificial intelligence, including generative artificial intelligence, is or may be enabled by or integrated into our products and services or those developed by our third-party partners.

As with many developing technologies, artificial intelligence presents risks and challenges that could affect its further development, adoption, and use, and therefore our business.

Artificial intelligence algorithms may be flawed, for example datasets may contain biased information or otherwise be insufficient;

and inappropriate or controversial data practices could impair the acceptance of artificial intelligence solutions and result in burdensome new regulations.

If the analyses that products incorporating artificial intelligence assist in producing for us or our third-party partners are deficient, biased or inaccurate, we could be subject to competitive harm, potential legal liability and brand or reputational harm.

The use of artificial intelligence may also present ethical issues.

If we or our third-party partners offer artificial intelligence enabled products that are controversial because of their purported or real impact on human rights, privacy, or other issues, we may experience competitive harm, potential legal liability and brand or reputational harm.

In addition, we expect that governments will continue to assess and implement new laws and regulations concerning the use of artificial intelligence, which may affect or impair the usability or efficiency of our products and services and those developed by our third-party partners.

Our business depends on our ability to attract and retain Korean-American immigrants as clients.

21 unchanged sentences

We primarily operate in California markets with a concentration of Korean-American individuals and businesses as customers.

We also currently have branch operations in New York, New Jersey and Texas, and LPO operations in various states, and would evaluate additional branch expansion opportunities in other Korean-American populated markets.

We also currently have branch operations in New York, New Jersey and Texas, and LPO operations in various states and may evaluate additional branch expansion opportunities in other Korean-American populated markets.

In the course of this expansion, we will encounter significant risks and uncertainties that could have a material adverse effect on our operations.

5 unchanged sentences

Any significant deterioration in economic and business conditions in our service areas could have a material adverse impact on the quality of our loan portfolio and the demand for our products and services, which in turn could have a material adverse effect on our results of operations.

We have attempted to diversify some of our loan business through LPOs in five other states;

We have attempted to diversify some of our loan business through LPOs in two states;

however, this diversification strategy may not be effective to reduce our geographic and ethnic concentrations.

55 unchanged sentences

We originated non-qualified residential mortgage loans of $36.0 million and $63.4 million, respectively, for the years ended December 31, 2024 and 2023.

We originated qualified residential mortgage loans of $0 and $400 thousand, respectively, for the years ended December 31, 2023 and 2022.

We originated qualified residential mortgage loans of $0 thousand and $0 thousand, respectively, for the years ended December 31, 2024 and 2023.

As of December 31, 2024, our non-qualified residential mortgage loans had a weighted average LTV of 62.1% and a weighted average Fair Isaac Corporation (“FICO”) score of 777.

7 unchanged sentences

Mortgage production, including refinancing activity, historically declines in rising interest rate environments.

While we have been experiencing historically low interest rates over the last five years, this low interest rate environment likely will not continue indefinitely.

Consequently, when interest rates increase further, our mortgage production may not continue at current levels.

Consequently, if interest rates increase, our mortgage production may not continue at current levels.

Curtailment of government guaranteed loan programs could affect a segment of our business.

41 unchanged sentences

Real estate market volatility and future changes in our disposition strategies could result in net proceeds that differ significantly from our other real estate owned fair value appraisals.

As of December 31, 2023, we had OREO of $2.6 million on our books.

As of December 31, 2024, we had no OREO on our books.

OREO typically consists of properties that we obtain through foreclosure or through an in-substance foreclosure in satisfaction of an outstanding loan.

51 unchanged sentences

ACL is funded from a provision (reversal) for credit losses, which is a charge to our income statement.

Our provision (reversal) for credit losses, was $(132) thousand, $3.6 million and $(4.6) million, respectively, for the years ended December 31, 2023, 2022 and 2021.

The determination of an appropriate level of allowance for credit losses is an inherently difficult process and is based on numerous assumptions.

Our provision (reversal) for credit losses, was $3.4 million, $(132) thousand and $3.6 million, respectively, for the years ended December 31, 2024, 2023 and 2022.

The determination of an appropriate level of ACL is an inherently difficult process and is based on numerous assumptions.

The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond our control, and these losses may exceed current estimates.

For these reasons, our allowance for credit losses may not be adequate to cover actual loan losses, and future provision for credit losses could materially and adversely affect our business, financial condition, results of operations and cash flows.

For these reasons, our ACL may not be adequate to cover actual loan losses, and future provision for credit losses could materially and adversely affect our business, financial condition, results of operations and cash flows.

Risks Related to Our Growth Strategy

7 unchanged sentences

Operations in our LPOs have positively affected our results of operations, and sustaining these operations and growing loans may be more difficult than we expect, which could adversely affect our results of operations.

We maintain seven LPOs that primarily originate SBA loans.

We maintained four LPOs that primarily originate SBA loans as of December 31, 2024.

During the year ended December 31, 2024, these LPOs accounted for approximately 12.3% of new loans originated by the Bank.

19 unchanged sentences

The Company receives substantially all of its revenue from the Bank in the form of dividends, which is the Company’s principal source of funds to pay cash dividends to the Company's shareholders, repurchase shares and cover operational expenses of the holding company.

Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to Company.

In the event that the Bank is unable to pay dividends to Company, Company may not be able to pay dividends to its shareholders and pay interest on the subordinated debentures.

Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to the Company.

In the event that the Bank is unable to pay dividends to the Company, the Company may not be able to pay dividends to its shareholders and pay interest on the subordinated debentures.

As a result, it could have an adverse effect on Company's stock price and investment value.

35 unchanged sentences

The effects of such policies upon our business, financial condition and results of operations cannot be predicted precisely, but the effects on our financial condition and results of operations could be severely and negatively impacted.

Changes in U.S.

trade policies, such as the implementation of tariffs, control may adversely impact our business, financial condition and results of operations.

The trade policies and potential tariff initiatives being pursued by the U.S.

government under the administration of President Trump may present risks to our borrowers and the markets within which we operate, particularly with respect to the threatened imposition of additional tariffs on certain products imported from countries such as Mexico, Canada, China and the European Union.

Many of our commercial borrowers operate in manufacturing or distribution, which are industries that may be particularly sensitive to changes in trade policy.

The imposition of tariffs on imports, including raw materials, the potential for retaliatory tariffs by foreign governments, or other similar restrictions on international trade could increase costs for manufacturers and resellers, reduce demand for U.S.

exports and disrupt supply chains.

We have a concentration of customers from the Korea-American community, whose businesses and incomes may tend to be more dependent on trade with the Republic of Korea and, more generally, Asia, so we may be more susceptible to international trade frictions than other depository organizations.

If these factors lead to financial strain on our borrowers, we may experience increased credit risk, higher loan delinquencies, and a potential decline in loan demand.

A prolonged trade tensions or the implementation of tariffs could negatively impact the broader economic environment, potentially leading to reduced consumer spending, lower economic growth, and decreased demand for other banking products and services.

As a result, our financial performance, including credit quality and loan growth, could be adversely affected by these policy changes.

While we actively monitor these developments and work closely with our agricultural customers, there is no assurance that we can fully mitigate the risks posed by potential tariff initiatives or other trade-related disruptions.

These factors could materially affect our business, financial condition, and results of operations.

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