What changed in this filing

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Item 1A. Risk Factors

2023-02-23 compared with 2022-02-24 · 110 added, 103 removed, 241 unchanged (47% of the section changed)

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The risks and uncertainties described below and in our other filings are not the only ones facing us.

Additional risks

and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, particularly in light of the fast-changing nature of the COVID-19 pandemic, containment measures and the related impacts to economic and operating conditions.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business.

If any of these known or unknown risks or uncertainties actually occurs, our business, financial condition and results of operations could be impaired.

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This report is qualified in its entirety by these risk factors.

RISKS RELATED TO THE COVID-19 PANDEMIC

The COVID-19 pandemic, and the measures taken to control its spread, may continue to adversely impact our employees, customers, business operations and financial results.

The COVID-19 pandemic has impacted and is likely to continue to impact the national economy and the regional and local markets in which we operate.

Our business operations may be disrupted if significant portions of our workforce are unable to work effectively because of illness.

We are subject to heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements that we and our third party service providers have put in place for employees.

Government policies and directives relating to the pandemic response are subject to change.

Changes in customer behavior due to work-from-home arrangements and other pandemic-related responses may impact the demand for our products and services, which could adversely affect our revenue.

The extent to which the COVID-19 pandemic will continue to impact our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic, as well as further actions we may take as may be required by government authorities or that we determine is in the best interests of our employees and customers.

There is no certainty that such measures will be sufficient to mitigate the risks posed by the pandemic.

All of these risks and uncertainties can be expected to persist at least until the pandemic is demonstrably and sustainably contained, authorities cease curbing business activity, and consumer and business confidence recover.

Our participation in the SBA’s PPP may expose us to reputational harm, as well as the risk that the SBA may not fund some or all of the guarantees associated with PPP loans.

As of December 31, 2021, there were 347 PPP loans with a carrying value (outstanding principal balance net of unamortized deferred loan origination fees and costs) of $38.0 million included in our commercial and industrial loan portfolio.

As of February 15, 2022, 172 PPP loans with a carrying value of $21.9 million remain in our loan portfolio.

We depend on our reputation as a trusted and responsible financial services company to compete effectively in the communities that we serve, and any negative public or customer response to, or any litigation or claims that might arise out of, our participation in the PPP and any other legislative or regulatory initiatives and programs that may be enacted in response to the COVID-19 pandemic, could adversely impact our business.

In addition, if the SBA determines that there is a deficiency in the manner in which a PPP loan was originated, funded, or serviced by us, 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 or the processing fee from us.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

Changes in the business and economic conditions, particularly those of southern New England, could adversely affect our financial condition and results of operations.

Changes in business and economic conditions, increased levels of unemployment, downside economic shocks, or recessionary economic conditions could lead to erosion of customer confidence, a reduction in general business activity and increased market volatility.

The resulting economic pressure on consumers and businesses could adversely affect our business, financial condition, results of operations and stock price.

The possibility of the economy entering a recession and/or experiencing further turmoil or volatility in the financial markets would likely have an adverse effect on our business, financial position, and results of operations.

The economy in the United States and globally has experienced volatility in recent years and may continue to experience such volatility for the foreseeable future.

There can be no assurance that economic conditions will not worsen.

Unfavorable or uncertain economic conditions can be caused by declines in economic growth, business activity, or investor or business confidence, limitations on the availability of or increases in the cost of credit and capital, increases in inflation or interest rates, the timing and impact of changing governmental policies, natural disasters, climate change, epidemics, the COVID-19 pandemic and future pandemics, terrorist attacks, acts of war, or a combination of these or other factors.

A worsening of business and economic conditions could have adverse effects on our business, including the following:

• investors may have less confidence in the equity markets in general and in financial services industry stocks in particular, which could place downward pressure on our stock price and resulting market valuation;

• economic and market developments may further affect consumer and business confidence levels and may cause declines in credit usage and adverse changes in payment patterns, causing increases in delinquencies and default rates;

• our ability to assess the creditworthiness of our customers may be impaired if the models and approaches we use to select, manage, and underwrite loans become less predictive of future behaviors;

• we could suffer decreases in demand for loans or other financial products and services or decreased deposits or other investments in accounts with us;

• our Wealth Management Services customers may liquidate investments, which together with lower asset values, may reduce the level of assets under management and administration, and thereby decrease our wealth management revenues;

• competition in the financial services industry could intensify as a result of the increasing consolidation of financial services companies in connection with current market conditions or otherwise; and

• the value of loans and other assets or collateral securing loans may decrease.

