6 unchanged sentences
First, changes in rates have an impact on the Corporation's liquidity position and could affect its ability to meet obligations and continue to grow.
−Removed: Second, movements in interest rates can create fluctuations in the Corporation's net interest income and changes in the economic value of its equity.
+Added: Second, movements in interest rates can create fluctuations in the Corporation's net interest income and changes in its economic value of its equity.
The Corporation employs various management techniques to minimize its exposure to interest rate risk.
15 unchanged sentences
The following table summarizes the expected impact of abrupt interest rate changes, i.e.
−Removed: a non-parallel instantaneous shock, on net interest income as of December 31, 2022 (due to the current level of interest rates, the 300 basis point downward shock scenario is not shown):
+Added: a non-parallel instantaneous shock, on net interest income as of December 31, 2023:
Rate Shock (1)
1 unchanged sentence
in net interest income % Change in net interest income
−Removed: +400 bps + $80.0 million + 8.2%
−Removed: +300 bps + $62.0 million + 6.3%
−Removed: +200 bps + $45.2 million + 4.6%
−Removed: +100 bps + $25.4 million + 2.6%
−Removed: -100 bps - $37.3 million - 3.8%
−Removed: -200 bps - $84.5 million - 8.6%
+Added: +400 bp +$38.1 million + 4.2%
+Added: +300 bp + $29.7 million + 3.3%
+Added: +200 bp + $22.5 million + 2.5%
+Added: +100 bp + $14.0 million + 1.6%
+Added: -100 bp - $38.1 million - 4.2%
+Added: -200 bp - $76.8 million - 8.5%
+Added: -300 bp - $105.9 million - 11.7%
+Added: -400 bp - $124.8 million -13.8%
(1) These results include the effect of implicit and explicit interest rate floors that limit further reduction in interest rates.
1 unchanged sentence
Discount rates are based upon market prices for like assets and liabilities.
−Removed: Abrupt changes or "shocks" in interest rates, both upward and downward, are used
−Removed: to determine the comparative effect of such interest rate movements relative to the unchanged environment.
+Added: Abrupt changes or "shocks" in interest rates, both upward and downward, are used to determine the comparative effect of such interest rate movements relative to the unchanged environment.
This measurement tool is used primarily to evaluate the longer-term repricing risks and options in the Corporation's balance sheet.
5 unchanged sentences
The net result of these interest rate derivatives is that the customer pays a fixed rate of interest and the Corporation receives a floating rate.
−Removed: These interest rate derivatives 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: These interest rate derivatives 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 income on the consolidated statements of income.
Cash Flow Hedges
−Removed: 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: The Corporation's objectives in using interest rate derivatives are to reduce volatility in net interest income and net interest expense and to manage its exposure to interest rate movements.
To accomplish this objective, the Corporation primarily uses interest rate derivatives as part of its interest rate risk management strategy.
−Removed: The Corporation enters into interest rate derivatives designated as cash flow hedges to hedge the variable cash flows associated with existing floating rate loans.
−Removed: 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.
−Removed: 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: The Corporation enters into interest rate derivatives designated as cash flow hedges to hedge the variable cash flows associated with existing floating rate loans and borrowings.
+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 or interest expense in the same period during which the hedged transaction affects earnings.
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.
1 unchanged sentence
As the hedged transaction continues to be probable, the unrealized losses that have been recorded in AOCI will be recognized as reduction to interest income when the previously forecasted hedged item affects earnings in future periods.
+Added: During 2023, $22.1 million of these unrealized losses have been reclassified as a reduction of interest income on loans, including fees, on the consolidated statements of income.
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.
3 unchanged sentences
The Corporation can access additional liquidity from these sources, if necessary, by increasing the rates of interest paid on those instruments.
−Removed: The positive impact to liquidity resulting from paying higher interest rates could have a detrimental impact on the net interest margin and net interest income if rates on interest-earning assets do not experience a proportionate increase.
+Added: The positive impact to liquidity resulting from paying higher interest rates could have a detrimental impact on NIM and net interest income if rates on interest-earning assets do not experience a proportionate increase.
