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New words:
migration, recruiter, SBIC
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guaranty, impacted, ratio
Financial report summary
?Risks
- The COVID-19 pandemic has resulted in significant global economic downturn which has adversely affected, and is expected to continue to adversely affect, our business and results of operations, and the future impacts of the COVID-19 pandemic on the global economy and our business, results of operations, liquidity and financial condition remain uncertain.
- We are subject to risks associated with geographic and customer concentration in our lending operations, which could negatively impact our asset quality.
- We are subject to risks associated with customer concentration in our deposit base, which could negatively impact our liquidity.
- A key focus of our strategy is originating commercial real estate and commercial and industrial loans. Because our loan portfolio consists largely of these types of loans, our portfolio carries a higher degree of risk than would a portfolio with larger amounts of other types of loans. These loans involve credit risks that could adversely affect our financial condition and results of operations.
- Lending to small businesses, franchisees and high-growth businesses may expose us to additional risks not present in lending to larger business customers.
- SBA lending is an important part of our business. Our SBA lending program is dependent on the federal government and our status as an SBA Preferred Lender, and we face risks associated with originating and selling SBA loans.
- We have originated a significant number of loans under the Small Business Administration’s Paycheck Protection Program, which may result in a large number of such loans remaining on our consolidated balance sheets at a very low yield for an extended period of time.
- Our growing deposit and processing focused business may expose us to additional risks not associated with the provision of core banking products and services.
- An economic downturn in the commercial loan market, the commercial real estate industry, and/or in our markets generally could adversely affect our financial condition, results of operations or cash flows.
- Our allowance for loan losses may not be adequate to cover actual losses, and we may be required to materially increase our allowance, which may adversely affect our capital, financial condition and results of operations.
- We depend on the accuracy and completeness of information about customers and counterparties.
- We are no longer an “emerging growth company” and are therefore subject to the auditor attestation requirement in the assessment of our internal controls over financial reporting and certain other increased disclosure and governance requirements.
- Our stock repurchase program may not enhance long-term stockholder value and stock repurchases, if any, could increase the volatility of the price of our common stock and will diminish our cash reserves.
Management Discussion
- Taxable equivalent net interest income for the third quarter of 2021 totaled $25.1 million, a $3.1 million, or 14%, increase compared to the third quarter of 2020. This increase was primarily driven by an increase in interest income of $2.5 million, or 10%, compared to the same period in 2020 and a decline in interest expense of $620,000, or 25%, compared to the same period in 2020. The third quarter of 2021 included $1.9 million in PPP loan income compared to $1.6 million in the third quarter of 2020. The yield on loans increased by 9 basis points to 3.91% from the third quarter of 2020. The yield on loans excluding PPP loans for the three months ended September 30, 2021, was 3.71%, a decrease of 24 basis points, compared to the same period in 2020.