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 generally does not have an offsetting reduction as it does not pay interest on these deposits.
−Removed: However, 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.
−Removed: These costs reprice immediately upon a change in the applicable rate index and would likely lower card processing expenses.
+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.
+Added: These costs reprice immediately upon a change in the applicable rate index.
The Bank, acting as custodian of cardholder funds, places a portion of such cardholder funds at one or more third-party banks insured by the FDIC (each, a “Program Bank”).
5 unchanged sentences
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.
−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 off-balance sheet custodial 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: 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.
1 unchanged sentence
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.
−Removed: The Company uses two approaches to model interest rate risk:
+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.
3 unchanged sentences
The EAR analysis used in the following table reflects the required analysis used no less than quarterly by management.
−Removed: It models immediate basis point parallel shifts in market interest rates over the next one-year period.
−Removed: The following table shows the results of the scenarios as of June 30, 2024:
+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 December 31, 2024 and September 30, 2024:
Net Sensitive Earnings at Risk
3 unchanged sentences
(Dollars in Thousands) Book Value -200 -100 Base +100 +200
−Removed: Total interest-sensitive income 6,694,715 407,182 437,969 469,288 498,832 528,045 557,119 586,469
−Removed: Total interest-sensitive expense 274,911 2,053 3,175 4,801 6,524 8,262 10,021 11,777
−Removed: Net interest-sensitive income 405,129 434,794 464,487 492,308 519,783 547,098 574,692
+Added: Balances as of December 31, 2024
+Added: Total interest income 6,737,172 407,539 436,927 470,173 504,673 537,976
+Added: Total interest expense 235,008 518 553 1,267 3,000 4,753
+Added: Net interest income 407,021 436,374 468,906 501,673 533,223
Percentage change from base -13.2 % -6.9 % — % 7.0 % 13.7 %
−Removed: The EAR analysis reported at June 30, 2024 , shows that total interest-sensitive income will change more rapidly than total interest-sensitive expense over the next year.
+Added: Balances as of September 30, 2024
+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
+Added: Percentage change from base -11.0 % -5.5 % — % 5.2 % 10.2 %
+Added: The EAR analysis reported at December 31, 2024 , shows that total interest income will change more rapidly than total interest expense over the next year.
IRR is a snapshot in time.
5 unchanged sentences
It models immediate basis point parallel shifts in market interest rates.
−Removed: The following table shows the results of the scenarios as June 30, 2024:
+Added: The following table shows the results of the scenario as of December 31, 2024 and September 30, 2024:
Economic Value Sensitivity
2 unchanged sentences
-200 -100 +100 +200
+Added: Balances as of December 31, 2024
Percentage change from base -7.5 % -3.2 % 2.2 % 3.8 %
−Removed: The EVE at risk reported at June 30, 2024 shows that the economic value of equity position is expected to benefit from rising interest rates due to the large amount of noninterest-bearing funding.
+Added: Balances as of September 30, 2024
+Added: Percentage change from base -10.0 % -3.9 % 2.6 % 4.2 %
+Added: The EVE at risk reported at December 31, 2024 shows that the economic value of equity position is expected to benefit from rising interest rates due to the large amount of noninterest-bearing funding.
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.