Changes in the business and economic conditions in southern New England could adversely affect our financial condition and results of operations.

We primarily serve individuals and businesses located in southern New England, and a substantial portion of our loans are secured by properties in southern New England.

The real estate collateral securing the Bank’s loans provides an alternate source of repayment in the event of default by the borrower.

A weakening or deterioration in the economy of

southern New England, including as a result of, among other things, real or threatened acts of war, natural disasters and adverse weather, could result in the following consequences:

However, unlike other larger institutions, we are not able to spread the risks of unfavorable local economic conditions across a large number of diversified economies.

An economic downturn could, therefore, result in losses that materially and adversely affect our business.

An economic downturn or a prolonged economic recession in southern New England could result in the following consequences:

• loan delinquencies may increase;

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• our ability to continue to originate real estate loans may be impaired.

Inflationary pressures and rising prices may affect our results of operations and financial condition.

Inflation rose sharply at the end of 2021 and throughout 2022.

Inflationary pressures are currently expected to remain elevated throughout 2023.

Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses.

Consequently, the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely impact our results of operations and financial condition.

Furthermore, a prolonged period of inflation could cause wages and other costs to increase, which could adversely affect our results of operations and financial condition.

Fluctuations in interest rates may impair the Bank’s business.

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These rates are highly sensitive to many factors beyond our control, including general economic conditions, both domestic and foreign, and the monetary and fiscal policies of various governmental and regulatory authorities.

At its January 2022 Federal Open Market Committee Meeting, the Federal Reserve indicated it expects to raise benchmark interest rates in 2022, partially in response to increasing inflation.

When interest rates increase, loan prepayments generally decline and depositors shift funds from accounts that have a comparatively lower cost, such as regular savings accounts, to accounts with a higher cost, such as certificates of deposit.

When interest rates increase, as they have over the past year, loan prepayments generally decline and depositors may shift funds from accounts that have a comparatively lower cost, such as regular savings accounts, to accounts with a higher cost, such as certificates of deposit.

In addition, wholesale funds may reprice more quickly and by a greater amount than the repricing of in-market deposits.

When interest rates decrease, loan prepayments and the receipt of payments on mortgage-backed securities generally increase, and may result in the proceeds having to be reinvested at a lower rate than the loan or mortgage-backed security being prepaid.

Changes in interest rates can also affect the value of loans and investment securities.

Changes in interest rates can also affect the value of loans and investment

Fixed-rate investment securities, mortgage-backed securities and mortgage loans typically decline in value as interest rates rise.

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However, even with these policies in place, a change in interest rates can impact our results of operations or financial condition.

We are subject to liquidity risk, which could negatively affect our funding levels.

We must maintain sufficient funds to respond to the needs of depositors and borrowers.

To manage liquidity, we draw upon a number of funding sources in addition to in-market deposit growth and repayments and maturities of loans and investments.

Market conditions or other events could negatively affect our access to or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, or fund asset growth and new business initiatives at a reasonable cost, in a timely manner and without adverse consequences.

Although we maintain a liquid asset portfolio and have implemented strategies to maintain sufficient and diverse sources of funding to accommodate planned, as well as unanticipated, changes in assets, liabilities, and off-balance sheet commitments under various economic conditions, a substantial, unexpected, or prolonged change in the level or cost of liquidity could have a material adverse effect on us.

If the cost effectiveness or the availability of supply in these credit markets is reduced for a prolonged period of time, our funding needs may require us to access funding and manage liquidity by other means.

These alternatives may include generating client deposits, extending the maturity of wholesale borrowings, borrowing under certain secured borrowing arrangements, using relationships developed with a variety of fixed income investors, selling or securitizing loans, and further managing loan growth and investment opportunities.

These alternative means of funding may result in an increase to the overall cost of funds and may not be available under stressed conditions, which would cause us to liquidate a portion of our liquid asset portfolio to meet any funding needs.

Our cost of funds for banking operations may increase as a result of general economic conditions, interest rates and competitive pressures.

Deposits are a low cost and stable source of funding.

We compete with banks and other financial institutions for deposits.

If, as a result of general economic conditions, market interest rates, competitive pressures, or otherwise, the amount of deposits at the Bank decreases relative to its overall banking operations, the Bank may have to rely more heavily on higher cost borrowings as a source of funds, such as the FHLB, or otherwise reduce its loan growth or pursue loan sales.

