8 unchanged sentences
The Corporation employs various management techniques to minimize its exposure to interest rate risk.
−Removed: An ALCO is responsible for reviewing the interest rate sensitivity and liquidity positions of the Corporation, approving asset and liability management policies, and overseeing the formulation and implementation of strategies regarding balance sheet positions.
+Added: The Corporation's ALCO is responsible for reviewing the interest rate sensitivity and liquidity positions of the Corporation, approving asset and liability management policies, and overseeing the formulation and implementation of strategies regarding balance sheet positions.
The Corporation uses two complementary methods to measure and manage interest rate risk.
5 unchanged sentences
Simulation of net interest income is used primarily to measure the Corporation’s short-term earnings exposure to rate movements.
−Removed: The Corporation’s policy limits the potential exposure of net interest income, in a non-parallel instantaneous shock, to 10% of the base case net interest income for a 100 bp shock in interest rates, 15% for a 200 bp shock, 20% for a 300 bp shock and 25% for a 400 bp shock.
+Added: The Corporation’s policy limits the potential exposure of net interest income, in a non-parallel instantaneous shock, to 10% of the base case net interest income for a 100 bps shock in interest rates, 15% for a 200 bps shock, 20% for a 300 bps shock and 25% for a 400 bps shock.
A "shock" is an immediate upward or downward movement of interest rates.
9 unchanged sentences
in net interest income % Change in net interest income
−Removed: +400 bp + $131.7 million + 19.8%
−Removed: +300 bp + $98.9 million + 14.9%
−Removed: +200 bp + $65.5 million + 9.9%
−Removed: +100 bp + $31.4 million + 4.7%
+Added: +400 bps + $173.1 million + 25.3%
+Added: +300 bps + $129.6 million + 19.0%
+Added: +200 bps + $85.6 million + 12.5%
+Added: +100 bps + $41.3 million + 6.0%
(1) These results include the effect of implicit and explicit interest rate floors that limit further reduction in interest rates.
3 unchanged sentences
This measurement tool is used primarily to evaluate the longer-term repricing risks and options in the Corporation’s balance sheet.
−Removed: The Corporation's policy limits the economic value of equity that may be at risk, in a non-parallel instantaneous shock, to 10% of the base case economic value of equity for a 100 bp shock in interest rates, 20% for a 200 bp shock, 30% for a 300 bp shock
−Removed: and 40% for a 400 bp shock.
−Removed: As of December 31, 2020, the Corporation was within economic value of equity policy limits for every 100 bp shock.
+Added: The Corporation's policy limits the economic value of equity that may be at risk, in a non-parallel instantaneous shock, to 10% of
+Added: the base case economic value of equity for a 100 bps shock in interest rates, 20% for a 200 bps shock, 30% for a 300 bps shock and 40% for a 400 bps shock.
+Added: As of December 31, 2021, the Corporation was within economic value of equity policy limits for every 100 bps shock.
Interest Rate Swaps
3 unchanged sentences
These interest rate swaps are derivative financial instruments, and the gross fair values are recorded in other assets and liabilities on the consolidated balance sheets, with changes in fair value during the period recorded in other non-interest expense on the consolidated statements of income.
+Added: Cash Flow Hedges
+Added: The Corporation’s objectives in using interest rate derivatives are to reduce volatility in net interest income and to manage its exposure to interest rate movements.
+Added: To accomplish this objective, the Corporation primarily uses interest rate swaps as part of its interest rate risk management strategy.
+Added: During 2021, the Corporation entered into interest rate swaps designated as cash flow hedges to hedge the variable cash flows associated with existing floating rate loans.
+Added: These hedge contracts involve the receipt of fixed-rate amounts from a counterparty in exchange for the Corporation making floating-rate payments over the life of the agreements without exchange of the underlying notional amount.
+Added: For derivatives designated and that qualify as cash flow hedges of interest rate risk, the unrealized gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest income in the same period during which the hedged transaction affects earnings.
