CASH 2018 Annual Report

59 The Bureau has reshaped certain consumer financial laws through rulemaking and enforcement of prohibitions against unfair, deceptive or abusive practices, and such actions have directly impacted the business operations of depository institutions offering consumer financial products or services, including the Bank, and may continue to do so in the future. The Bureau has broad rulemaking authority to administer and carry out the purposes and objectives of “federal consumer financial laws, and to prevent evasions thereof” with respect to all financial institutions that offer financial products and services to consumers. The Bureau is also authorized to prescribe rules, applicable to any covered person or service provider, identifying and prohibiting acts or practices that are “unfair, deceptive, or abusive” in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service (“UDAAP authority”). We cannot predict the impact the Bureau’s future actions will have on the banking industry broadly or the Company and the Bank specifically. Notwithstanding that insured depository institutions with assets of $10 billion or less (such as the Bank) will continue to be supervised and examined by their primary federal regulators, the full reach and impact of the Bureau’s broad rulemaking powers and UDAAP authority on the operations of financial institutions offering consumer financial products or services are currently unknown. See “Business Regulation - Bank Supervision and Regulation” which is included in Item 1 of this Annual Report on Form 10-K. A less than “Satisfactory” CRA rating could have a negative effect on the OCC’s review of certain banking applications submitted by the Bank. Under the CRA, the Bank is evaluated periodically by the OCC, its primary federal banking regulator, to determine if it is meeting its continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. In the Bank’s most recent CRA examination dated January 3, 2017, the Bank received an overall rating of “Satisfactory.” If the Bank were to receive a future CRA rating of less than “Satisfactory,” the CRA requires the OCC to take such rating into account in considering an application for any of the following: (i) the establishment of a domestic branch; (ii) the relocation of its main office or of a branch; (iii) the merger or consolidation with or acquisition of assets or assumption of liabilities of an insured depository institution; or (iv) the conversion of the Bank to a national charter. Based upon the NB Election Proposed Rule, CRA ratings will also be considered in determining whether a federal savings bank may to elect treatment as a national bank, although such rule has not yet been finalized as of the date of this Annual Report on Form 10-K and could be revised to materially differ from the proposed rule. Actions taken by the Federal Reserve in connection with national monetary policy could have a material adverse effect on us. The Federal Reserve is tasked with monitoring domestic economic conditions and national monetary and credit supply. To carry out these responsibilities, the Federal Reserve Board uses numerous monetary tools, including open market operations in U.S. government securities, adjustments of the discount rate, and changes in reserve requirements against bank deposits. Each of these measures is used in combination in an attempt to positively affect economic conditions in the United States. These actions also directly affect the interest rates charged by U.S. insured depository institutions and have a direct and immediate impact on savings and loan holding companies like us. Any future Federal Reserve actions or policies may have a material adverse effect on us, including with regard to the interest rates we will be able to charge. Changes in interest rates could adversely affect our results of operations and financial condition. Our earnings depend substantially on our interest rate spread, which is the difference between (i) the rates we earn on loans, securities, and other earning assets, and (ii) the interest rates we pay on deposits and other borrowings. These rates are highly sensitive to many factors beyond our control, including general economic conditions and the policies of various governmental and regulatory authorities. As market interest rates rise, we experience competitive pressures to increase the rates we pay on deposits, especially at our community bank, which may decrease our net interest income. Conversely, if interest rates fall, yields on loans and investments may fall. The Bank monitors its interest rate risk exposure; however, the Bank can provide no assurance that its efforts will appropriately protect the Bank in the future from interest rate risk exposure. For additional information, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.”