7 unchanged sentences
Over the past five calendar years, our net interest margin has ranged from a low of 3.56% (realized in 2020) to a high of 4.09% (realized in 2018).
−Removed: The consistency of
−Removed: the net interest margin is aided by the relatively low level of long-term interest rate exposure that we maintain.
−Removed: At June 30, 2021 a majority of our interest-earning assets are subject to repricing within five years (because they are either adjustable rate assets or they are fixed rate assets that mature) and substantially all of our interest-bearing liabilities reprice within five years.
−Removed: Using stated maturities for all fixed rate instruments except mortgage-backed securities (which are allocated in the periods of their expected payback) and securities and borrowings with call features that are expected to be called (which are shown in the period of their expected call), at June 30, 2021, we had over $2 billion more in interest-bearing liabilities that are subject to interest rate changes within one year than earning assets.
+Added: Our 2021 margins have decreased from our low in 2020, with our net interest margins amounting to 3.03% and 3.17% for the three and nine months ended September 30, 2021, respectively, as discussed below.
+Added: Our generally consistent net interest margin has been aided by the relatively low level of long-term interest rate exposure that we maintain.
+Added: At September 30, 2021 a majority of our interest-earning assets are subject to repricing within five years (because they are either adjustable rate assets or they are fixed rate assets that mature) and substantially all of our interest-bearing liabilities reprice within five years.
+Added: Using stated maturities for all fixed rate instruments except mortgage-backed securities (which are allocated in the periods of their expected payback) and securities and borrowings with call features that are expected to be called (which are shown in the period of their expected call), at September 30, 2021, we had approximately $3 billion more in interest-bearing liabilities that are subject to interest rate changes within one year than earning assets.
This generally would indicate that net interest income would experience downward pressure in a rising interest rate environment and would benefit from a declining interest rate environment.
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In addition to the effects of “when” various rate-sensitive products reprice, market rate changes may not result in uniform changes in rates among all products.
−Removed: For example, included in interest-bearing liabilities subject to interest rate changes within one year at June 30, 2021 were deposits totaling $3.8 b illion comprised of checking, savings, and certain types of money market deposits with interest rates set by management.
+Added: For example, included in interest-bearing liabilities subject to interest rate changes within one year at September 30, 2021 were deposits totaling $4.0 b illion comprised of checking, savings, and certain types of money market deposits with interest rates set by management.
These types of deposits historically have not repriced with, or in the same proportion, as general market indicators.
6 unchanged sentences
A “flat yield curve” means that short-term interest rates are substantially the same as long-term interest rates.
−Removed: Due to actions taken by the Federal Reserve related to short-term interest rates and the impact of the global economy on longer-term interest rates, we are currently in a very low and flat interest rate curve environment.
−Removed: A flat interest rate curve is an unfavorable interest rate environment for many banks, including the Bank, as short-term interest rates generally drive our deposit pricing and longer-term interest rates generally drive loan pricing.
+Added: Due to actions taken by the Federal Reserve related to short-term interest rates and the impact of the global economy on longer-term interest rates, we are currently in a
+Added: very low and flat interest rate curve environment.
+Added: A flat interest rate curve is an unfavorable interest rate environment for many banks, including First Bank, as short-term interest rates generally drive our deposit pricing and longer-term interest rates generally drive loan pricing.
When these rates converge, the profit spread we realize between loan yields and deposit rates narrows, which pressures our net interest margin.
6 unchanged sentences
Overall however, the impact of the interest rate cuts negatively impacted our net interest margin in 2020 and 2021.
+Added: The impact of the lower interest rates combined with the high liquidity arising from high deposit growth led to the decline in our net interest margins in 2021 when compared to prior periods.
Assuming no significant changes in interest rates in the next twelve months, we expect continued pressure on our net interest margin (excluding the impact of PPP - see below) as a result of the flat yield curve and the expectation of lower interest rates on the redeployment of cash received on maturing loans and investments that will likely not be fully offset by lower funding costs.
−Removed: Since the announcement of the SBA's PPP program, we have originated at total of approximately $358 million in PPP loans, of which $156 million and $241 million were outstanding at June 30, 2021 and December 31, 2020,
−Removed: respectively.
+Added: While our net interest margin is expected to continue to decline, the impact of that decline, as discussed previously, has been more that offset most quarters by incremental earnings associated with higher levels of interest-earnings assets arising from the high deposit growth.
+Added: The result has been that our net interest income, exclusive of loan discount accretion and PPP fee amortization (both are discussed below), has generally trended upwards for the last several years and reached an all-time high of $55.2 million in the third quarter of 2021.
+Added: Since the announcement of the PPP program, we have originated at total of approximately $353 million in PPP loans, of which $67 million and $241 million were outstanding at September 30, 2021 and December 31, 2020, respectively.
These loans all have an interest rate of 1.00%.
3 unchanged sentences
In 2020, we amortized $4.1 million of the PPP loan fees as interest income.
−Removed: For the first six months of 2021, we amortized $5.7 million of the PPP loan fees as interest income.
−Removed: The Company has $6.2 million in remaining deferred PPP loan fees, of which $0.9 million relates to 2020 originations and $5.3 million relates to 2021 originations.
−Removed: While the exact timing of the forgiveness approvals from PPP loans is uncertain, we currently expect the majority of the remaining fees associated with the 2020 originations to be realized during the third quarter of 2021.
−Removed: As it relates to the 2021 PPP originations, we expect approximately one-third of the remaining fees at June 30, 2021 to be recognized in the third quarter of 2021, half to be recognized in the fourth quarter of 2021, with substantially all of the remainder recognized in the first quarter of 2022.
+Added: For the first nine months of 2021, we amortized $7.8 million of the PPP loan fees as interest income.
+Added: The Company has $4.3 million in remaining deferred PPP loan fees.
+Added: While the exact timing of the forgiveness approvals from PPP loans is uncertain, of the remaining fees at September 30, 2021, we currently expect approximately half to be recognized in the fourth quarter of 2021, with substantially all of the remainder recognized in the first quarter of 2022.
As previously discussed in the section “Net Interest Income,” our net interest income has been impacted by certain purchase accounting adjustments related to the acquired banks.
The purchase accounting adjustments related to the premium amortization on loans, deposits and borrowings are based on amortization schedules and are thus systematic and predictable.
−Removed: The accretion of the loan discount on acquired loans amounted to $3.7 million and $2.0 million for the first six months of 2021 and 2020, respectively, is less predictable and could be materially different among periods.
+Added: The accretion of the loan discount on acquired loans amounted to $4.2 million and $3.0 million for the first nine months of 2021 and 2020, respectively, is less predictable and could be materially different among periods.
This is because of the magnitude of the discounts that are initially recorded and the fact that the accretion being recorded is dependent on both the credit quality of the acquired loans and the impact of any accelerated loan repayments, including payoffs.
4 unchanged sentences
Each of these factors is difficult to predict and susceptible to volatility.
−Removed: The remaining loan discount on acquired loans amounted to $5.3 million at June 30, 2021 compared to $8.9 million at December 31, 2020.
+Added: The remaining loan discount on acquired loans amounted to $4.8 million at September 30, 2021 compared to $8.9 million at December 31, 2020.
We have no market risk sensitive instruments held for trading purposes, nor do we maintain any foreign currency positions.
1 unchanged sentence
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.