The company faces interest rate risk due to differing repricing times of assets and liabilities. Increased unemployment and inflation, slower economic growth, volatile global markets, and downward pressure on commercial real estate values pose risks to loan performance and credit losses. Potential regulatory changes and litigation also present uncertainties. The company's concentration of commercial real estate loans relative to capital is a concern. Liquidity risk exists from potential deposit outflows and reliance on wholesale borrowings.
Financial Upside
The company saw a slight increase in net interest income in the recent quarter, driven by a decrease in interest-bearing liability costs. Higher other income, including mortgage banking revenues and deposit service charges, also contributed to improved results. The sale of the CIT business in 2023 generated a significant gain. Growth in consumer loans, particularly recreational finance and automobile loans, is a positive trend.
