6 unchanged sentences
Interest rate risk is the risk to earnings and value arising from changes in market interest rates.
−Removed: Interest rate risk arises from timing differences in the repricings and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay home mortgage loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S.
+Added: Interest rate risk arises from timing differences in the repricings and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay home mortgage loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option
+Added: risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S.
Treasuries and SOFR (basis risk).
The Company’s Board of Directors establishes broad policy limits with respect to interest rate risk.
−Removed: As part of this policy, the asset liability committee of the Company, or ALCO, establishes specific operating guidelines within the parameters of the Board of Director’s policies.
+Added: As part of this policy, the Asset Liability Committee establishes specific operating guidelines within the parameters of the Board of Director’s policies.
In general, the ALCO focuses on ensuring a stable and steadily increasing flow of net interest income through managing the size and mix of the balance sheet.
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Evaluation of Interest Rate Risk
−Removed: We use income simulations, an analysis of core funding utilization, and economic value of equity (EVE) simulations as our primary tools in measuring and managing interest rate risk.
−Removed: These tools are utilized to quantify the potential earnings impact of changing interest rates over a 12-month simulation horizon (income simulations) as well as identify expected earnings trends given longer term rate cycles (long term simulations, core funding utilizations, and EVE simulation).
+Added: We use income simulations, an analysis of core funding utilization, and EVE at Risk simulations as our primary tools in measuring and managing interest rate risk.
+Added: These tools are utilized to quantify the potential earnings impact of changing interest rates over a 12-month simulation horizon (income simulations) as well as identify expected earnings trends given longer term rate cycles (long term simulations, core funding utilizations, and EVE at Risk simulation).
A standard gap report and funding matrix will also be utilized to provide supporting detailed information on the expected timing of cashflow and repricing opportunities.
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Doing so necessitates an assessment of rate changes over varying time horizons and of varying/sufficient degrees such that the impact of embedded options within the balance sheet are sufficiently examined.
−Removed: We utilize a simulation model as our primary tool to assess the direction and magnitude of variations in net interest income and EVE resulting from potential changes in market interest rates.
+Added: We utilize a simulation model as our primary tool to assess the direction and magnitude of variations in net interest income and EVE at Risk resulting from potential changes in market interest rates.
Key assumptions in the model, which we believe are reasonable but which may have a significant impact on results, include:
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The resulting change in net interest income is an indication of the sensitivity of our earnings to directional changes in market interest rates.
−Removed: The simulation also measures the change in EVE, or the net present value of our assets and liabilities, under an immediate shift, or shock, in interest rates under various scenarios, as calculated by discounting the estimated future cash flows using market-based discount rates.
−Removed: The following table shows the impact of changes in interest rates on net interest income over the next twelve months and EVE based on our balance sheet as of December 31, 2024 (dollars in millions):
−Removed: If interest rates across the yield curve were to uniformly decrease, this analysis suggests that the Bank may be positioned for relatively neutral to positive improvements in net interest income over the next twelve months.
−Removed: If interest rates across the yield curve were to uniformly increase, this analysis suggests we would experience a reduction in net interest income over the next twelve months.
+Added: The simulation also measures the change in EVE at Risk, or the net present value of our assets and liabilities, under an immediate shift, or shock, in interest rates under various scenarios, as calculated by discounting the estimated future cash flows using market-based discount rates.
+Added: The following table shows the impact of changes in interest rates on net interest income over the next twelve months and EVE at Risk based on our balance sheet as of December 31, 2025 (dollars in millions):
+Added: Interest Rate Scenario EVE at Risk Percent Change Net interest income Percent Change
+Added: +400 Bps $ 244 -30.8 % $ 64.8 0.1 %
+Added: +300 Bps $ 286 -18.7 % $ 65.7 1.5 %
+Added: +200 Bps $ 324 -7.9 % $ 66.0 1.9 %
+Added: +100 Bps $ 345 -2.0 % $ 65.5 1.2 %
+Added: No change $ 352 0.0 % $ 64.8 0.0 %
+Added: -100 Bps $ 342 -2.7 % $ 64.3 -0.7 %
+Added: -200 Bps $ 321 -8.8 % $ 64.1 -1.1 %
+Added: -300 Bps $ 287 -18.6 % $ 63.7 -1.7 %
+Added: -400 Bps $ 236 -33.1 % $ 62.3 -3.8 %
+Added: If interest rates across the yield curve were to uniformly decrease, this analysis suggests the Bank may be positioned for relatively neutral to modestly negative changes in net interest income over the next twelve months.
+Added: If interest rates across the yield curve were to uniformly increase by approximately 100 to 300 basis points, this analysis suggests we would experience positive impact to net interest income over the next twelve months.
+Added: If interest rates across the yield curve were to uniformly increase by a more material amount (400 basis points and above), the analysis suggests we would shift into more neutral impacts to net interest income over the next twelve months.
We also forecast the impact of immediate and parallel interest rate shocks on net interest income under various scenarios to measure the sensitivity of our earnings under extreme conditions.
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.