Higher funding costs reduce our NIM, net interest income and net income.

A significant component of our liquidity needs is met through our access to funding pursuant to our membership in the FHLB.

The FHLB is a cooperative that provides services to its member banking institutions.

The primary reason for joining the FHLB is to obtain funding.

The purchase of stock in the FHLB is a requirement for a member to gain access to funding.

Any deterioration in the FHLB’s performance or financial condition may affect our ability to access funding and/or require us to deem the required investment in FHLB stock to be impaired.

If we are not able to access funding through the FHLB, we may not be able to meet our liquidity needs, which could have an adverse effect on our results of operations or financial condition.

Similarly, if we deem all or part of our investment in FHLB stock impaired, such action could have an adverse effect on our financial condition or results of operations.

Our loan portfolio includes commercial loans, which are generally riskier than other types of loans.

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We may experience losses and expenses if security interests granted for loans are not enforceable.

When we make loans we sometimes obtains liens, such as real estate mortgages or other asset pledges, to provide us with a security interest in collateral.

If there is a loan default, we may seek to foreclose upon collateral and enforce the security interests to obtain repayment and eliminate or mitigate our loss.

When we make loans, we sometimes obtain liens, such as real estate mortgages or other asset pledges, to provide us with a security interest in collateral.

If there is a loan default, we may seek to foreclose upon collateral and enforce the security

interests to obtain repayment and eliminate or mitigate our loss.

Drafting errors, recording errors, other defects or imperfections in the security interests granted to us and/or changes in law may render liens granted to the us unenforceable.

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If repurchase and indemnity demands increase and such demands are valid claims and are in excess of our provision for potential losses, our results of operations and financial condition may be adversely affected.

Our allowance for credit losses on loans may not be adequate to cover actual loan losses, and an increase in the allowance for credit losses on loans will adversely affect our earnings.

We maintain an Allowance for Credit Losses (“ACL”) on loans that is based on relevant internal and external information related to past events, current economic conditions and reasonable supportable forecasts.

Our ACL on loans may not be adequate to cover actual loan losses, and an increase in the ACL on loans will adversely affect our earnings.

We maintain an ACL on loans that is based on relevant internal and external information related to past events, current economic conditions and reasonable supportable forecasts.

Historical credit loss experience provides the basis for the estimation of expected credit losses.

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Any increases in our ACL will result in a decrease in our net income and, possibly, our capital, and could have an adverse effect on our financial condition and results of operations.

We are subject to liquidity risk, which could negatively affect our funding levels.

We must maintain sufficient funds to respond to the needs of depositors and borrowers.

To manage liquidity, we draw upon a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments.

These alternatives may include generating client deposits, securitizing or selling loans, extending the maturity of wholesale borrowings, borrowing under certain secured borrowing arrangements, using relationships developed with a variety of fixed income investors, and further managing loan growth and investment opportunities.

Our cost of funds for banking operations may increase as a result of general economic conditions, interest rates and competitive pressures.

Deposits are a low cost and stable source of funding.

We compete with banks and other financial institutions for deposits.

If, as a result of general economic conditions, market interest rates, competitive pressures, or otherwise, the amount of deposits at the Bank decreases relative to its overall banking operations, the Bank may have to rely more heavily on higher cost borrowings as a source of funds, such as the FHLB, in the future or otherwise reduce its loan growth or pursue loan sales.

Higher funding costs reduce our net interest margin, net interest income and net income.

A significant component of our liquidity needs are met through our access to funding pursuant to our membership in the FHLB.

The FHLB is a cooperative that provides services to its member banking institutions.

The primary reason for joining the FHLB is to obtain funding.

The purchase of stock in the FHLB is a requirement for a member to gain access to funding.

Any deterioration in the FHLB’s performance or financial condition may affect our ability to access funding and/or require Washington Trust to deem the required investment in FHLB stock to be impaired.

If we are not able to access funding through the FHLB, we may not be able to meet our liquidity needs, which could have an adverse effect on our results of operations or financial condition.

Similarly, if we deem all or part of our investment in FHLB stock impaired, such action could have an adverse effect on our financial condition or results of operations.

We are a holding company and depend on the Bank for dividends, distributions and other payments.

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The valuation of our securities requires judgment and as market conditions change security values may also change.

