What changed in this filing

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Item 1A. Risk Factors

2021-03-11 compared with 2020-03-06 · 106 added, 55 removed, 293 unchanged (35% of the section changed)

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Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this report.

Risks Related to the COVID-19 Pandemic

The outbreak of COVID-19, or other such epidemic, pandemic, or outbreak of a highly contagious disease, occurring in the United States or in the geographies in which it conducts operations, could adversely affect the Corporation’s business operations, asset valuations, financial condition, and results of operations.

The Corporation’s business is dependent upon the willingness and ability of our customers to conduct banking and other financial transactions.

The COVID-19 outbreak, or an outbreak of another highly contagious or infectious disease, could negatively impact the ability of our employees and customers to conduct such transactions and disrupt the business activities and operations of our customers in the geographic areas in which we operate.

The spread of the COVID-19 virus had an impact on the Corporation’s operations during fiscal year 2020, and we expect that the virus will continue to have an impact on business, financial condition, and results of operations and our customers during fiscal year 2021.

The COVID-19 pandemic has caused changes in the behavior of our customers, businesses, and employees, including illness, quarantines, social distancing practices, cancellation of events and travel, business and school shutdowns, reduction in commercial activity and financial transactions, supply chain interruptions, increased unemployment, and overall economic and financial market instability.

Future effects, including additional actions taken by federal, state, and local governments to contain COVID-19 or treat its impact, are unknown.

Any sustained disruption to our operations is likely to negatively impact our financial condition and results of operations.

Notwithstanding our contingency plans and other safeguards against pandemics or another contagious disease, the spread of COVID-19 could also negatively impact the availability of our personnel who are necessary to conduct our business operations, as well as potentially impact the business and operations of our third party service providers who perform critical services for us.

If the response to contain COVID-19, or another highly infectious or contagious disease, is unsuccessful, we could experience a material adverse effect on our business operations, asset valuations, financial condition, and results of operations.

Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, investments, loans, loan servicing rights, deferred tax assets, or counter-party risk derivatives.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business.

The extent of such impact will depend on future developments, which are highly uncertain, including when COVID-19 be controlled and abated and when and how the economy may be reopened.

We are subject to increasing credit risk as a result of the COVID-19 pandemic, which could adversely impact our profitability.

Our business depends on our ability to successfully measure and manage credit risk.

We are exposed to the risk that the principal of, or interest on, a loan will not be paid timely or at all or that the value of any collateral supporting a loan will be insufficient to cover our outstanding exposure.

In addition, we are exposed to risks resulting from changes in economic and industry conditions and risks inherent in dealing with loans and borrowers.

As the overall economic climate in the U.S., generally, and in our market areas specifically, experience material disruption due to the COVID-19 pandemic, our borrowers may have difficulties in repaying their loans.

Governmental actions providing payment relief to borrowers affected by COVID-19 could preclude our ability to initiate foreclosure proceedings in certain circumstances and, as a result, the collateral

we hold may decrease in value or become illiquid, and the level of our nonperforming loans, charge-offs and delinquencies could rise and require significant additional provisions for credit losses.

Additional factors related to the credit quality of certain commercial real estate and multifamily residential loans include the duration of state and local moratoriums on evictions for non-payment of rent or other fees.

The payment on these loans that are secured by income producing properties are typically dependent on the successful operation of the related real estate property and may subject us to risks from adverse conditions in the real estate market or the general economy.

Bank regulatory agencies and various governmental authorities are urging financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19.

We are actively working to support our borrowers to mitigate the impact of the COVID-19 pandemic on them and on our loan portfolio, including through loan modifications that defer payments for those who experienced a hardship as a result of the COVID-19 pandemic.

Although recent regulatory guidance provides that such loan modifications are exempt from the calculation and reporting of troubled debt restructurings (“TDRs”) and loan delinquencies, we cannot predict whether such loan modifications may ultimately have an adverse impact on our profitability in future periods.

Our inability to successfully manage the increased credit risk caused by the COVID-19 pandemic could have a material adverse effect on our business, financial condition and results of operations.

Our participation in the SBA Paycheck Protection Program (“PPP”) exposes us to credit risk and regulatory enforcement risk, which could have a material adverse impact on our business, financial condition, and results of operations.

The Corporation is a participating lender in the PPP, a loan program administered through the SBA, which was created to help eligible businesses, organizations and self-employed persons fund their operational costs during the COVID-19 pandemic.

