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Concordia Financial Group (CCRDF)
:CCRDF
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Risk Overview Q1, 2016
Risk Distribution
52% Finance & Corporate
16% Legal & Regulatory
10% Ability to Sell
10% Macro & Political
6% Tech & Innovation
6% Production
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Concordia Financial Group Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q1, 2016
Main Risk Category
Finance & Corporate
With 16 Risks
Finance & Corporate
With 16 Risks
Number of Disclosed Risks
31
S&P 500 Average: 31
31
S&P 500 Average: 31
Recent Changes
0Risks added
0Risks removed
0Risks changed
Since Mar 2016
0Risks added
0Risks removed
0Risks changed
Since Mar 2016
Number of Risk Changed
0
S&P 500 Average: 3
0
S&P 500 Average: 3
See the risk highlights of Concordia Financial Group in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 31
Finance & Corporate
Total Risks: 16/31 (52%)Above Sector Average
Share Price & Shareholder Rights8 | 25.8%
Share Price & Shareholder Rights - Risk 1
Future declines of securities prices on Japanese stock markets or other global markets could cause unrealized losses, impairment losses and losses from sales of equity securities as well as affect Concordia Financial's capital adequacy ratio.Share Price & Shareholder Rights - Risk 2
A successful legal challenge to the validity of the joint share transfer following its completion may invalidate the shares of Concordia Financial issued in the joint share transfer.Until six months after the effective date of the joint share transfer, any of Bank of Yokohama's or Higashi-Nippon Bank's shareholders, directors, audit & supervisory board members or liquidators as of the effective date of the joint share transfer may bring a court action to nullify the joint share transfer. Concordia Financial's shareholders, directors, audit & supervisory board members or liquidators may also bring a court action to nullify the joint share transfer until six months after the effective date of the joint share transfer. A court may nullify the joint share transfer if it finds that a material procedural defect occurred in connection with the joint share transfer. If any court action challenging the validity of the joint share transfer is brought, the price or liquidity of Concordia Financial's shares may be adversely affected, regardless of the merits of the claim. Moreover, if such a court action is successful and a court enters a final and binding judgment, Concordia Financial would be liquidated and Concordia Financial's shareholders at the time of such judgment will receive shares of common stock of Bank of Yokohama and/or Higashi-Nippon Bank.
Share Price & Shareholder Rights - Risk 3
Concordia Financial may fail to realize the anticipated benefits of the joint share transfer due to the challenges of integrating the operations of Bank of Yokohama and Higashi-Nippon Bank.The success of the joint share transfer will depend, in part, on Concordia Financial's ability to realize the anticipated growth opportunities, synergies and cost savings from integrating the operations of Bank of Yokohama and Higashi-Nippon Bank. The business integration agreement calls for an ongoing integration process, including replacing the core system used by Higashi-Nippon Bank with that used by Bank of Yokohama and unifying creditor classifications of Bank of Yokohama and Higashi-Nippon Bank. Concordia Financial faces significant challenges relating to integrating the operations of Bank of Yokohama and Higashi-Nippon Bank, including the following:
- effectively integrating the respective organizations, key management, employees and other personnel, business cultures, procedures and operations of Bank of Yokohama and Higashi-Nippon Bank;- identifying and streamlining redundant operations and assets, and combining the product and service offerings effectively and quickly;- allocating resources effectively to areas and activities that present substantial potential synergies identified as a result of the joint share transfer;- smoothly transitioning relevant operations to a common information technology system; and - developing and implementing uniform accounting policies, internal controls and procedures, disclosure controls and procedures and other governance policies and standards.
If Concordia Financial is not able to successfully manage the integration process, take advantage of the anticipated synergies, and create an integrated business, the anticipated benefits of the joint share transfer and subsequent integration may not be realized fully or at all or may take longer to realize than expected.
Share Price & Shareholder Rights - Risk 4
Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions.The articles of incorporation, share handling regulations and regulations of the board of directors, as well as the Companies Act, govern the affairs of Concordia Financial. Legal principles relating to such matters as the validity of corporate actions, directors' and officers' fiduciary duties and shareholders' rights may be different from those that would apply if Concordia Financial were a non-Japanese company. Shareholders' rights under Japanese law may not be as extensive as shareholders' rights under the laws of other countries or jurisdictions within the United States. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in another jurisdiction.
Share Price & Shareholder Rights - Risk 5
Japan's unit share system imposes restrictions on the rights of holders of shares of Concordia Financial common stock that do not constitute a unit.Pursuant to the Companies Act and certain related legislation, the articles of incorporation of Concordia Financial provide that 100 shares of Concordia Financial common stock constitute one unit. Holders of shares that constitute less than one unit do not have voting rights under the Companies Act, which imposes other significant restrictions and limitations on such holders. The transferability of such shares is also significantly limited. Under the unit share system, holders of shares constituting less than one unit have the right to require the issuer to purchase their shares.
