What changed in this filing

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Item 1A. Risk Factors

2022-02-17 compared with 2021-02-18 · 30 added, 19 removed, 159 unchanged (24% of the section changed)

59 unchanged sentences

Any such losses could have a material adverse effect on our financial condition and results of operations.

We may be adversely affected by the world-wide coronavirus (COVID-19) pandemic.

The coronavirus (COVID-19) outbreak has had an adverse impact on certain of our customers directly or indirectly.

Entire industries within our loan and lease portfolio such as buses, auto rental and hotels have been impacted due to reduced demand related to quarantines and travel restrictions.

Other industries within our loan and lease portfolio or the communities we serve are likely to experience similar disruptions and economic hardships as the current coronavirus pandemic persists.

We may be adversely affected by climate change and related legislative and regulatory initiatives — Political and social attention to the issue of climate change has increased.

Federal and state legislatures and regulatory agencies continue to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.

As a financial institution, it is unclear how future governmental regulations and shifts in business trends resulting from increased concern about climate change will affect our operations;

however, natural or man-made disasters and severe weather events may cause operational disruptions and damage to both our properties and properties securing our loans.

Losses resulting from these disasters and severe weather events may make it more difficult for borrowers to timely repay their loans.

Additionally, our customers who finance vehicles and equipment reliant on fossil fuels could face cost increases, asset value reductions, operating process changes, and the like.

If these events occur, we may experience a decrease in the value of our loan and lease portfolio and our revenue, and may incur additional operational expenses, each of which could have a material adverse effect on our financial condition and results of operations.

We may be adversely affected by the world-wide coronavirus (COVID-19) pandemic — The coronavirus (COVID-19) outbreak that began during 2020 has continued to have an adverse impact on certain of our customers directly or indirectly.

Entire industries within our loan and lease portfolio such as buses, auto rental and hotels were immediately impacted due to reduced demand related to quarantines and travel re strictions.

Other industries within our loan and lease portfolio or the communities we serve are likely to experience similar prolonged disruptions and economic hardships as the current coronavirus pandemic persists.

In addition, such events affect the stability of our deposit base, lead to mass layoffs and furloughs which could impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, result in lost revenue or cause us to incur additional expenses.

Additionally, the Federal Reserve has reduced interest rates substantially in an attempt to boost consumer spending due to the coronavirus pandemic which could have a sustained negative impact on our results of operations.

Congress has also passed massive stimulus packages (the “Coronavirus Aid, Relief, and Economic Security Act” and the “Coronavirus Response and Relief Supplemental Appropriations Act”) intended to provide relief to consumers and small businesses, however the effectiveness of these packages could be disrupted by operational challenges in successfully implementing all of their provisions in a timely manner and could ultimately prove to be insufficient in scale.

Additionally, the Federal Reserve reduced interest rates substantially during 2020 in an attempt to boost consumer spending due to the coronavirus pandemic which could have a sustained negative impact on our results of operations.

Pandemic related disruptions in labor markets and upended global supply chains have led to the emergence of high inflation which may not subside until societies feel assured future outbreaks can be reasonably contained.

Even with operational precautions we have implemented such as mask utilization, social distancing and disinfection of surfaces, the continued spread or prolonged impact of the coronavirus could negatively impact the availability of key personnel or significant numbers of our staff, who are necessary to conduct our business.

1 unchanged sentence

Similarly, the adverse impacts already seen by our commercial and retail customers from the pandemic, may be exacerbated or more prolonged than we currently anticipate.

If the coronavirus spreads or the containment and mitigation response is unsuccessful for a prolonged period of time, we could experience a material adverse effect on our business, financial condition, and results of operations.

If new coronavirus variants continue to form and spread and containment and mitigation responses are unable to curtail the global impact of the coronavirus pandemic for a prolonged period of time, we could experience a material adverse effect on our business, financial condition, and results of operations.

Fluctuations in interest rates could reduce our profitability and affect the value of our assets — Like other financial institutions, we are subject to interest rate risk.

18 unchanged sentences

In July 2017, the United Kingdom Financial Conduct Authority, which regulates the process for establishing LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021.

The exact impact this will have on financial markets and their individual participants is not currently known.

Various substitute benchmarks are being considered in the marketplace but at this time it is not feasible to predict which of these will emerge as acceptable substitutes after 2021.

We have a significant number of loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR.

In November 2020, the Federal Reserve, FDIC and OCC issued a joint statement confirming that the lesser used one-week and two-month USD LIBOR settings would cease publication at the end of 2021, but the remaining USD LIBOR settings would continue publication until June 30, 2023 to better facilitate an orderly transition.