Under this program, the SBA guarantees 100% of the amounts loaned under the PPP.

As of December 31, 2020, the Corporation obtained approval from the SBA for 1,734 PPP loans totaling $169.8 million for both existing and new customers, with an average loan size of approximately $98 thousand.

The net deferred fee related to PPP loan origination totaled $2.4 million at December 31, 2020.

The Corporation may be exposed to credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which these loans were originated, funded, or serviced.

If a deficiency is identified, 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 Corporation.

These PPP loans are subject to the regulatory requirements that would require forbearance of loan payments and other relief to borrowers for a specified time or that would limit our ability to pursue all available remedies in the event of a loan default.

If the borrower under the PPP loan fails to qualify for loan forgiveness, we are at the heightened risk of holding these loans at unfavorable interest rates as compared to the loans to customers that we would have otherwise extended credit.

Interest rate volatility stemming from COVID-19 could negatively affect our net interest income, lending activities, deposits, and profitability.

Our net interest income, lending activities, deposits and profitability could be negatively affected by volatility in interest rates caused by uncertainties stemming from COVID-19.

Following the COVID-19 outbreak and during 2020, market interest rates have declined significantly.

The yields on 10-year and 30-year treasury notes have declined to historic lows, and in March 2020, the Federal Open Market Committee (“FOMC”) of the Federal Reserve reduced the federal funds rate to a target range of 0.00% to 0.25% citing concerns about the impact of COVID-19 on markets and stress in certain sectors.

Additionally, the Federal Reserve announced it will take the following actions:

• purchase U.S.

Treasury bills;

• initiate overnight repurchase agreement operations;

• reinvest principal received on the Federal Reserve’s securities portfolio;

• reduce the interest paid on excess bank reserves held by the Federal Reserve.

A prolonged period of extremely volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies.

Higher income volatility from changes in interest rates and spreads to benchmark indices could cause a loss of future net interest income and a decrease in current fair market values of our assets.

Fluctuations in interest rates will impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, and financial condition.

The Corporation may become subject to Covid-19-related litigation.

Litigation related to the COVID-19 pandemic has been commenced against some banks.

These lawsuits assert a variety of claims, including alleged mishandling of the PPP loans, violations of executive orders and regulatory guidance prohibiting or limiting debt collection, evictions and foreclosures, discriminatory program administration, workplace safety claims and claims alleging minimization in securities filings of the COVID-19 effect on operations.

The Corporation is not a party to any such litigation, and we are not aware of any facts which may give rise to such litigation.

While we believe our strong compliance and risk culture, proactive pandemic actions and clear communication with our customers employees and shareholders mitigate this legal risk, there can be no assurance that we will not become a party to COVID-19 related litigation.

Risks Related to Economic and Market Conditions

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• an increase in problem assets and foreclosures;

an increase in our allowance for loan losses;

• an increase in our allowance for credit losses;

• a decrease in the demand for our products and services;

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Changes in monetary policy, including changes in interest rates, could influence not only the interest that is received on loans and securities and the interest that is paid on deposits and borrowings, but such changes could also affect the Corporation’s ability to originate loans and obtain deposits and the fair value of the Corporation’s financial assets and liabilities.

For several years prior to December 2015, the Federal Open Market Committee (“FOMC”) of the Federal Reserve kept the target federal funds rate between 0% to 0.25% to help the overall U.S.

For several years prior to December 2015, the FOMC kept the target federal funds rate between 0% to 0.25% to help the overall U.S.

Beginning in late 2015 and continuing through 2018, the FOMC steadily increased the target federal funds rate up to between 2.25% to 2.5%.

In 2019, the FOMC decreased rates on three separate occasions for a total decrease of 75 basis points, resulting in a target federal funds rate between 1.5% to 1.75%.

The FOMC decreased the target federal funds rate in response to economic uncertainty, and indicated possible further decreases, which will likely be influenced by global economic and financial developments and inflationary pressures.

In 2019, the FOMC decreased rates on three separate occasions for a total decrease of 75 basis

points, resulting in a target federal funds rate between 1.5% to 1.75%.

Following the COVID-19 outbreak and during 2020, market interest rates have declined significantly.

The 10-year U.S.

Treasury bond fell below 1.00% on March 3, 2020 for the first time and the FOMC reduced the federal funds rate to a target range of 0.00% to 0.25%.

If the interest rates paid on deposits and other interest-bearing liabilities increase at a faster rate than the interest rates received on loans and other interest-earning assets, our net interest income, and, therefore, our earnings, could be adversely affected.

