93 added · 125 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
For example, the Company’s business may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, the benefits from which may not be realized.
Commercial Real Estate Concentration Limits In December 2006, the federal banking regulators issued guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” to address increased concentrations in commercial real estate, or “CRE”, loans.
Each party’s obligation to complete the merger is also subject to certain additional customary conditions, including (a) subject to applicable materiality standards, the accuracy of the representations and warranties of the other party set forth in the merger agreement, (b) the performance in all material respects by the other party of its obligations under the merger agreement and (c) the receipt by each party of an opinion from its counsel to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986.
Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections. 15 The CRA specifically directs the federal bank regulatory agencies, in examining insured depository institutions, to assess their record of helping to meet the credit needs of the entire communities in which the financial institution operates, including low and moderate income communities, consistent with safe and sound banking practices.
None of the information contained in or hyperlinked from our website is incorporated into this Form 10-K. 18 Executive Officers of the Company The following sets forth certain information regarding our executive officers, their positions and their ages.
Operational Risks • We face risks related to our operational, technological and organizational infrastructure. • The development and use of AI presents risks and challenges that may adversely impact our business. • Failure to manage our growth may adversely affect our performance. • Risks Relating to our Pending Merger with Heritage • Failure to complete the proposed merger with Heritage • Combining with Heritage may be more difficult, costly or time-consuming than expected, and the Company may fail to realize the anticipated benefits of the merger. • The combined company may be unable to retain the Company’s and/or Heritage’s personnel successfully after the merger is completed. • The Company will be subject to business uncertainties and contractual restrictions while the merger with Heritage is pending. • The Company has incurred and is expected to incur substantial costs related to the merger and integration. • The merger agreement between the Company and Heritage may be terminated in accordance with its terms and the merger may not be completed. • Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the Company following the merger. • Our assumptions regarding the fair value of assets acquired could be inaccurate, which could materially and adversely affect our business, financial condition, results of operations, and future prospects. • The future results of the Company following the completion of the mergers may suffer if the Company does not effectively manage its expanded business and operations. 20 • Issuance of shares of the Company’s common stock in connection with the merger may adversely affect the market price of such common stock. • The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents to either our information systems or information systems provided by third party vendors could have a material adverse effect on our business, financial condition and results of operations. • Our business is exposed to the risk of changes in technology. • Our controls and procedures could fail or be circumvented. • Failure to maintain effective internal control over financial reporting or disclosure controls and procedures could adversely affect our ability to report our financial condition and results of operations accurately and on a timely basis. • We rely on communications, information, operating and financial control systems technology from third-party service providers, and we may suffer an interruption in those systems. • We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects. • If our enterprise risk management framework is not effective at mitigating risk and loss to us, we could suffer unexpected losses and our results of operations could be materially adversely affected. • Changes in stock market prices could reduce fee income from our brokerage, asset management and investment advisory businesses. • Our accounting estimates and risk management processes rely on analytical and forecasting models. • Our decisions regarding the fair value of assets acquired could be different than initially estimated, which could materially and adversely affect our business, financial condition, results of operations, and future prospects. • If the goodwill that we recorded in connection with business acquisitions becomes impaired, it could require charges to earnings, which would have a negative impact on our financial condition and results of operations.
Strategic and External Risks • Changes in economic, market and political conditions can adversely affect our liquidity, results of operations and financial condition. • Our earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies. • Future legislation, regulatory reform or policy changes could have a material effect on our business and results of operations. • We face strong competition from financial services companies and other companies that offer banking services. • Consumers may decide not to use banks to complete their financial transactions. • Potential downgrades of U.S. government securities or the securities of U.S. government-sponsored entities by one or more of the credit ratings agencies could have a material adverse effect on our operations, earnings, and financial condition. • Climate change and climate change regulation could have a material adverse effect on us and our customers. • Public Health Risks Legal, Regulatory, Compliance and Reputational Risks • We are subject to extensive government regulation that could limit or restrict our activities, which, in turn, may hamper our ability to increase our assets and earnings. • Any enhanced regulatory examination scrutiny or new regulatory requirements arising from recent events in the banking industry could increase the Company’s expenses and affect the Company’s operations and acquisition opportunities. • We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. • The impact of current capital rules may materially affect our operations. • Increasing scrutiny and evolving expectations from regulators, customers, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. • Managing reputational risk is important to attracting and maintaining customers, investors and employees. • We depend on the accuracy and completeness of information provided by customers and counterparties. • We are subject to legal and litigation risk which could adversely affect us.