Share Price & Shareholder Rights - Risk 6
Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell Concordia Financial shares at a particular price on any particular trading day, or at all.Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each listed stock based on the previous day's closing price. Although transactions on a given Japanese stock exchange may continue at the upward or downward price limit, if the price limit is reached on a particular trading day, no transactions on such exchange may take place outside these limits. Consequently, an investor wishing to sell shares on a Japanese stock exchange at a price outside of the relevant daily limit may be unable to complete the sale through that exchange on that particular trading day.
Share Price & Shareholder Rights - Risk 7
It may not be possible for investors to effect service of process within the United States upon Concordia Financial's directors, senior management or audit & supervisory board members, or to enforce against Concordia Financial or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States.Concordia Financial is a joint stock company incorporated under the laws of Japan. All of Concordia Financial's directors, senior management and audit & supervisory board members are expected to reside outside the United States. It may not be possible, therefore, for U.S. investors to effect service of process within the United States upon these persons. Furthermore, most of the assets of Concordia Financial and these persons are located in
Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to enforce, against Concordia Financial or these persons, judgments obtained in the U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. Concordia Financial believes that there is doubt as to the enforceability in Japan, in original actions or in actions to enforce judgments of U.S. courts, of claims predicated solely upon the federal securities laws of the United States.
Share Price & Shareholder Rights - Risk 8
Concordia Financial will likely terminate its registration under the Exchange Act and cease to be an SEC reporting company as soon as practicable in accordance with applicable rules and regulations.Concordia Financial will likely decide to terminate its registration under the Exchange Act as soon as practicable in accordance with the rules that permit the deregistration of eligible foreign private issuers. If Concordia Financial terminates its registration, it will no longer be subject to the reporting provisions of the Exchange Act. As a result, U.S. shareholders will have access to less information about Concordia Financial and its business, operations and financial performance. If Concordia Financial terminates its registration under the Exchange Act, it will cease, among other things, to be subject to the liability provisions of the Exchange Act and the provisions of the Sarbanes-Oxley Act of 2002. If, conversely, Concordia Financial is unable to terminate its registration as currently contemplated, it may incur additional costs in order to maintain compliance with applicable U.S. laws and regulations.
Accounting & Financial Operations2 | 6.5%
Accounting & Financial Operations - Risk 1
Concordia Financial is a holding company and its ability to meet its obligations depends upon the results of operations from its subsidiaries. Concordia Financial's ability to pay dividends is also restricted by statutory provisions.Accounting & Financial Operations - Risk 2
Decreases in returns on Concordia Financial's plan assets or revised actuarial assumptions for retirement benefits for its group employees may adversely affect Concordia Financial's business, financial condition, results of operations and cash flows.Concordia Financial's pension-related costs and projected benefit obligations relating to retirement plans for its group employees is calculated based on assumptions regarding projected returns on pension assets and various actuarial assumptions relating to the retirement plans. If returns on plan assets decrease, if actual results differ from Concordia Financial's assumptions, or if Concordia Financial revises the discount rates and other assumptions due to changes in the stock markets, interest rate environment or otherwise, Concordia Financial's pension-related costs and projected retirement benefit obligations could increase, which could adversely affect its business, financial condition, results of operations and cash flows, as well as the price of shares of its common stock.
Debt & Financing4 | 12.9%
Debt & Financing - Risk 1
Changes in interest rates could adversely affect Concordia Financial's business, financial condition, results of operations and cash flows as well as its capital adequacy ratio.Debt & Financing - Risk 2
A withdrawal or downgrade of the credit ratings of Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank could have a negative effect on Concordia Financial.Concordia Financial, Bank of Yokohama and Higashi-Nippon Bank have been assigned credit ratings by major domestic and international credit rating agencies. A withdrawal or downgrade of credit ratings of Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank may have various effects including, but not limited to, the following:
- Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank may have to accept less favorable terms in its transactions with counterparties, including capital raising activities;- Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank may be unable to enter into certain transactions, including accessing capital markets; and - existing agreements or transactions may be cancelled.
Any of these or other effects of a withdrawal or downgrade of credit ratings of Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank could adversely affect Concordia Financial's business, financial condition, results of operations and cash flows, as well as the price of shares of its common stock, reputation and regulatory capital position of Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank.
