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affiliated, announced, captioned, catch, close, closing, ConnectOne, customary, deductible, detail, dissolved, entered, entirety, Exhibit, fifteen, foregoing, gain, margin, merge, merger, October, outpacing, proposed, proration, proxy, qualifed, satisfaction, surviving, text, vote
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Financial report summary
?Risks
- Risks Applicable to Our Business:
- Our business may be adversely affected if we are not able to attract and retain skilled employees or if we lose the services of our senior management team.
- We may need to raise additional capital to execute our business strategy.
- We have a significant concentration in commercial real estate loans.
- If we are limited in our ability to originate loans secured by commercial real estate we may face greater risk in our loan portfolio.
- We expect that the implementation of a new accounting standard could require us to increase our allowance for loan losses and may have a material adverse effect on our financial condition and results of operations.
- The small to medium-sized businesses that the Bank lends to may have fewer resources to weather a downturn in the economy, which may impair a borrower’s ability to repay a loan to the Bank that could materially harm our operating results.
- We are a community bank and our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance.
- Competition in originating loans and attracting deposits may adversely affect our profitability.
- External factors, many of which we cannot control, may result in liquidity concerns for us.
- The Bank’s ability to pay dividends is subject to regulatory limitations, which may impact the Company’s ability to pay dividends to its shareholders.
- Hurricanes or other adverse weather events could negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of operations.
- Recent New Jersey legislative changes may increase our tax expense.
- Risks Applicable to the Banking Industry Generally:
- Our allowance for loan and lease losses may not be adequate to cover actual losses.
- Changes in interest rates may adversely affect our earnings and financial condition.
- The banking business is subject to significant government regulations.
- The laws that regulate our operations are designed for the protection of depositors and the public, not our shareholders.
- The potential impact of changes in monetary policy and interest rates may negatively affect our operations.
- We cannot predict how changes in technology will impact our business; increased use of technology may expose us to service interruptions or breaches in security.
Management Discussion
- Our results of operations depend primarily on net interest income, which is the difference between interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities. Interest-earning assets consist principally of loans, cash and cash equivalents and investment securities, while interest-bearing liabilities consist primarily of deposits and borrowed funds. Net income is also affected by the amount of non-interest income and non-interest expense, the provision for loan losses, and income tax expense.
- Net income for the third quarter of 2019 was $517 thousand compared to net income of $1.76 million for the third quarter of 2018, a decrease of $1.25 million or 70.9%. Net income for the nine months ended September 30, 2019 was $3.42 million compared to net income of $4.30 million for the same period in 2018, a decrease of $873 thousand or 20.4%. This decrease in net income for the three and nine month periods is primarily due to merger related expenses, lower net interest income and an increase in the effective tax rate.
- Net interest income represents the difference between income on interest-earning assets and expense paid on interest-bearing liabilities. Net interest income depends upon the volume of interest-earning assets and interest-bearing liabilities and the interest rate earned or paid on them.