9 unchanged sentences
In addition, the investment portfolio may be used in the management of the Company’s interest rate risk profile.
−Removed: The investment policy generally calls for funds to be invested among various categories of security types and maturities based upon the Company’s need for liquidity, desire to achieve a proper balance between minimizing risk while maximizing yield, the need to provide collateral for borrowings and to fulfill the Company’s asset/liability management goals.
+Added: The investment policy generally calls for funds to be invested among various categories of security types and maturities based upon the Company’s need for liquidity, desire to achieve a proper balance between minimizing risk while maximizing yield, the need to provide collateral for borrowings, and the need to fulfill the Company’s asset/liability management goals.
The Company’s cost of funds responds to changes in interest rates due to the relatively short-term nature of its wholesale deposit portfolio, and due to the relatively short-term nature of its borrowed funds.
The Company believes that its growing portfolio of longer duration, low-cost deposits generated from its payments division provides a stable and profitable funding vehicle, but also subjects the Company to greater risk in a falling interest rate environment than it would otherwise have without this portfolio.
−Removed: This risk is due to the fact that, while asset yields may decrease in a falling interest rate environment, the Company cannot significantly reduce interest costs associated with these deposits, which thereby compresses the Company’s NIM.
+Added: This risk is due to the fact that, while asset yields may decrease in a falling interest rate environment, the Company cannot significantly reduce interest costs associated with these deposits, which thereby compress the Company’s net interest margin.
The Board of Directors and relevant government regulations establish limits on the level of acceptable interest rate risk at the Company, to which management adheres.
9 unchanged sentences
Earnings at Risk (“EAR analysis”) and Economic Value of Equity (“EVE analysis”).
−Removed: Under EAR analysis, net interest income is calculated for each interest rate scenario to the net interest income forecast in the base case.
+Added: Under EAR analysis, net interest income is calculated for each interest rate scenario and compared to the net interest income forecast in the base case.
EAR analysis measures the sensitivity of interest-sensitive earnings over a one-year minimum time horizon.
2 unchanged sentences
These assumptions are subjective and, as a result, net interest income simulation results will differ from actual results due to the timing, magnitude, and frequency of interest rate changes, changes in market conditions, customer behavior and management strategies, among other factors.
−Removed: The Company performs various sensitivity analyses on assumptions of deposit attrition and deposit re-pricing, as well as market-implied forward rates and various likely and extreme interest rate scenarios, including rapid and gradual interest rate ramps, rate shocks and yield curve twists.
+Added: The Company performs various sensitivity analyses on assumptions of deposit attrition, loan prepayments, and asset re-pricing, as
+Added: well as market-implied forward rates and various likely and extreme interest rate scenarios, including rapid and gradual interest rate ramps, rate shocks and yield curve twists.
The EAR analysis used in the following table reflects the required analysis used no less than quarterly by management.
−Removed: It models -200, -100, +100, +200, +300 and +400 basis point parallel shifts in market interest rates over the next one-year period.
−Removed: Due to the current low level of interest rates, only a ‑100 basis point parallel shift is represented.
−Removed: The Company was within Board approved policy limits for all interest rate scenarios using the snapshot as of September 30, 2020.
−Removed: The tables below show the results of the scenarios as of September 30, 2020 and 2019:
+Added: It models basis point parallel shifts in market interest rates over the next one-year period.
+Added: The following table shows the results of the scenarios as of September 30, 2021 and 2020:
Net Sensitive Earnings at Risk
−Removed: Balances as of September 30, 2020 Change in Interest Income/Expense
+Added: Change in Interest Income/Expense
for a given change in interest rates
Over / (Under) Base Case Parallel Shift
−Removed: (Dollars in Thousands) Book Value -200 (1)
−Removed: -100 Base 100 200 300 400
+Added: (Dollars in Thousands) Book Value -100 Base +100 +200 +300 +400
+Added: Balances as of September 30, 2021
Total interest-sensitive income 5,880,667 263,269 277,479 302,440 327,277 352,428 377,750
2 unchanged sentences
Percentage change from base -5.1 % — % 8.6 % 17.1 % 25.8 % 34.5 %
−Removed: Board Policy Limits — % -8.0 % — % -8.0 % -10.0 % -15.0 % -20.0 %
−Removed: (1) A -200 basis point parallel shift was not analyzed by the Company at September 30, 2020.