Significant negative changes to valuations could result in impairments in the value of the Corporation’s securities portfolio, which could have an adverse effect on the Corporation’s financial condition or results of operations.

Significant negative changes to valuations could result in impairments in the value of our securities portfolio, which could have an adverse effect on our financial condition or results of operations.

Potential downgrades of U.S.

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We cannot predict if, when or how any changes to the credit ratings or perceived creditworthiness of these organizations will affect economic conditions.

actions could result in a significant adverse impact on us.

Such ratings actions could result in a significant adverse impact on us.

Among other things, a downgrade of the sovereign credit ratings of the U.S.

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LIBOR is used extensively in the United States as a benchmark for various commercial and financial contracts, including loans, securities, funding sources, interest rate swaps and other derivatives.

ICE Benchmark Administration (“IBA”), the authorized and regulated administrator of LIBOR recently announced it would consult on its plans for the discontinuation of LIBOR.

IBA intends to end publication of remaining LIBOR tenors in June 2023.

Financial services regulators issued guidance on the ongoing use of LIBOR, encouraging banks to transition away from LIBOR as soon as practicable and to not enter into new transactions referencing LIBOR after December 31, 2021.

Financial services regulators and industry groups have collaborated to develop alternate reference rate indices or reference rates, such as the Secured Overnight Financing Rate (“SOFR”).

The transition to a new reference rate requires changes to contracts, risk and pricing models, valuation tools, systems, product design and hedging strategies.

The Corporation has established a cross-functional project team to address the LIBOR transition.

As of December 31, 2021 , the Corporation is generally no longer entering into new transactions referencing LIBOR.

We have approximately 330 financial instruments that reference LIBOR (predominantly commercial loans) with on-balance sheet amounts of $1.6 billion and 300 derivative instruments (loan related derivatives and cash flow hedging instruments) that reference LIBOR with total notional amounts of $2.4 billion as of December 31, 2021.

Late in the fourth quarter of 2021, the Corporation began processing modifications on loans that reference LIBOR to transition them to a new reference rate, primarily SOFR.

Given the complexity of the transition, as well as the different risk characteristics between LIBOR and the replacement reference rate, the Corporation continues to evaluate the impact the transition, which may, ultimately, adversely affect the Corporation’s business, financial condition, or results of operations.

Market changes or economic downturns may adversely affect demand for our fee-based services and level of wealth management assets under administration.

The ICE Benchmark Administration, the authorized and regulated administrator of LIBOR, intends to end publication of remaining LIBOR tenors in June 2023.

Financial services regulators and industry groups have collaborated to develop alternate reference rate indices or reference rates, such as SOFR.

SOFR is a backward-looking secured rate as opposed to a forward-looking unsecured rate.

We have identified all LIBOR-related contracts and determined which ones will require language to incorporate an alternative reference rate.

In the fourth quarter of 2021, we began processing modifications on loans that reference LIBOR to transition them to a new reference rate, primarily SOFR .

Additionally, contracts executed after December 31, 2021 are no longer being written with LIBOR terms.

For derivative contracts, the International Swap Dealers Association (commonly known as "ISDA") has developed fallback language for swap agreements and established a protocol to allow counterparties to modify legacy trades to include the new fallback language.

We have executed agreements with the majority of our customers to adopt the fallback language protocol.

We have remaining approximately 200 financial instruments that reference LIBOR (predominantly commercial loans) with on-balance sheet amounts of $1.0 billion and approximately 250 derivative instruments (loan related derivatives and cash flow hedging instruments) that reference LIBOR with total notional amounts of $2.0 billion as of December 31, 2022.

We continue to incorporate LIBOR replacement language in contracts.

In addition to changes in contracts, the transition from LIBOR involves changes to risk and pricing models, valuation tools, systems, product design and hedging strategies.

Our failure to adequately manage the transition process with our customers could also impact our reputation.

Given the complexity of the transition, as well as the different risk characteristics between LIBOR and the replacement reference rate, we are unable to assess the ultimate impact of the transition from LIBOR, which may, ultimately, adversely affect our business, financial condition, or results of operations.

Market changes or economic downturns may adversely affect demand for our fee-based services and level of wealth management AUA.

Economic downturns could affect the volume of income earned from, and demand for, fee-based services.

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Revenues from wealth management services depend in large part on the level of AUA, which are primarily marketable securities.

Market volatility that results in clients liquidating investments, as well as lower asset values, can reduce the

level of assets under management and administration and decrease the Corporation's wealth management revenues, which could materially adversely affect the Corporation's results of operations.