Borrowing availability with the FHLB and the FRB, along with federal funds lines at various correspondent banks, provides the Corporation with additional liquidity.
Fulton Bank is a member of the FHLB and has access to FHLB overnight and term credit facilities.
−Removed: As of December 31, 2022,
−Removed: the Bank had total borrowing capacity of approximately $7.7 billion with $3.1 billion of advances and letters of credit outstanding, for a remaining available borrowing capacity of approximately $4.6 billion.
+Added: As of December 31, 2023, the Bank had total borrowing capacity of approximately $8.2 billion with $3.3 billion of advances and letters of credit outstanding, for a remaining available borrowing capacity of approximately $4.9 billion.
Advances from the FHLB, when utilized, are secured by qualifying commercial real estate and residential mortgage loans, investments and other assets.
−Removed: As of December 31, 2022, the Corporation had aggregate availability under federal funds lines of $2.3 billion, with $0.2 billion of outstanding borrowings against that amount.
+Added: As of December 31, 2023, the Corporation had aggregate federal funds lines borrowing capacity of $2.6 billion, with $0.2 billion of outstanding borrowings against that amount.
+Added: As of December 31, 2023, the Corporation had $1.3 billion of
+Added: collateralized borrowing capacity at the discount window and $1.9 billion of borrowing capacity at the Bank Term Funding Program facility with no amounts outstanding under these programs.
A combination of commercial real estate loans, commercial loans, consumer loans and securities are pledged to the FRB of Philadelphia to provide access to FRB discount window borrowings.
−Removed: December 31, 2022, the Corporation had $1.3 billion of collateralized borrowing availability at the discount window, and no outstanding borrowings.
+Added: Securities carried at $0.4 billion at December 31, 2023 and $1.1 billion at December 31, 2022 were pledged as collateral to secure public and trust deposits.
The Corporation has commitments to extend credit and letters of credit.
−Removed: As of December 31, 2022, the balance of commitments to extend credit was $8,695.6 million and total letters of credit were $310.1 million.
−Removed: Liquidity must also be managed at the Corporation's parent company level.
+Added: As of December 31, 2023, the balance of commitments to extend credit was $8.8 billion and total letters of credit were $0.3 billion.
+Added: Liquidity must also be managed at the Parent Company level.
For safety and soundness reasons, banking regulations limit the amount of cash that can be transferred from subsidiary banks to the parent company in the form of loans and dividends.
Generally, these limitations are based on the subsidiary banks’ regulatory capital levels and their net income.
−Removed: See "Note 12 - Regulatory Matters - Dividend and Loan Limitations" in the Notes to Consolidated Financial Statements in Item 8.
−Removed: "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.
−Removed: Management continues to monitor the liquidity and capital needs of the parent company and will implement appropriate strategies, as necessary, to remain adequately capitalized and to meet its cash needs.
−Removed: The Corporation's sources and uses of funds were discussed in general terms in the "Net Interest Income" section of Management's Discussion and Analysis.
+Added: Management continues to monitor the liquidity and capital needs of the Parent Company including monitoring the granularity of the deposit portfolio and level of uninsured deposits.
+Added: Management will implement appropriate strategies, as necessary, to remain adequately capitalized and to meet its cash needs.
The consolidated statements of cash flows provide additional information.
−Removed: The Corporation's operating activities during 2022 generated $598.3 million of cash, mainly due to net income of $287.0 million and an increase in other liabilities presented in other changes, net.
−Removed: Cash used in investing activities was $1,539.1 million, primarily due to $1,407.3 million net increase in loans.
−Removed: Net cash used in financing activities was $15.9 million, due primarily to the decreases in deposits and dividend payments, partially offset by an increase in borrowings.
−Removed: The following table presents the expected maturities of government and corporate AFS investment securities, at estimated fair value, as of December 31, 2022 and the weighted average yields on such securities (calculated based on historical cost):
+Added: The Corporation's operating activities during 2023 generated $363.0 million of cash, mainly due to net income of $284.3 million.
+Added: Cash used in investing activities was $809.2 million, primarily due to $1.1 billion net increase in loans.