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The Corporation and its subsidiaries have financial instruments which have a rate indexed to LIBOR.

On July 27, 2017, the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021.

The announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021.

It is uncertain at this time whether and to what extent banks will continue to provide LIBOR submissions to the administrator of LIBOR or whether any additional reforms to LIBOR may be enacted in the United Kingdom or elsewhere.

As a result of this announcement, regulators, industry groups, and committees have, among other things, published recommended fallback language for financial instruments indexed to LIBOR, identified and recommended alternatives to LIBOR, and proposed implementations of the recommended alternatives in floating-rate financial instruments.

On July 27, 2017, the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021.

This announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021.

In late 2020, the LIBOR administrator published a consultation regarding its intention to delay the date on which it will cease publication of U.S.

dollar LIBOR from December 31, 2021 to June 30, 2023 for the most common tenors of U.S.

dollar LIBOR, including the three-month LIBOR, but indicated no new contracts using U.S.

dollar LIBOR should be entered into after December 31, 20121.

Publication of a non-U.S.

dollar LIBOR would continue to cease after December 31, 2021.

Notwithstanding the publication of this consultation, there is no assurance of how long LIBOR of any currency or tenor will continue to be published.

It is impossible to predict whether and to what extent banks will continue to provide LIBOR submissions to the administrator of LIBOR, whether LIBOR rates will cease or continue to be published before or after December 31, 2021 or June 30, 2023, as applicable, or whether any additional reforms to LIBOR may be enacted in the United Kingdom or elsewhere.

As a result of the 2017 announcement, regulators, industry groups, and committees have, among other things, published recommended fallback language for financial instruments indexed to LIBOR, identified and recommended alternatives to LIBOR, and proposed implementations of the recommended alternatives in floating-rate financial instruments.

For example, in June 2017, the Alternative Reference Rate Committee, a committee of private-market derivative participants and their regulators convened by the Federal Reserve to identity alternative reference interest rates, announced a Secured Overnight Funding Rate, a broad Treasuries overnight repurchase agreement (repo) financing rate, as its preferred alternative to U.S.

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This process, which is critical to our financial results and condition, requires difficult, subjective, and complex judgments, including reviews of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans.

There is the chance that we will fail to identify the proper factors or that we will fail to accurately estimate the impacts of factors that we identify.

There is the chance that we will fail to identify the proper factors or that we will fail to

accurately estimate the impacts of factors that we identify.

In addition, large loans, letters of credit, and contracts with individual counterparties in our portfolio magnify the credit risk that we face, as the impact of large borrowers and counterparties not repaying their loans or performing according to the terms of their contracts has a disproportionately significant impact on our credit losses and reserves.

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If these events or circumstances were to occur, it could result in a potential loss of revenue and have an adverse effect on our business, results of operations, and financial condition.

If the Corporation’s actual loan losses exceed our allowance for loan losses, our net income will decrease.

The Corporation maintains an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, that represents management’s best estimate of probable incurred losses that are inherent within the existing portfolio of loans.

The level of the allowance reflects management’s continuing evaluation of industry concentrations;

specific credit risks;

loan loss experience;

current loan portfolio quality;

present economic, political, and regulatory conditions;

and unidentified losses inherent in the current loan portfolio.

The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires the Corporation to make significant estimates of current credit risks and future trends, all of which may undergo material changes.

Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside of the Corporation’s control, may require an increase in the allowance for loan losses.

In addition, bank regulatory agencies periodically review the Corporation’s allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different than those of management.

If charge-offs in future periods exceed the allowance for loan losses, the Corporation will need additional provisions to increase the allowance for loan losses.

Any increases in the allowance for loan losses will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on the Corporation’s financial condition and results of operations.

The implementation of CECL, including the design and maintenance of related internal controls over financial reporting, will require a significant amount of time and resources which may have a material impact on our results of operations, and we anticipate will require us to increase our allowance for credit losses.

The Financial Accounting Standards Board has adopted a new accounting standard that is effective for our fiscal year beginning on January 1, 2020.

This standard, referred to as Current Expected Credit Loss, or (“CECL”), requires us to determine periodic estimates of lifetime expected credit losses on financial assets, and recognize the expected credit losses as allowances for credit losses.

This changes the current method of providing allowances for credit losses that are probable, which we anticipate will require us to increase our allowance for credit losses and may introduce increased volatility in the level of our allowance for credit losses.