Our wealth management business is highly regulated, and the regulators have the ability to limit or restrict our activities and impose fines or suspensions on the conduct of our business.

We offer wealth management services through the Bank and WTA.

WTA is a registered investment adviser under the Investment Advisers Act.

The Investment Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary, record keeping, operational and disclosure obligations.

We are also subject to the provisions and regulations of ERISA to the extent that we act as a “fiduciary” under ERISA with respect to certain of our clients.

ERISA and the applicable provisions of the federal tax laws impose a number of duties on persons who are fiduciaries under ERISA and prohibit certain transactions involving the assets of each ERISA plan which is a client, as well as certain transactions by the fiduciaries (and certain other related parties) to such plans.

Investment contracts with institutional and other clients are typically terminable by the client, also without penalty, upon 30 to 60 days’ notice.

Changes in these laws or regulations could have a material adverse impact on our profitability and mode of operations.

Market volatility that results in clients liquidating investments, as well as lower asset values, can reduce the level of assets under management and administration and decrease our wealth management revenues, which could materially adversely affect our results of operations.

We face continuing and growing security risks to our information base, including the information we maintain relating to our customers.

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A failure or circumvention of these controls could have a material adverse effect on our business operations and financial condition.

We regularly assess and test our security systems and disaster preparedness, including back-up systems, but the risks are substantially escalating.

We regularly assess and test our security systems and disaster preparedness, including back-up systems, but the risks are escalating.

We also review and assess the cyber-security risk of our third-party service providers.

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Third-party vendors provide key components of our business infrastructure such as internet connections, network access and core application processing.

While we have selected these third party vendors carefully, we do not control their actions.

While we have selected these third-party vendors carefully, we do not control them or their actions.

Any problems caused by these third parties, including as a result of their not providing us their services for any reason or their performing their services poorly, could adversely affect our ability to deliver products and services to our customers or otherwise conduct our business efficiently and effectively.

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Such sanctions could include fines and suspension of trading in our stock, among others.

In addition, future system

enhancements could have higher than expected costs and/or result in operating inefficiencies, which could increase the costs associated with the implementation as well as ongoing operations.

In addition, future system enhancements could have higher than expected

costs and/or result in operating inefficiencies, which could increase the costs associated with the implementation as well as ongoing operations.

Failure to properly utilize system enhancements that are implemented in the future could result in impairment charges that adversely impact our financial condition and results of operations and could result in significant costs to remediate or replace the defective components.

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and other mechanisms.

In some cases, management of the Corporation’s risks depends upon the use of analytical and/or forecasting models, which, in turn, rely on assumptions and estimates.

If the models used to mitigate these risks are inadequate, or the assumption or estimates are inaccurate or otherwise flawed, the Corporation may fail to adequately protect against risks and may incur losses.

In addition, there may be risks that exist, or that develop in the future, that the Corporation has not appropriately anticipated, identified or mitigated, which could lead to unexpected losses and the Corporation's results of operations or financial condition could be materially adversely affected.

In some cases, management of our risks depends upon the use of analytical and/or forecasting models, which, in turn, rely on assumptions and estimates.

If the models used to mitigate these risks are inadequate, or the assumption or estimates are inaccurate or otherwise flawed, we may fail to adequately protect against risks and may incur losses.

In addition, there may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated, which could lead to unexpected losses and our results of operations or financial condition could be materially adversely affected.

Damage to our reputation could significantly harm our business, including our competitive position and business prospects.

We are dependent on our reputation within our market area, as a trusted and responsible financial services company, for all aspects of our business with customers, employees, vendors, third-party service providers, and others, with whom we conduct business or potential future businesses.

Our ability to attract and retain customers and employees could be adversely affected if our reputation is damaged.

Our actual or perceived failure to address various issues could give rise to reputational risk that could cause harm to us and our business prospects.

These issues also include, but are not limited to, legal and regulatory requirements;

Negative public opinion about the financial services industry generally (including the types of banking and wealth management services that we provide) or us specifically could adversely affect our reputation and our ability to keep and attract customers and employees.

Our actual or perceived failure to address various issues could give rise to negative public opinion and reputational risk that could cause harm to us and our business prospects.

These issues include, but are not limited to, legal and regulatory requirements;

properly maintaining customer and employee personal information;

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Failure to appropriately address any of these issues could also give rise to additional regulatory restrictions and legal risks, which could, among other consequences, increase the size and number of litigation claims and damages asserted or subject us to enforcement actions, fines and penalties and cause us to incur related costs and expenses.