Debt & Financing - Risk 3
Failure to maintain capital adequacy ratios and liquidity coverage ratios above minimum required levels, as a result of the materialization of risks or regulatory changes, could have an adverse effect on Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank.Concordia Financial and its subsidiaries, Bank of Yokohama and Higashi-Nippon Bank, are required to follow the capital adequacy ratio guidelines adopted by Japan's Financial Services Agency, or FSA, and endeavor to maintain their capital adequacy ratios at sufficiently high levels. Such ratios are calculated pursuant to standards set forth by the FSA and based on accounting principles generally accepted in Japan, or Japanese GAAP. However, their respective capital adequacy ratios could decline in the future, including, but not limited to, as a result of any of the following:
- decrease in Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank's capital and retained earnings;- decline in the value of securities that they hold;- repayments of subordinated debt obligations;- increase in risk-weighted assets resulting from business growth, strategic investments, borrower downgrades or changes in parameters such as probability of default; and - the materialization of any of the risks enumerated in these "Risk Factors."
In addition, if the framework set by the Basel Committee on Banking Supervision, upon which the FSA's rules concerning banks' capital adequacy ratios are based, is changed or if the FSA otherwise changes its banking regulations, Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank might not be able to meet the minimum regulatory requirements for capital adequacy ratios.
Furthermore, Concordia Financial and Bank of Yokohama are required to follow the liquidity coverage ratio guidelines adopted by the FSA. If the framework set by the Basel Committee on Banking Supervision, upon which the FSA's rules concerning banks' liquidity coverage ratio are based, is changed or if the FSA otherwise changes its banking regulations, Concordia Financial or Bank of Yokohama might not be able to meet the minimum regulatory requirements for liquidity coverage ratio.
If the capital adequacy ratios or liquidity coverage ratios of Concordia Financial and its subsidiaries, Bank of Yokohama and/or Higashi-Nippon Bank, fall below specified levels, the FSA could require Concordia Financial to take corrective actions, such as submission of an improvement plan that would strengthen its respective capital base or a reduction of Concordia Financial, Bank of Yokohama and/or Higashi-Nippon Bank's total assets. If the FSA deems such corrective actions to be not adequate, the FSA may suspend all or a portion of Concordia Financial, Bank of Yokohama or Higashi-Nippon Bank's respective business operations.
Accordingly, failure to maintain capital adequacy ratios or liquidity coverage ratios could adversely affect Concordia Financial's business, financial condition, results of operations and cash flows, as well as the price of shares of its common stock.
Debt & Financing - Risk 4
Concordia Financial may suffer credit losses or may have to provide for a significant amount of additional allowance for credit losses if Concordia Financial's borrowers are unable to repay their loans as expected.By lending money or committing to lend money, Concordia Financial incurs credit risk, which is the risk of losses if borrowers do not repay their loans. Concordia Financial may incur significant credit losses or have to provide for a significant amount of additional allowance for credit losses relating to nonperforming loans if:
- economic conditions, especially in Kanagawa and Tokyo Prefectures, deteriorate;- the value of assets over which it will have security interests in, such as real estate or securities, declines; or - the financial conditions of Concordia Financial's borrowers deteriorate.
In addition, Concordia Financial's actual loan losses could materially exceed the allowance for credit losses or its estimate of credit losses based on its evaluations of customers' creditworthiness or current value of collateral, or its estimate of credit losses may differ as a result of inspection of its regulators. In each case, Concordia Financial may need to provide for additional allowance for credit losses. Such a need may adversely affect its business, financial condition, results of operations and cash flows, as well as the price of shares of its common stock.
Corporate Activity and Growth2 | 6.5%
Corporate Activity and Growth - Risk 1
Concordia Financial's strategic initiatives and measures may not result in the anticipated outcome.Corporate Activity and Growth - Risk 2
Uncertainties associated with Concordia Financial as a new owner may damage existing relationships with customers and business partners of Bank of Yokohama and Higashi-Nippon Bank.Customers and business partners of Bank of Yokohama or Higashi-Nippon Bank may, in response to the steps taken to integrate the businesses of Bank of Yokohama and Higashi-Nippon Bank, delay or defer decisions concerning their relationships with Concordia Financial. The loss of business from such customers and business partners may have a material adverse effect on Concordia Financial's business and results of operations.