A material increase in the level of our allowance for credit losses could adversely affect our capital levels, financial condition, and results of operations.

Our CECL implementation initiative has increased the amount of data and assumptions we need to collect and review to determine the appropriate level of the allowance for credit losses.

A significant amount of time and resources has been spent and will continue to be spent in order to implement CECL effectively, including the design and

implementation of related adequate internal controls, which may adversely affect our results of operations.

If we are unable to maintain effective internal control over financial reporting relating to CECL, our ability to report our financial condition and results of operations accurately and on a timely basis could also be adversely affected.

New accounting standard, effective January 1, 2020, significantly changes how we recognize credit losses and may have a material impact on our financial condition or results of operations.

Effective January 1, 2020, the Corporation implemented the provision of Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 represents a comprehensive change in estimating the allowance for credit losses from the previous “incurred loss” model of losses inherent in the loan portfolio to a current “expected loss” model, which encompasses losses expected to be incurred over the life of the portfolio.

The measurement of expected credit losses under ASU 2016-13 is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter.

This differs significantly from the “incurred loss” model previously required under generally accepted accounting principles, which delays recognition until it is probable a loss has been incurred.

Accordingly, we expect that the adoption of ASU 2016-13 could materially affect how we determine our allowance for credit losses and may require us to significantly increase our allowance.

Moreover, ASU 2016-13 may create more volatility in the level of our allowance for credit losses.

If we are required to materially increase our level of allowance for credit losses for any reason, such increase could adversely affect our business, financial condition and results of operations.

The Corporation operates in a highly competitive industry and market, and our business will suffer if we are unable to compete effectively.

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The Corporation’s accounting estimates and risk management processes rely on analytical and forecasting models, which, if inadequate, may result in a material adverse effect on our business, financial condition, or results of operation.

The processes the Corporation uses to estimate its loan losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on the Corporation’s financial condition and results of operations, depend upon the use of analytical and forecasting models.

The processes the Corporation uses to estimate its allowance for credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on the Corporation’s financial condition and results of operations, depend upon the use of analytical and forecasting models.

These models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances.

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If the models the Corporation uses for interest rate risk and asset-liability management are inadequate, the Corporation may incur increased or unexpected losses upon changes in market interest rates or other market measures.

If the models the Corporation uses for determining its probable loan losses are inadequate, the allowance for loan losses may not be sufficient to support future charge-offs.

If the models the Corporation uses to measure the fair value of our financial instruments are inadequate, the fair value of our financial instruments may fluctuate unexpectedly or may not accurately reflect what the Corporation could realize

upon sale or settlement of our financial instruments.

If the models the Corporation uses for determining its probable credit losses are inadequate, the allowance for credit losses may not be sufficient to support future charge-offs.

Any failure in the Corporation’s analytical or forecasting models could have a material adverse effect on the Corporation’s business, financial condition, and results of operations.

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Frequently, we compete in the market for talent with entities that are not subject to comprehensive regulation.

The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of the markets in which we operate, years of industry experience, and the difficulty of promptly finding qualified replacement personnel.

industry experience, and the difficulty of promptly finding qualified replacement personnel.

Also, the loss of key personnel could jeopardize our relationships with customers and clients and could lead to the loss of accounts.

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Failure by these participants or their systems to protect our customers’ transaction data may put us at risk for possible losses due to fraud or operational disruption.

In addition, a number of our third party service providers are large national entities with dominant market presence in their respective fields.

Their services could prove difficult to replace in a timely manner if a failure or other service interruption were to occur.

Failures of certain vendors to provide contracted services could adversely affect our ability to deliver products and services to our customers and cause us to incur significant expense.

Our customers are also the target of cyber-attacks and identity theft.

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The occurrence of a cybersecurity incident involving us, third party service providers, or our customers, regardless of its origin, could damage our reputation and result in a loss of customers and business and subject us to additional regulatory scrutiny, and could expose us to litigation and possible financial liability.

Furthermore, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures arising from

operational and security risks.

Furthermore, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures arising from operational and security risks.

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

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External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.

Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of the Corporation’s system of internal controls.

Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of the Corporation’s system of

internal controls.

Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on the Corporation’s business, financial condition, and results of operations.

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The Corporation’s controls and procedures may fail or be circumvented, and the Corporation’s methods of reducing risk exposure may not be effective.

The Corporation’s internal operations are subject to isks, including, but not limited to, data processing system failures and errors, customer or employee fraud, and catastrophic failures resulting from terrorist acts or natural disasters.

