46 unchanged sentences
Thus, any borrowing or funds needed to raise capital required to make a capital injection becomes more difficult and expensive and could have an adverse effect on our business, financial condition and results of operations.
+Added: We may become subject to enforcement actions even though non-compliance was inadvertent or unintentional.
+Added: 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.
+Added: Enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices.
+Added: We maintain systems and procedures designed to ensure that we comply with applicable laws and regulations;
+Added: however, some legal/regulatory frameworks provide for the imposition of fines or penalties for non-compliance even though the non-compliance was inadvertent or unintentional and even though there was in place at the time systems and procedures designed to ensure compliance.
+Added: Failure to comply with these and other regulations, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputation damage, or restrictions on our business.
Risks Related to Interest Rates
−Removed: The reversal of the historically low interest rate environment may adversely affect our net interest income and profitability.
−Removed: The Federal Reserve Board decreased benchmark interest rates to near zero in response to the COVID-19 pandemic.
−Removed: The Federal Reserve Board has reversed its policy of near zero interest rates given its concerns over inflation.
−Removed: Market interest rates have risen significantly in response to the Federal Reserve Board’s recent rate increases.
−Removed: As discussed below, the increase in market interest rates has already had and is expected to further have an adverse effect on our net interest income and profitability.
Changing interest rates may have a negative effect on our results of operations.
8 unchanged sentences
Net unrealized losses on these securities totaled $24.1 million at December 31, 2024.
−Removed: During the year ended December 31, 2023, we incurred other comprehensive gains of $1.7 million, net of tax expense, related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.
+Added: During the year ended December 31, 2024, we incurred other comprehensive losses of $994,000, net of tax benefit, related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.
Increases in interest rates can also have an adverse impact on our results of operations, as has happened in recent periods.
5 unchanged sentences
We generate revenues primarily from gains on the sale of mortgage loans to investors, and from the amortization of deferred mortgage servicing rights.
−Removed: We had mortgage banking income decrease of $23.9 million during the year ended December 31, 2023.
+Added: Although we had a mortgage banking income increase of $7.9 million during the year ended December 31, 2024, it remains a challenging environment.
We also earn interest on loans held for sale while awaiting delivery to our investors.
39 unchanged sentences
Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.
−Removed: Sustained higher interest rates by the Federal Reserve Board to tame persistent inflationary price pressures could also push down asset prices and weaken economic activity.
A deterioration in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations.
−Removed: Our stock price may be negatively impacted by unrelated bank failures and negative depositor confidence in depository institutions.
−Removed: Further, if we are unable to adequately manage our liquidity, deposits, capital levels and interest rate risk, which have come under greater scrutiny in light of recent bank failures, it may have a material adverse effect on our financial condition and results of operations.
On March 9, 2023, Silvergate Bank, La Jolla, California, announced its decision to voluntarily liquidate its assets and wind down operations.
32 unchanged sentences
The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.
+Added: Uncertainties associated with increased originations of commercial business loans, as well as continued originations of commercial real estate and multi-family residential real estate loans may result in errors in judging collectability, which may lead to additional provisions for credit losses or charge-offs, which would negatively affect our operations.
+Added: Our recent and intended increases in the level of our commercial lending (including commercial business loans, commercial real estate loans and multi-family residential real estate loans) have required and would likely require us to lend to borrowers with which we have limited or no experience.
+Added: Recently originated loans are unseasoned and we do not have a significant payment history pattern with which to judge future collectability.
+Added: Further, newly originated loans have not been subjected to unfavorable economic conditions.
+Added: As a result, it may be difficult to predict the future performance of newly originated loans.
+Added: These loans may have delinquency or charge-off levels above our recent historical experience, which could adversely affect our future performance.
+Added: Further, these types of loans generally have larger balances and involve a greater risk than one-to four-family residential mortgage loans.
+Added: Accordingly, if we make any errors in judgment in the collectability of these loans, any resulting charge-offs may be larger on a per loan basis than those incurred historically with our single-family residential mortgage loans.
We are subject to environmental liability risk associated with lending activities.
62 unchanged sentences
In this case, our operating margins and profitability would be adversely affected.
+Added: The soundness of other financial institutions could adversely affect us.
+Added: Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
+Added: Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships.
+Added: We have exposure to many different counterparties, and we routinely execute transactions with counterparties in the financial industry, including brokers and dealers, other commercial banks, investment banks, mutual and hedge funds, and other financial institutions.
+Added: As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, could lead to market-wide liquidity problems and losses or defaults by us or by other institutions and organizations.
+Added: Many of these transactions expose us to credit risk in the event of default of our counterparty or client.
+Added: In addition, our credit risk may be exacerbated when the collateral held by us cannot be liquidated or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due to us.
+Added: Any such losses could materially and adversely affect our results of operations.
+Added: Recently we have held larger levels of certificates of deposit, which has increased our cost of funds and could continue to do so in the future .
+Added: At December 31, 2024, certificates of deposit comprised 66.6% of our total deposits as compared to 61.3% at December 31, 2023.
+Added: Our increased levels of certificates of deposit have resulted in a higher cost of funds than would otherwise be the case if we had a higher percentage of demand deposits and savings deposits.
+Added: In addition, if our certificates of deposit do not remain with us, we may be required to access other sources of funds, including loan sales, other types of deposits, FHLB advances and other borrowings.
+Added: Depending on market conditions, we may be required to pay higher rates on such deposits or borrowings than we currently pay on our certificates of deposit.
+Added: Interruption of our customers ’ supply chains and federal funding could negatively impact their business and operations and impact their ability to repay their loans.
+Added: Any material interruption in our customers’ supply chains, such as a material interruption of the resources required to conduct their business, such as those resulting from interruptions in service by third-party providers, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions, reductions in federal subsidies or grants, social or labor unrest, natural disasters, epidemics or pandemics or political disputes and military conflicts, that cause a material disruption in our customers’ supply chains, could have a negative impact on their business and ability to repay their borrowings with us.
+Added: In the event of disruptions in our customers’ supply chains, the labor and materials they rely on in the ordinary course of business may not be available at reasonable rates or at all.
+Added: Additionally, changes in distribution of federal funds or freezing of federal funds, including reductions in federal workforce causing unemployment, could have an adverse effect on the ability of consumers and businesses to pay debts and/or affect the demand for loans and deposits.
+Added: Changes in U.S.
+Added: trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition, and results of operations.
+Added: Tariffs and trade restrictions may cause the prices of our customers' products to increase, which could reduce demand for such products, or reduce our customers' margins, and adversely impact their revenues, financial results, and ability to service debt.
+Added: This in turn could adversely affect our financial condition and results of operations.
+Added: In addition, to the extent changes in the political environment have a negative impact on us or on the markets in which we operate our business, our results of operations and financial condition could be materially and adversely impacted in the future.
Risks Related to Competitive Matters
132 unchanged sentences
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.