5 unchanged sentences
The tables below show the effects of gradual shifts in interest rates over a twelve month period on the Company’s net interest income versus the Company's net interest income in a flat rate scenario.
−Removed: Simulation A presents three rising rate scenarios and in each scenario, rates are assumed to change evenly over 12 months.
+Added: Simulation A presents three rising rate scenarios and one falling rate scenario, and in each scenario, rates are assumed to change evenly over 12 months.
In these scenarios, the balance sheet remains flat.
−Removed: The sensitivity of deposit balances to changes in rates is particularly difficult to estimate in exceptionally low rate environments.
+Added: The sensitivity of deposit balances to changes in rates is particularly difficult to estimate in low interest rate environments.
Since the future effects of changes in rates on deposit balances cannot be known with certainty, the Company conservatively models alternate scenarios with deposit attrition as rates rise.
2 unchanged sentences
While the future effects of rising rates on deposit balances cannot be known, the Company maintains a practice of running multiple rate scenarios to better understand interest rate risk and its effect on the Company’s performance.
−Removed: Simulation A March 31, 2022 December 31, 2021
+Added: Simulation A June 30, 2022 March 31, 2022
(Dollars in millions)
4 unchanged sentences
100 basis points rising 23.5 2.55 — 31.5 3.86 —
−Removed: Simulation B March 31, 2022 December 31, 2021
+Added: 100 basis points falling (35.3) (3.83) — — — —
+Added: Simulation B June 30, 2022 March 31, 2022
(Dollars in millions)
4 unchanged sentences
100 basis points rising (2.7) (.31) (612.5) 12.9 1.58 (673.4)
−Removed: Under Simulation A, in the three rising rate scenarios, interest rate risk is less asset sensitive than the previous quarter, which is primarily due to a decrease in interest earning balances at the Federal Reserve coupled with an increase in interest rates.
+Added: 100 basis points falling (2.7) (.31) % 1,086.4 — — —
+Added: Under Simulation A, in the three rising rate scenarios and 100 basis points falling rate scenario, interest rate risk is less asset sensitive than the previous quarter, primarily due to an increase in the Federal funds rate, which impacts surge deposit runoff and increases non-maturity deposit rates.
Deposit attrition was removed from the simulation in both the current and previous quarters.
−Removed: The Company did not model a 100 basis point falling scenario due to the already low interest rate environment.
In Simulation B, the assumed levels of deposit attrition were modeled to capture the results of a shrinking balance sheet.
−Removed: Under this Simulation, in the three rising rate scenarios, interest rate risk is less asset sensitive than the previous quarter, also primarily due to a decrease in interest earning balances at the Federal Reserve coupled with an increase in interest rates.
+Added: Under this Simulation, in the three rising rate scenarios and the 100 basis points falling rate scenario, interest rate risk is liability sensitive, while in the previous quarter it was asset sensitive.
+Added: This was primarily due to an increase in the Federal funds rate, which impacts surge deposit runoff and puts upward pressure on non-maturity deposit rates.
Projecting deposit activity in a period of historically low interest rates is difficult, and the Company cannot predict how deposits will actually react to shifting rates.
The comparisons above provide insight into potential effects of changes in rates and deposit levels on net interest income.
−Removed: The Company believes that its approach to interest rate risk has appropriately considered its susceptibility to both rising and falling rates and has adopted strategies which minimize the impact of interest rate risk.
+Added: The Company believes that its approach to interest rate risk has appropriately
+Added: considered its susceptibility to both rising and falling rates and has adopted strategies which minimize the impact of interest rate risk.
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.