+Added: Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are made on the Corporation’s variable-rate liabilities.
The Corporation must maintain a sufficient level of liquid assets to meet the cash needs of its customers, who, as depositors, may want to withdraw funds or who, as borrowers, need credit availability.
1 unchanged sentence
The Corporation also maintains secondary sources that provide liquidity on a secured and unsecured basis to meet short- and long-term needs.
−Removed: The Corporation maintains liquidity sources in the form of interest-bearing deposits and customer funding (repurchase agreements and short-term promissory notes).
+Added: The Corporation maintains liquidity sources in the form of interest-bearing deposits and customer funding (short-term promissory notes).
The Corporation can access additional liquidity from these sources, if necessary, by increasing the rates of interest paid on those instruments.
2 unchanged sentences
Fulton Bank is a member of the FHLB and has access to FHLB overnight and term credit facilities.
−Removed: As of December 31, 2020, the Corporation had $536.0 million of short- and long-term advances outstanding from the FHLB with an additional borrowing capacity of approximately $3.9 billion under these facilities.
−Removed: Advances from the FHLB are secured by qualifying commercial real estate and residential mortgage loans, investments and other assets.
+Added: As of December 31, 2021, the Corporation had no short- or long-term advances outstanding with the FHLB.
+Added: As of December 31, 2021, the Corporation has borrowing capacity of approximately $5.8 billion under these facilities.
+Added: Advances from the FHLB, when utilized, are secured by qualifying commercial real estate and residential mortgage loans, investments and other assets.
As of December 31, 2021, the Corporation had aggregate availability under federal funds lines of $2.1 billion, with no outstanding borrowings against that amount.
A combination of commercial real estate loans, commercial loans and securities are pledged to the FRB of Philadelphia to provide access to FRB discount window borrowings.
−Removed: As of December 31, 2020, the Corporation had $324.3 million of collateralized borrowing availability at the Discount Window, and no outstanding borrowings.
+Added: As of December 31, 2021, the Corporation had $0.9 billion of collateralized borrowing availability at the discount window, and no outstanding borrowings.
+Added: The Corporation records a reserve for unfunded commitments, included in other liabilities on the consolidated balance sheets, which represents management’s estimate of losses inherent in commitments to extend credit and letters of credit.
+Added: As of December 31, 2021, the balance of these commitments was $352.5 million.
Liquidity must also be managed at the Corporation's parent company level.
1 unchanged sentence
Generally, these limitations are based on the subsidiary banks’ regulatory capital levels and their net income.
−Removed: See "Note 11 - Regulatory Matters - Dividend and Loan Limitations" in the Notes to Consolidated Financial Statements in Item 8.
+Added: "Note 11 - Regulatory Matters - Dividend and Loan Limitations" in the Notes to Consolidated Financial Statements in Item 8.
"Financial Statements and Supplementary Data" for additional information concerning limitations on the dividends that may be paid to the Corporation, and loans that may be granted to the Corporation.
2 unchanged sentences
The consolidated statements of cash flows provide additional information.
−Removed: The Corporation’s operating activities during 2020 generated $154.5 million of cash, mainly due to net income of $178.0 million, partially offset by the net impact of other operating activities.
−Removed: Cash used in investing activities was $2.5 billion, primarily due to the net increase in loans, primarily related to loans originated under the PPP.
−Removed: Net cash provided by financing activities was $3.7 billion due mainly to increases in deposits and the issuance of long-term borrowings, which included the addition of subordinated debt, and preferred stock.
+Added: The Corporation’s operating activities during 2021 generated $342.3 million of cash, mainly due to net income of $275.5 million.
+Added: Cash used in investing activities was $214.0 million, primarily due to net cash flows from purchases of AFS and HTM securities, offset by an increase in cash flows from loans, primarily related to the decrease in PPP loans.
+Added: Net cash used in financing activities was $337.5 million, due primarily to the repayment of long-term borrowings, decreases in time deposits and short-term borrowings, and dividends paid, offset by cash flows provided by an increase in demand and savings deposits.