We, or our third party vendors, clients or counterparties may develop or incorporate Artificial Intelligence (AI) technology in certain business processes, services, or products including deploying AI in the areas of fraud detection and prevention, cybersecurity, credit risk and underwriting, regulatory compliance, process automation, data analysis, and customer marketing and product customization.
AI models, particularly generative AI models, may produce output or take action that is incorrect, include unauthorized material in the training data for their models, result in the release of private, confidential, or proprietary information, reflect biases included in the data on which they are trained, infringe on the intellectual property rights of others, or are otherwise harmful.
This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.
The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI.
Risks specifically associated with this pending merger can be found below under the heading “Risks Relating to our Pending Merger with Heritage.” The merger may not have the anticipated positive results, including results relating to: correctly assessing the asset quality of the assets being acquired; the total cost of integration including management attention and resources; the time required to complete the integration successfully; the amount of longer-term cost savings; being able to profitably deploy funds acquired in an acquisition; or the overall performance of the combined entity.
No longer disclosed
The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. 15 Commercial Real Estate Concentration Limits In December 2006, the federal banking regulators issued guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” to address increased concentrations in commercial real estate, or “CRE”, loans.
Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections.
These potential regulatory reactions could increase the Company’s costs of doing business, lead to an increased risk of regulatory oversight actions or restrictions, result in decreased regulatory support for merger and acquisition activity, and reduce our profitability.
Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee mistakes, misconduct or fraud, failure to deliver minimum standards of service, failure of any product or service offered by us to meet our customers’ expectations, compliance deficiencies, privacy or information security breaches, government investigations, litigation, and questionable or fraudulent activities of our employees or customers.
Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers, investors and employees, costly litigation, a decline in revenues and increased governmental scrutiny and regulation.
Because our Company is extensively regulated by a variety of federal and state agencies, and because we are subject to a wide range of business, consumer and employment laws and regulations at the federal, state and local levels, we are at risk of governmental investigations and lawsuits as well as claims and litigation from private parties.
We are from time to time involved in disputes with and claims from investors, customers, bankruptcy trustees, government agencies, vendors, employees and other business parties, and such disputes and claims may result in investigations, litigation or settlements, any one of which or in the aggregate could have an adverse impact on the Company’s operating flexibility, employee relations, financial condition or results of operations, as a result of the costs of any judgment, the terms of any settlement and/or the expenses incurred in defending the applicable claim.
New legislation, regulatory reform or policy changes, including financial services regulatory reform, enforcement priorities, antitrust and merger review policies, and increased infrastructure spending, could adversely impact our business.
Any enhanced regulatory examination scrutiny or new regulatory requirements arising from recent events in the banking industry could increase the Company’s expenses and affect the Company’s operations and acquisition opportunities.
For example, consumers can now maintain funds that would have historically been held as bank deposits in brokerage accounts, mutual funds or general-purpose reloadable prepaid cards.
The final CRA rule was enjoined from implementation by a Texas federal court on April 1, 2024, extending the effective date of April 1, 2024, as well as all other implementation dates, on a day-for-day basis for each day that the injunction remains in effect.
The Federal Reserve’s Open Market Committee raised the target range for the federal funds rate to 5.25% to 5.50% in 2023, and then subsequently lowered it to a range of 4.25% to 4.50% in the last few months of 2024, resulting in a cumulative increase of 4.25% from March of 2022.