The agencies also stated that the act of entering into new contracts that use USD LIBOR as a reference rate after December 31, 2021 would create safety and soundness risks.

The exact impact this ongoing transition will have on financial markets and their individual participants is not currently known.

Various substitute benchmarks are developing in the marketplace but at this time it is not feasible to predict exactly which of these will emerge as enduring substitutes for LIBOR.

We convened a transition committee in 2019 to monitor market developments and implement a transition plan.

Existing loans impacted by the transition are actively tracked, appropriate legal fallback language has been created and incorporated into documentation where appropriate and we are an adhering party to the ISDA IBOR Fallbacks Protocol.

In 2021, we began to utilize other interest rate benchmarks to remain in alignment with the regulatory prohibitions of originating LIBOR-denominated loans in 2022, and are continuing our transition efforts.

As of December 31, 2021, we have approximately $1.1 billion of loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR.

The impact of the transition away from LIBOR may adversely affect revenues, expenses and the value of those financial instruments.

Such transition may also result in litigation with counterparties impacted by the transition as well as increased regulatory scrutiny and other adverse consequences.

Such transition could result in litigation with counterparties impacted by the transition as well as increased regulatory scrutiny and other adverse consequences.

Any replacement benchmark ultimately adopted as a substitute for LIBOR may behave differently than LIBOR in a manner detrimental to our financial performance.

We convened a transition committee in 2019 to monitor market developments and implement a transition plan.

Existing loans impacted by the transition are actively tracked, appropriate legal fallback language has been created and incorporated into documentation where appropriate and the we are an adhering party to the ISDA IBOR Fallbacks Protocol.

We will continue to evaluate various alternatives should the industry fail to coalesce around a single suitable substitute.

Although we are currently unable to assess what the ultimate impact of the transition from LIBOR will be, failure to adequately manage the transition could have a material adverse effect on our business, financial condition and results of operations.

Liquidity Risks

13 unchanged sentences

Operational Risks

Our risk management framework could be ineffective and could have a material adverse effect on our ability to mitigate risks and/or losses — We have established a risk management framework to identify and manage our risk exposure.

Our risk management framework could prove ineffective which could have a material adverse effect on our ability to mitigate risks and/or losses — We have established a risk management framework to identify and manage our risk exposure.

This framework is comprised of various processes, systems and strategies, and is designed to manage the types of risk to which we are subject, including, credit, market, liquidity, operational, legal/compliance, and reputational risks.

13 unchanged sentences

Any compromise of our security could deter our clients from using our banking services.

We rely on security systems to provide the protection and authentication necessary to secure transmission of data against damage by theft, fire, power loss, telecommunications failure or similar catastrophic event, as well as from security breaches, denial of service attacks, viruses, worms, and other disruptive problems caused by hackers.

We rely on security systems to provide the protection and authentication necessary to secure transmission of data against damage by theft, fire, power loss, telecommunications failure or similar catastrophic event, as well as from security breaches, ransomware, denial of service attacks, viruses, worms, and other disruptive problems caused by hackers.

Computer break-ins, phishing and other disruptions of customer or vendor systems could also jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure.

We maintain a cyber insurance policy that is designed to cover a majority of loss resulting from cyber security breaches.

We maintain a cyber insurance policy that is designed to cover a majority of loss resulting from cyber security breaches, but there is no assurance such coverage will be adequate to address all potential material adverse impacts.

We also confront the risk of being compromised by emails sent by perpetrators posing as company executives or vendors in order to dupe company personnel into sending large sums of money to accounts controlled by the perpetrators.

27 unchanged sentences

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.

We are subject to the risk that previously recorded tax credits, which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level, will fail to meet certain government compliance requirements and will not be able to be fully realized.

We are subject to the risk that previously recorded tax credits will not be able to be fully realized.

Such credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level which may not be met.

The possible inability to realize these tax credits and other tax benefits can have a negative impact on our financial results.

10 unchanged sentences

Nonetheless, negative publicity may arise regarding our business, employees, or customers, with or without merit, and could result in the loss of customers, investors, or employees, costly litigation, a decline in revenues, and increased government regulation.

In addition, increased focus on environmental, social and governance (“ESG”) issues could damage our reputation or prospects.

Customers, prospective customers, investors or third parties assigning ESG ratings may believe that our practices, including our lending practices, are not sufficiently robust from an ESG perspective.

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.

What changed 10-K

Item 1A. Risk Factors