2 unchanged sentences
For financial institutions, market risk arises primarily from interest rate risk inherent in lending, investment, and deposit-taking activities.
−Removed: Interest rate risk can arise from timing differences in the repricing and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay home mortgage loans at any time, depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the
−Removed: CARTER BANKSHARES, INC.
−Removed: shape of the yield curve, where interest rates increase or decrease in a non-parallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S.
+Added: Interest rate risk can arise from timing differences in the repricing and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay home mortgage loans at any time, depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve, where interest rates increase or decrease in a non-parallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S.
Treasuries and SOFR (basis risk).
1 unchanged sentence
Interest rate changes affect capital by changing the net present value of a financial institution’s future cash flows, and the cash flows themselves, as rates change.
−Removed: Accepting this risk is a normal part of banking and can be an important source of profitability and enhancement of shareholder value.
+Added: Accepting this risk is a normal part of banking and can be an important source of
+Added: CARTER BANKSHARES, INC.
+Added: profitability and enhancement of shareholder value.
However, excessive interest rate risk can threaten a financial institution’s earnings, capital, liquidity, and solvency.
19 unchanged sentences
All percentage changes presented are within prescribed ranges set by ALCO.
−Removed: March 31, 2024 December 31, 2023
+Added: June 30, 2024 December 31, 2023
Change in Interest Rate (basis points) % Change in Pretax Net Interest Income % Change in Pretax Net Interest Income
5 unchanged sentences
-400 11.0 % 6.7 %
−Removed: The results from the earnings simulation imply that the Company’s balance sheet is slightly liability sensitive balance sheet at March 31, 2024 and December 31, 2023.
−Removed: The above table indicates that, in a rising interest rate environment, the Company is positioned to have a minimum increase in net interest income for the same asset and liability mix due to the balance sheet composition, related maturity structures, and repricing correlations to market interest rates for assets and liabilities.
−Removed: However, in a declining interest rate environment, we are positioned to have a slightly more advantageous increase in net interest income for
+Added: The results from the earnings simulation imply that the Company’s balance sheet is slightly liability sensitive balance sheet at June 30, 2024 and December 31, 2023.
+Added: The above table indicates that, in a rising interest rate environment, the Company is positioned to have a small decrease in net interest income for the same asset and liability mix due to the balance sheet composition, related maturity structures, and repricing correlations to market interest rates for assets and liabilities.
+Added: However, in a declining interest rate environment, we are positioned to have a slightly more advantageous increase in net interest income for the same reasons discussed above.
+Added: The liability sensitivity is due to a variety of factors which include 1) lower yielding, floating rate excess cash positions held in federal reserve bank and interest-bearing deposits in other financial institutions, that are more sensitive to future market interest rate changes which were deployed into higher yielding, fixed and variable rate securities and portfolio loans that are less sensitive to future market interest rate changes, 2) shortening maturities of the time deposit portfolio due to shorter term time deposit promotional campaigns related to the inverted yield curve, and 3) the recent shifts in the shape of the yield curve between the two periods presented above.
CARTER BANKSHARES, INC.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (continued)
−Removed: the same reasons discussed above.
−Removed: The liability sensitivity is due to a variety of factors which include 1) lower yielding, floating rate excess cash positions held in federal reserve bank and interest-bearing deposits in other financial institutions, that are more sensitive to future market interest rate changes which were deployed into higher yielding, fixed and variable rate securities and portfolio loans that are less sensitive to future market interest rate changes, 2) shortening maturities of the time deposit portfolio due to shorter term time deposit promotional campaigns related to the inverted yield curve, and 3) the recent shifts in the shape of the yield curve between the two periods presented above.
Economic Value of Equity Modeling
11 unchanged sentences
All percentage changes presented are within prescribed ranges set by management.
−Removed: March 31, 2024 December 31, 2023
+Added: June 30, 2024 December 31, 2023
Change in Interest Rate (basis points) % Change in Economic Value of Equity % Change in Economic Value of Equity
6 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.