Furthermore, any damage to our reputation could affect our ability to retain and develop the business relationships necessary to conduct business, which in turn could negatively impact our financial condition, results of operations, and the market price of our common stock.

The proliferation of social media websites utilized by us and other third parties, as well as the personal use of social media by our employees and others, including personal blogs and social network profiles, also may increase the risk that negative, inappropriate or unauthorized information may be posted or released publicly that could harm our reputation or have other negative consequences, including as a result of our employees interacting with our customers in an unauthorized manner in various social media outlets.

Any damage to our reputation could affect our ability to retain and develop the business relationships necessary to conduct business, which in turn could negatively impact our financial condition, results of operations, and the market price of our common stock.

We may not be able to compete effectively in our increasingly competitive industry.

We compete with financial and non-financial services firms, including traditional banks, online banks, financial technology companies, and investment management and wealth advisory firms, including commercial banks and trust

companies, investment advisory firms, mutual fund companies, stock brokerage firms.

These companies compete on the basis of, among other factors, size, location, quality and type of products and services offered, price, technology, brand recognition and reputation.

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Certain key personnel that have regular direct contact with customers and clients often build strong relationships that are important to our business.

In addition, the Corporation relies on key personnel to manage and operate its business, including major revenue producing functions, such as loan and deposit generation and wealth management services.

In addition, we rely on key personnel to manage and operate its business, including major revenue producing functions, such as loan and deposit generation and wealth management services.

Competition for qualified personnel in the financial services industry can be intense and we may not be able to hire or retain the key personnel that we depend upon for success.

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

At the end of the third quarter of 2022, four client-facing wealth management advisors at WTA, our registered investment adviser subsidiary, resigned.

We could experience additional client asset withdrawals in upcoming months associated with the departure of the former advisors.

Losses of such accounts could have a material adverse impact on our business.

Natural disasters, acts of terrorism and other external events could harm our business.

Natural disasters, acts of terrorism, pandemics and other external events could harm our business.

Natural disasters can disrupt our operations, result in damage to our properties, reduce or destroy the value of the collateral for our loans and negatively affect the economies in which we operate, which could have a material adverse effect on our results of operations and financial condition.

A significant natural disaster, such as a hurricane, blizzard, flood, fire or earthquake, could have a material adverse impact on our ability to conduct business, and our insurance coverage may be insufficient to compensate for losses that may occur.

Acts of terrorism, war, civil unrest, or future pandemics could cause disruptions to our business or the economy as a whole.

Acts of terrorism, war, civil unrest, or pandemics could cause disruptions to our business or the economy as a whole.

While we have established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial condition.

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Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.

From time to time, the Financial Accounting Standards Board (“FASB”) or regulatory authorities change the financial accounting and reporting standards that govern the preparation of our financial statements.

From time to time, the Financial Accounting Standards Board or regulatory authorities change the financial accounting and reporting standards that govern the preparation of our financial statements.

Such changes are expected to continue and can materially impact how we record and report our financial condition and results of operations.

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Our net deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled.

The Corporation assesses the deferred tax assets periodically to determine the likelihood of the Corporation’s ability to realize the benefits.

We assess the deferred tax assets periodically to determine the likelihood of our ability to realize the benefits.

Management judgment is required in determining the appropriate recognition and valuation of deferred tax assets and liabilities, including projections of future taxable income, as well as the character of that income.

A change in statutory tax rates may result in a decrease or increase to the Corporation’s deferred tax assets.

A decrease in the Corporation’s deferred tax assets could have a material adverse effect on the Corporation’s results of operations or financial condition.

A change in statutory tax rates may result in a decrease or increase to our deferred tax assets.

A decrease in our deferred tax assets could have a material adverse effect on our results of operations or financial condition.

Local, state or federal tax authorities may interpret tax laws and regulations differently than we do and challenge tax positions that we have taken on tax returns.

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We cannot assure you that the market price of our common stock will not fluctuate or decline significantly.

Some of the factors that could cause fluctuations or declines in the price of our common stock include, but are not limited to, actual or anticipated variations in reported operating results, recommendations by securities analysts, the level of trading activity in our common stock, our past and future dividend and share repurchase practices, new services or delivery systems offered by competitors, business combinations involving our competitors, operating and stock price performance of companies that investors deem to be comparable to Washington Trust, news reports relating to trends or developments in the financial, credit, mortgage and housing markets, as well as the financial services industry, and changes in government regulations.