The Corporation’s internal operations are subject to risks, including, but not limited to, data processing system failures and errors, customer or employee fraud, and catastrophic failures resulting from terrorist acts or natural disasters.

We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies and procedures.

Any system of controls and any system to reduce risk exposure, however well designed and operated, is based in part on assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.

Additionally, instruments, systems, and strategies used to hedge or otherwise manage exposure to various types of market compliance, credit, liquidity, operational,

and business risks and enterprise-wide risk could be less effective than anticipated.

Additionally, instruments, systems, and strategies used to hedge or otherwise manage exposure to various types of market compliance, credit, liquidity, operational, and business risks and enterprise-wide risk could be less effective than anticipated.

As a result, the Corporation may not be able to effectively mitigate its risk exposures in particular market environments or against particular types of risk.

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(ix) governmental rules, regulations, and fiscal policies;

and (x) natural disasters.

natural disasters.

Certain expenditures associated with the ownership of real estate, principally real estate taxes, insurance, and maintenance costs, may adversely affect the income from the real estate.

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Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have a material adverse effect on the Corporation’s business, financial condition, and results of operations.

Difficulties in combining the operations of acquired entities with our operations may prevent us from achieving the expected benefits from acquisitions.

We may not be able to fully achieve the strategic objectives and operating efficiencies expected in an acquisition, including our acquisition of HopFed Bancorp, Inc.

and its banking subsidiary, Heritage Bank USA, Inc., in July 2019.

Inherent uncertainties exist in integrating the operations of an acquired entity.

We may lose customers and/or key personnel and incur disruption of ongoing business as a result of an acquisition.

We may experience greater than expected costs or difficulties relating to the integration of operations and may not realize expected cost savings within the expected time frame, if at all.

If integration is unsuccessful or does not occur in the manner anticipated by management it could have a material adverse effect on our business, financial condition, and results of operations.

Future growth or operating results may require the Corporation to raise additional capital, but that capital may not be available or it may be dilutive.

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The Corporation’s ability to raise capital will depend on conditions in the capital markets, which are outside of its control, and on the Corporation’s financial performance.

Accordingly, the Corporation

may not be able to raise capital when needed or on favorable terms.

Accordingly, the Corporation may not be able to raise capital when needed or on favorable terms.

If the Corporation cannot raise additional capital when needed, it will be subject to increased regulatory supervision and the imposition of restrictions on its growth and business.

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These changes and increased scrutiny may result in increased costs of doing business, decreased revenues and net income, may reduce our ability to effectively compete to attract and retain customers, or make it less attractive for us to continue providing certain products and services.

impede the efficiency of our internal business processes, require us to increase our regulatory capital and modify our business strategy, limit our ability to pursue business opportunities in an efficient manner, or other ways that could have a material adverse effect on our business, financial condition, or results of operations.

Any future changes in federal and state law and regulations, as well as the interpretations and implementations of federal and state laws and regulations, could affect us in substantial and unpredictable ways, including those listed above, impact the regulatory structure under which we operate, significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital and modify our business strategy, limit our ability to pursue business opportunities in an efficient manner, or other ways that could have a material adverse effect on our business, financial condition, or results of operations.

These changes also may require us to invest significant management attention and resources to make any necessary changes to operations to comply and could have an adverse effect on our business, financial condition, and results of operations.

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The Bank Secrecy Act, the USA Patriot Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate.

The Federal Financial Crimes Enforcement Network is authorized to impose significant civil money penalties for violations of those requirements and has engaged in coordinated enforcement efforts with the other federal agencies, including federal banking regulators.

including federal banking regulators.

We are also subject to increased scrutiny of compliance with the rules enforced by the U.S.

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Market developments may significantly deplete the insurance fund of the FDIC and further reduce the ratio of reserves to insured deposits, thereby making it requisite upon the FDIC to charge higher premiums prospectively.

We have risk related to legal proceedings.

We are involved in judicial, regulatory, and arbitration proceedings concerning matters arising from our business activities and fiduciary responsibilities.

We establish reserves for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.

We may still incur legal costs for a matter even if we have not established a reserve.

In addition, the actual cost of resolving a legal claim may be substantially higher than any amounts reserved for that matter.

The ultimate resolution of a pending or future legal proceeding, depending on the remedy sought and granted, could materially adversely affect our results of operations and financial condition.

Risks Related to the Corporation’s Common Stock

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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 1A. Risk Factors