−Removed: Net Sensitive Earnings at Risk
−Removed: Balances as of September 30, 2019 Change in Interest Income/Expense
−Removed: for a given change in interest rates
−Removed: Over / (Under) Base Case Parallel Shift
−Removed: (Dollars in Thousands) Book Value -200 -100 Base 100 200 300 400
+Added: Balances as of September 30, 2020
Total interest-sensitive income 5,273,791 246,070 251,977 275,320 298,406 322,340 346,057
2 unchanged sentences
Percentage change from base -2.2 % — % 8.1 % 16.1 % 24.4 % 32.7 %
−Removed: Board Policy Limits -12.0 % -8.0 % — % -8.0 % -10.0 % -15.0 % -20.0 %
The EAR analysis reported at September 30, 2021 shows that Total Interest Sensitive Income will change more rapidly than Total Interest Sensitive Expense over the next year.
1 unchanged sentence
The Company's business and deposits are predictably cyclical on a weekly, monthly and yearly basis.
−Removed: The Company’s static IRR results could vary depending on which day of the week and timing in relation to certain payrolls, as well as time of the month in regard to early funding of certain programs, when this snapshot is taken.
−Removed: The Company’s overnight federal funds purchased fluctuates on a predictable daily and monthly basis due to fluctuations in a portion of its noninterest-bearing deposit base, primarily related to payroll processing and timing of when certain programs are prefunded and when the funds are received.
−Removed: The Company believes that its growing portfolio of noninterest-bearing deposits provides a stable and profitable funding vehicle and a significant competitive advantage in a rising interest rate environment as the Company’s cost of funds will likely remain relatively low, with less of an increase in the cost of funds expected relative to many other banks.
+Added: The Company's static IRR results could vary depending on which day of the week the month ends, primarily related to payroll processing and timing of when certain programs are prefunded and when the funds are received.
Under EVE analysis, the economic value of financial assets, liabilities and off-balance sheet instruments is derived under each rate scenario.
1 unchanged sentence
The EVE analysis used in the following table reflects the required analysis used no less than quarterly by management.
−Removed: It models immediate -200, -100, +100, +200, 300 and +400 basis point parallel shifts in market interest rates.
−Removed: Due to the current low level of interest rates, only a -100 basis point parallel shift is represented.
−Removed: The Company was within Board policy limits for all scenarios.
−Removed: The tables below show the results of the scenario as of September 30, 2020 and 2019:
+Added: It models immediate basis point parallel shifts in market interest rates.
+Added: The following table shows the results of the scenario as of September 30, 2021 and 2020:
Economic Value Sensitivity
−Removed: Balances as of September 30, 2020 Standard (Parallel Shift)
+Added: Standard (Parallel Shift)
Economic Value of Equity at Risk %
-100 +100 +200 +300 +400
+Added: Balances as of September 30, 2021
Percentage change from base -12.9 % 8.4 % 14.5 % 19.5 % 24.6 %
−Removed: Board Policy Limits — % -10.0 % -10.0 % -20.0 % -25.0 % -35.0 %
−Removed: (1) A -200 basis point parallel shift was not analyzed by the Company at September 30, 2020.
−Removed: Balances as of September 30, 2019 Standard (Parallel Shift)
−Removed: Economic Value of Equity at Risk%
−Removed: -200 -100 100 200 300 400
+Added: Balances as of September 30, 2020
Percentage change from base -9.4 % 9.2 % 15.7 % 20.6 % 24.8 %
−Removed: Board Policy Limits -20.0 % -10.0 % -10.0 % -20.0 % -25.0 % -35.0 %
The EVE at risk reported at September 30, 2021 shows that the economic value of equity position will be more sensitive to changes in interest rates than the prior period due to the large amount of non-interest bearing funding compared with the prior period.
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.