Legal & Regulatory
Total Risks: 5/31 (16%)Below Sector Average
Regulation1 | 3.2%
Regulation - Risk 1
Implementations of new laws or regulations, changes to existing laws and regulations or violations of laws and regulations that are applicable to Concordia Financial, its business and its employees could have an adverse effect on Concordia Financial.Litigation & Legal Liabilities2 | 6.5%
Litigation & Legal Liabilities - Risk 1
Concordia Financial is subject to risks relating to litigation and other legal proceedings.Litigation & Legal Liabilities - Risk 2
Fraud, misconduct or other unlawful behavior by directors, officers and employees or third parties could subject Concordia Financial to losses and regulatory sanctions.Concordia Financial is exposed to potential losses resulting from fraud, misconduct and other unlawful behavior by directors, officers and employees, who may bind the company to transactions that exceed authorized limits or present unacceptable risks, hide from Concordia Financial and from its customers unauthorized activities, improperly use confidential information or otherwise abuse customer confidence. Third parties may also engage in fraudulent activities, including phishing, fraudulent use of bank accounts at Bank of Yokohama or Higashi-Nippon Bank or the use of false identities to open accounts for money laundering, tax evasion or other illegal purposes. Third parties could additionally use stolen or forged ATM cards, or engage in credit card fraud, and Concordia Financial may be required to indemnify victims of such fraud for related losses and to implement future preventive measures to its systems, each of which may be costly. In addition, investigations, administrative actions or litigation could commence regarding actual or alleged fraud, misconduct or other unlawful behavior by directors, officers, employees and third parties. Furthermore, Concordia Financial may not be able to recover the losses caused by these activities, including those caused by any deterioration of Concordia Financial's reputation. Accordingly, actual or perceived unlawful behavior by directors, officers and employees or third parties could adversely affect its business, financial condition, results of operations and cash flows, as well as the price of shares of its common stock.
Taxation & Government Incentives1 | 3.2%
Taxation & Government Incentives - Risk 1
A decrease in deferred tax assets due to a change in Concordia Financial's estimation of future taxable income or change in Japanese tax policy could adversely affect Concordia Financial's business, financial condition, results of operations and cash flows.Environmental / Social1 | 3.2%
Environmental / Social - Risk 1
If Concordia Financial is unable to protect personal and other confidential information, it may become subject to liabilities and regulatory actions, which could lead to significant costs and harm its reputation.Ability to Sell
Total Risks: 3/31 (10%)Above Sector Average
Competition1 | 3.2%
Competition - Risk 1
Intensification of competition in the market for financial services, particularly in Kanagawa and Tokyo Prefectures, could have an adverse effect on Concordia Financial.Demand1 | 3.2%
Demand - Risk 1
Concentration of loans to small and medium-sized enterprises and individual customers, as well as concentration of loans in the real estate industry, may increase Concordia Financial's exposure to credit risk.Brand / Reputation1 | 3.2%
Brand / Reputation - Risk 1
Damage to the reputation of Concordia Financial and the financial services industry in general may have an adverse effect on Concordia Financial's business, financial condition, results of operations and cash flows.Macro & Political
Total Risks: 3/31 (10%)Below Sector Average
Economy & Political Environment2 | 6.5%
Economy & Political Environment - Risk 1
Concordia Financial's regional concentration in Kanagawa and Tokyo Prefectures exposes it to adverse economic conditions in its primary retail banking network footprint.Economy & Political Environment - Risk 2
Concordia Financial may be adversely affected if economic or market conditions in Japan or elsewhere deteriorate.If economic conditions in Kanagawa and Tokyo Prefectures or other regions of Japan or the world were to deteriorate or if the financial markets, including currency exchange market, or geopolitical situation become subject to turmoil, Concordia Financial could experience weakness in its business, deterioration in its liquidity, capital conditions and quality of its assets, increase in credit losses and losses in its investment securities, each of which could adversely affect its business, financial condition, results of operations and cash flows, as well as the price of shares of its common stock.
Natural and Human Disruptions1 | 3.2%
Natural and Human Disruptions - Risk 1
Concordia Financial's business could be significantly disrupted due to natural disasters, accidents or other events beyond its control.Tech & Innovation
Total Risks: 2/31 (6%)Below Sector Average
Innovation / R&D1 | 3.2%
Innovation / R&D - Risk 1
Concordia Financial is exposed to new or increased risks as it expands the range of its products and services.Technology1 | 3.2%
Technology - Risk 1
Concordia Financial's business relies on its information technology systems, and their failure could harm its relationships with customers and its reputation, adversely affect its provision of services to customers or result in significant costs.Production
Total Risks: 2/31 (6%)Below Sector Average
Manufacturing1 | 3.2%
Manufacturing - Risk 1
Operational errors could subject Concordia Financial to losses, regulatory action and reputational harm.Costs1 | 3.2%
Costs - Risk 1
Significant costs are being incurred in the course of the integration of the business operations of Bank of Yokohama and Higashi-Nippon Bank.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.