4 unchanged sentences
It is our policy to maintain portfolios of earning assets and interest-bearing liabilities with maturities and repricing opportunities that will afford protection, to the extent practical, against wide interest rate fluctuations.
−Removed: Our exposure to interest rate risk is analyzed on a regular basis by management using standard "gap" reports (which measure the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that time period), maturity reports, and an asset/liability software model that simulates future levels of interest income and expense based on current interest rates, expected future interest rates, and various intervals of “shock” interest rates.
−Removed: Over the years, we have been able to maintain a fairly consistent yield on average earning assets (NIM), even during periods of changing interest rates.
+Added: Our exposure to interest rate risk is analyzed on a regular basis by management using standard "gap" reports (which measure the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that time period), maturity reports, and an asset/liability software model that simulates future levels of interest income and expense based on current interest rates, expected future interest rates, and various intervals of “shock” or "ramped" interest rate scenarios.
+Added: Over the years, we have been able to maintain a fairly consistent yield on average earning assets (our NIM), even during periods of changing interest rates.
Over the past five calendar years, our NIM has ranged from a low of 3.16% (realized in 2021) to a high of 4.09% (realized in 2018).
The 93 basis point fluctuation in NIM between the high and low point during this period was a direct result of the FRB monetary policy enacted at the beginning of the COVID-19 pandemic resulting in a reduction in short-term market interest rates totaling 150 basis points in March 2020.
−Removed: During the first quarter of 2022, the FRB implemented monetary policy to combat inflationary conditions and increased short-term rates 25 basis points, with the anticipation of additional rate increases to occur throughout 2022.
+Added: During the first six months of 2022, the FRB implemented monetary policy to combat inflationary conditions and increased short-term rates 175 basis points, with the anticipation of additional rate increases to occur throughout 2022.
There has be no significant change in the Company-estimated net interest income sensitivity from December 31, 2021.
−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 March 31, 2022, we had approximately $3.2 billion more in interest-bearing liabilities that are subject to interest rate changes within one year than earning assets.
+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 June 30, 2022, we had approximate ly $3.2 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.
1 unchanged sentence
Also, interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates.
−Removed: 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 as of March 31, 2022 were deposits totaling $4.9 billion comprised of checking, savings, and certain types of money market deposits with interest rates set by management.
+Added: 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.
+Added: For example, included in interest-bearing liabilities subject to interest rate changes within one year as of June 30, 2022 were deposits tota ling $4.9 billion c omprised 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.
10 unchanged sentences
Actions taken by the FRB at the beginning of the pandemic resulted in a very low and flat interest rate curve environment.
−Removed: Recent actions to raise short-term interest rates have resulted in a some steepening of the yield curve on the short end (within 3 years).
−Removed: However, the longer end of the curve continues to be flat.
−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: Recent actions to raise short-term interest rates have resulted in a some steepening of the yield curve on the short end (within 1 year).
+Added: However, the longer end of the curve continues to be flat to slightly inverted (between 1 and 10 years).
+Added: A flat interest rate curve is an unfavorable interest rate environment for many financial institutions, including the 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.
1 unchanged sentence
Our experience historically has been that our demand deposit accounts have lagged the timing and amount of general market increases.
−Removed: However, we expect continued pressure on net interest margin from market competition for quality loans and the investment of liquidity in lower earning assets until loan demand increases sufficiently to deploy excess liquidity from short-term investments and securities.
+Added: However, we expect continued pressure on net interest margin from market competition for quality loans and the current mix of out earning assets in lower yielding investment securities.
Because the assets and liabilities of a bank are primarily monetary in nature (payable in fixed, determinable amounts), the performance of a bank is affected more by changes in interest rates than by inflation as discussed above under Interest Rate Risk.
1 unchanged sentence
The effect of inflation on banks is normally not as significant as its influence on those businesses that have large investments in plant and inventories.
−Removed: During periods of high inflation, there are normally corresponding increases in the money supply, and banks will normally experience above average growth in assets, loans, and deposits.
+Added: During periods of high inflation as we have recently experienced, there are normally corresponding increases in the money supply, and banks will normally experience above average growth in assets, loans, and deposits.
Also, general increases in the price of goods and services will result in increased operating expenses.
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.