Some of the factors that could cause fluctuations or declines in the price of our common stock include, but are not limited to, actual or anticipated variations in reported operating results, recommendations by securities analysts, the level of trading activity in our common stock, our past and future dividend and share repurchase practices, new services or delivery systems offered by competitors, business combinations involving our competitors, operating and stock price performance of companies that investors deem to be comparable to us, news reports relating to trends or developments in the financial, credit, mortgage and housing markets, as well as the financial services industry, and changes in government regulations.

We may need to raise additional capital in the future and such capital may not be available when needed.

We are required by regulatory authorities to maintain adequate levels of capital to support our operations.

We may need to raise additional capital in the future to provide us with sufficient capital resources and liquidity to meet our

commitments and business needs.

We may need to raise additional capital in the future to provide us with sufficient capital resources and liquidity to meet our commitments and business needs.

Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance.

We cannot assure you that such capital will be available to us on acceptable terms or at all.

Our inability to raise sufficient additional capital on acceptable terms when needed could subject us to certain activity restrictions or to a variety of enforcement remedies available to the regulatory authorities, including limitations on our ability to pay dividends or pursue acquisitions, the issuance by regulatory authorities of a capital directive to increase capital and the termination of deposit insurance by the FDIC.

Our inability to raise sufficient additional capital on acceptable terms when needed could subject us to certain activity restrictions or to a variety of enforcement remedies available to the

regulatory authorities, including limitations on our ability to pay dividends or pursue acquisitions, the issuance by regulatory authorities of a capital directive to increase capital and the termination of deposit insurance by the FDIC.

Certain provisions of our articles of incorporation may have an anti-takeover effect.

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See “Business-Supervision and Regulation.”

We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.

The Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose community investment and nondiscriminatory lending requirements on financial institutions.

The Consumer Financial Protection Bureau, the Department of Justice and other federal agencies are

responsible for enforcing these laws and regulations.

A successful regulatory challenge to an institution’s performance under the Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act or other fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions, restrictions on expansion and restrictions on entering new business lines.

Our wealth management business is highly regulated, and the regulators have the ability to limit or restrict our activities and impose fines or suspensions on the conduct of our business.

We offer wealth management services through the Bank and WTA.

WTA is a registered investment adviser under the Advisers Act.

The Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary, record keeping, operational and disclosure obligations.

We are also subject to the provisions and regulations of ERISA to the extent that we act as a “fiduciary” under ERISA with respect to certain of our clients.

Investment contracts with institutional and other clients are typically terminable by the client, also without penalty, upon 30 to 60 days’ notice.

Changes in these laws or regulations could have a material adverse impact on our profitability and mode of operations.

We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.

The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose community investment and nondiscriminatory lending requirements on financial institutions.

The CFPB, the Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.

A successful regulatory challenge to an institution’s performance under the CRA, the Equal Credit Opportunity Act, the Fair Housing Act or other fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions, restrictions on expansion and restrictions on entering new business lines.

Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation.

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We may become subject to enforcement actions even though noncompliance was inadvertent or unintentional.

The financial services industry is subject to intense scrutiny from bank supervisors in the examination process and aggressive enforcement of federal and state regulations, particularly with respect to mortgage-related practices and other consumer compliance matters, and compliance with anti-money laundering, Bank Secrecy Act and Office of Foreign Assets Control regulations, and economic sanctions against certain foreign countries and nationals.

The financial services industry is subject to intense scrutiny from bank supervisors in the examination process and aggressive enforcement of federal and state regulations, particularly with respect to mortgage-related practices and other consumer compliance matters, and compliance with anti-money laundering, BSA and OFAC regulations, and economic sanctions against certain foreign countries and nationals.

Enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices.

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As a participant in the financial services industry, many aspects of our business involve substantial risk of legal liability.

From time to time we are named as a defendant or are otherwise involved in various legal proceedings, including class actions and other litigation or disputes with third parties.

From time to time, customers and others make claims and take legal action pertaining to the performance of our responsibilities.

Whether customer claims and legal action related to the performance of our responsibilities are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to us, they may result in significant expenses, attention from management and financial liability.

Any financial liability or reputational damage could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.

There is no assurance that litigation with private parties will not increase 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 1A. Risk Factors