9 unchanged sentences
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.
−Removed: The Company believes that its portfolio of longer duration deposits generated from its BaaS business line 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 compress the Company’s net interest margin.
−Removed: However, the card processing expense derived from contractual agreements with certain BaaS partners, which are tied to a rate index, would likely lower card processing expenses.
−Removed: A portion of the Company’s deposit balances are subject to variable card processing expenses, derived from contractual agreements with certain BaaS partners tied to a rate index, typically the EFFR.
+Added: The Company believes that its portfolio of longer duration deposits generated from its Partner Solutions business line provides a stable and profitable funding vehicle.
+Added: A portion of the Company’s deposit balances are subject to variable card processing expenses, derived from contractual agreements with certain Partner Solutions partners tied to a rate index, typically the EFFR.
These costs reprice immediately upon a change in the applicable rate index.
5 unchanged sentences
The Company actively manages interest rate risk, as changes in market interest rates can have a significant impact on reported earnings.
−Removed: The Company's interest rate risk analysis is designed to compare income and economic valuation simulations in market scenarios designed to alter the direction, magnitude and speed of interest rate changes, as well as the slope of the yield curve.
−Removed: This analysis may not represent all impacts driven by changes in the interest rate environment, such as certain other card fee income and expense line items tied to card processing expense derived from contractual agreements with certain BaaS partners and servicing fees the Company recognizes from custodial off-balance sheet deposits.
−Removed: The Company does not currently engage in trading activities to control interest rate risk although it may do so in the future, if deemed necessary, to help manage interest rate risk.
+Added: The Company's IRR analysis is designed to compare income and economic valuation simulations in market scenarios designed to alter the direction, magnitude and speed of interest rate changes, as well as the slope of the yield curve.
+Added: This analysis may not represent all impacts driven by changes in the interest rate environment, such as certain other card fee income and expense line items tied to card processing expense derived from contractual agreements with certain Partner Solutions partners and servicing fees the Company recognizes from custodial off-balance sheet deposits.
+Added: The Company does not currently engage in trading activities to control IRR although it may do so in the future, if deemed necessary, to help manage IRR.
Earnings at risk and economic value analysis.
As a continuing part of its financial strategy, the Bank considers methods of managing an asset/liability mismatch consistent with maintaining acceptable levels of net interest income.
−Removed: In order to monitor interest rate risk, the Company has created an Asset/Liability Committee whose principal responsibilities are to assess the Bank’s asset/liability mix and implement strategies that will enhance income while managing the Bank’s vulnerability to changes in interest rates.
−Removed: The Company uses two approaches to model interest rate risk:
+Added: In order to monitor IRR, the Company has created an Asset/Liability Committee whose principal responsibilities are to assess the Bank’s asset/liability mix and implement strategies that will enhance income while managing the Bank’s vulnerability to changes in interest rates.
+Added: The Company uses two approaches to model IRR:
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 and compared to the net interest income forecast in the base case.
−Removed: EAR analysis measures the sensitivity of interest-sensitive earnings over a one-year minimum time horizon.
+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 over a one-year minimum time horizon.
The results are affected by projected rates, prepayments, caps and floors.
11 unchanged sentences
Balances as of September 30, 2024
−Removed: Total interest-sensitive income 6,650,735 397,360 424,061 450,823 477,078 503,412 529,599 556,117
−Removed: Total interest-sensitive expense 269,861 1,069 1,905 3,530 5,429 7,352 9,289 11,249
−Removed: Net interest-sensitive income 396,291 422,156 447,293 471,649 496,060 520,310 544,868
+Added: Total interest income 6,676,417 411,926 440,588 470,620 499,529 527,533
+Added: Total interest expense 634,988 12,614 16,686 22,053 27,715 33,184
+Added: Net interest income 399,312 423,902 448,567 471,814 494,349
Percentage change from base -11.0 % -5.5 % — % 5.2 % 10.2 %
Balances as of September 30, 2023
−Removed: Total interest-sensitive income 5,866,763 314,229 337,945 361,442 384,921 408,263 431,850
−Removed: Total interest-sensitive expense 221,302 323 752 1,821 2,904 4,017 5,149
−Removed: Net interest-sensitive income 313,906 337,193 359,621 382,017 404,246 426,701
+Added: Total interest income 6,650,735 397,360 424,061 450,823 477,078 503,412
+Added: Total interest expense 269,861 1,069 1,905 3,530 5,429 7,352
+Added: Net interest income 396,291 422,156 447,293 471,649 496,060
Percentage change from base -11.4 % -5.6 % — % 5.4 % 10.9 %
−Removed: The EAR analysis reported at September 30, 2023 , shows that total interest-sensitive income will change more rapidly than total interest-sensitive expense over the next year.
+Added: The EAR analysis reported at September 30, 2024 , shows that total interest income will change more rapidly than total interest expense over the next year.
IRR is a snapshot in time.
16 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.