ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: The COVID-19 pandemic added market risk disclosure which should be read with the disclosures presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
−Removed: While 2020 began with increased loan demand and strong employment, the economic picture reversed sharply as coronavirus wreaked havoc and became the lead story by mid-March.
−Removed: A series of emergency health orders for public safety curtailed nonessential activity and had the effect of shutting down vast swaths of Ohio’s economy, resulting in a peak of approximately one million people on unemployment, or an unemployment rate of 17.6%, in Ohio during April of 2020.
−Removed: By September 2021, Ohio’s unemployment rate approximated 4.6%.
−Removed: The bank is based in Holmes County which is reporting the lowest unemployment rate in Ohio at 2.6% in September 2021.
−Removed: Of the counties within the bank’s footprint, Stark County reported the highest unemployment rate at 4.8% in September.
−Removed: With vaccination rates and government stimulus funds slowing, the Federal Reserve is projecting bottlenecks, hiring difficulties, and other constraints as well as the possibility that inflation could turn out to be higher and more persistent than expected.
−Removed: The effects of the pandemic on the economy have continued to diminish but risks to the economy remain.
+Added: By March 2022, Ohio’s unemployment rate approximated 4.1%.
+Added: The bank is based in Holmes County which is reporting the lowest unemployment rate in Ohio at 2.6% in March 2022.
+Added: Of the counties within the bank’s footprint, Stark County reported the highest unemployment rate at 4.1% in March.
+Added: Many jobs within the Bank’s market footprint are going unfilled.
+Added: The rising rate of inflation, which stood at 8.5% in March 2022, has become persistent and market interest rates have risen substantially during the first quarter of the year.
+Added: Credit quality in the Bank’s loan portfolio has continued to improve, however risks to the economy remain with higher prices for goods and labor.
Management performs a quarterly analysis of the Company’s interest rate risk over a twenty-four month horizon.
The analysis includes two balance sheet models, one based on a static balance sheet and one on a dynamic balance sheet with projected growth in assets and liabilities.
−Removed: All balance sheet positions and interest rate projections are currently within the Company’s board-approved policy for the first twelve- month period.
−Removed: For the twenty-four month periods in the rising interest rate scenarios the increase in interest income is favorably above board policy limits.
−Removed: The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained -200 through +400 basis point changes, in 100 basis point increments, in market interest rates at September 30, 2021 and December 31, 2020.
+Added: All balance sheet positions and interest rate projections are currently within the Company’s board-approved policy for both the twelve- month and twenty-four month periods.
+Added: The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained -200 through +400 basis point changes, in 100 basis point increments, in market interest rates at March 31, 2022 and December 31, 2021.
The net interest income reflected is for the first twelve-month period of the modeled twenty-four month horizon.
The underlying balance sheet for illustrative purposes is dynamic with projected growth in assets and liabilities.
−Removed: September 30, 2021
+Added: March 31, 2022
(Dollars in thousands)
5 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.