The following table presents the expected maturities of AFS investment securities, at estimated fair value, as of December 31, 2021 and the weighted average yields on such securities (calculated based on historical cost):
4 unchanged sentences
Available for sale (dollars in thousands)
+Added: Government securities $ — — % $ 127,618 0.65 % $ — — % $ — — %
State and municipal (1)
6 unchanged sentences
(2) Maturities of ARCs are based on contractual maturities.
−Removed: The Corporation’s investment portfolio consists mainly of mortgage-backed securities and collateralized mortgage obligations which have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations.
+Added: The Corporation’s investment portfolio consists mainly of state and municipal securities, mortgage-backed securities and collateralized mortgage obligations.
+Added: Mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations.
Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates.
1 unchanged sentence
As rates decrease, cash flows generally increase as prepayments increase.
−Removed: The following table presents AFS investment securities, at estimated fair value, and HTM investment securities, at amortized cost, as of December 31, 2020, without stated maturities, including the weighted average yields and estimated weighted average lives based on prepayment speeds on such securities:
+Added: The following table presents AFS mortgage-backed investment securities, at estimated fair value, and HTM mortgage-backed investment securities, at amortized cost, as of December 31, 2021, without stated maturities, including the weighted average yields and estimated weighted average lives based on prepayment speeds on such securities:
Amount Yield Average Life
1 unchanged sentence
Available for sale
−Removed: Collateralized mortgage obligations $ 503,766 2.39 % 1.4
Residential mortgage-backed securities $ 229,795 1.48 % 6.9
Commercial mortgage-backed securities 971,148 2.03 5.4
+Added: Collateralized mortgage obligations 209,359 2.57 1.8
Held to maturity
Residential mortgage-backed securities 404,958 1.71 5.3
+Added: Commercial mortgage-backed securities $ 575,426 1.42 % 6.9
The following table presents the contractual maturities of fixed rate loans and loan types subject to changes in interest rates as of December 31, 2021:
15 unchanged sentences
Total real estate – construction $ 542,909 $ 432,056 $ 164,814 $ 1,139,779
+Added: Consumer, lease financing and other:
+Added: Adjustable and floating rate $ 12,765 $ 47,116 $ — $ 59,881
+Added: Fixed rate 206,605 403,315 80,404 690,324
+Added: Total consumer, lease financing and other $ 219,370 $ 450,431 $ 80,404 $ 750,205
+Added: Unearned income — (17,039) — (17,039)
Total $ 4,525,694 $ 9,906,537 $ 3,893,119 $ 18,325,350
17 unchanged sentences
State and Municipal Securities
−Removed: As of December 31, 2020, the Corporation owned securities issued by various states and municipalities with a total fair value of $952.6 million.
+Added: As of December 31, 2021, the Corporation owned securities issued by various states and municipalities with a total fair value of $1.2 billion.
Uncertainty with respect to the financial strength of state and municipal bond insurers places emphasis on the underlying strength of issuers.
13 unchanged sentences
At December 31, 2021, all of the Corporation's ARCs were current and making scheduled interest payments.
−Removed: Corporate Debt Securities
−Removed: The Corporation holds corporate debt securities in the form of single-issuer TruPs and subordinated debt and senior debt issued by financial institutions.
−Removed: As of December 31, 2020, these securities had an amortized cost of $348.4 million and an estimated fair value of $367.1 million.
−Removed: See "Note 3 - Investment Securities," in the Notes to Consolidated Financial Statements in Item 8.
−Removed: "Financial Statements and Supplementary Data" for further discussion related to the Corporation’s other-than-temporary impairment evaluations for debt securities, and see "Note 19 - Fair Value Measurements," in the Notes to Consolidated Financial Statements in Item 8.
−Removed: "Financial Statements and Supplementary Data" for further discussion related to the fair values of debt securities.
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.