+Added: Net cash provided by financing activities was $314.0 million, due largely to the increases in time and brokered deposits, partially offset by decreases in demand and savings deposits and other borrowings.
+Added: The following table presents the expected maturities of government, state and municipal and corporate AFS investment securities, at estimated fair value, as of December 31, 2023 and the weighted average yields on such securities (calculated based on historical cost):
Within One Year After One But
5 unchanged sentences
Government-sponsored agency securities — — 1,010 3.10 — — — —
−Removed: — — 1,008 — — — — —
State and municipal (1)
2 unchanged sentences
Total $ 49,022 3.45 % $ 147,521 5.10 % $ 471,086 3.99 % $ 888,106 3.90 %
−Removed: (1) Weighted average yields on tax-exempt securities have been computed on a FTE basis assuming a federal tax rate of 21% and statutory interest expense disallowances.
−Removed: The Corporation's investment portfolio consists mainly of state and municipal securities, mortgage-backed securities and collateralized mortgage obligations.
−Removed: Mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers' ability to prepay obligations.
+Added: (1) Weighted average yields on tax-exempt securities have been computed on a FTE basis assuming a federal tax rate of 21% and statutory interest expense
+Added: disallowances.
+Added: The Corporation's investment portfolio consists mainly of state and municipal securities, commercial mortgage-backed securities, residential mortgage-backed securities, corporate debt securities and collateralized mortgage obligations.
+Added: Commercial mortgage-backed securities, residential 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 mortgage-backed investment securities, at estimated fair value, and HTM mortgage-backed investment securities, at amortized cost, as of December 31, 2022, 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 residential mortgage-backed securities, commercial mortgage-backed securities and collateralized mortgage obligations, at estimated fair value, and HTM residential mortgage-backed securities and commercial mortgage-backed securities, at amortized cost, as of December 31, 2023, without stated maturities, including the weighted average yields and estimated weighted average lives based on prepayment speeds on such securities:
Amount Yield Average Life
24 unchanged sentences
Total real estate - construction 583,667 504,555 150,853 1,239,075
−Removed: Consumer, lease financing and other:
+Added: Consumer, leases and other:
Adjustable and floating rate 11,322 37,660 8 48,990
Fixed rate 296,185 618,707 139,716 1,054,608
−Removed: Total consumer, lease financing and other $ 277,312 $ 613,596 $ 136,602 $ 1,027,510
+Added: Total consumer, leases and other 307,507 656,367 139,724 1,103,598
Unearned income — (38,009) — (38,009)
5 unchanged sentences
Total $ 2,739,241
−Removed: Contractual maturities of outstanding uninsured time deposits included in the table above, as of December 31, 2022, were as follows (dollars in thousands):
+Added: Contractual maturities of the portion of time deposits estimated to be in excess of the FDIC insurance limit as of December 31, 2023 included in the table above, were as follows (dollars in thousands):
Three months or less $ 46,709
3 unchanged sentences
Total $ 200,951
−Removed: Total uninsured deposits were estimated to be $7.0 billion at December 31, 2022 compared with $7.8 billion at December 31, 2021.
+Added: Total uninsured deposits (excluding intra-Company deposits) were estimated to be $7.2 billion at December 31, 2023 compared with $7.8 billion at December 31, 2022.
Debt Security Market Price Risk
1 unchanged sentence
The Corporation's debt security investments consist primarily of U.S.
−Removed: government sponsored agency issued mortgage-backed securities and collateralized mortgage obligations, state and municipal securities and corporate debt securities.
−Removed: All of the Corporation's investments in mortgage-backed securities and collateralized mortgage obligations have principal payments that are guaranteed by U.S.
+Added: government-sponsored agency issued residential mortgage-backed securities, commercial mortgage-backed securities and collateralized mortgage obligations;
+Added: as well as, state and municipal securities and corporate debt securities.
+Added: All of the Corporation's investments in residential mortgage-backed securities, commercial mortgage-backed securities and collateralized mortgage obligations have principal payments that are guaranteed by U.S.
government-sponsored agencies.
7 unchanged sentences
Approximately 74% of these securities were school district issuances, which are also supported by the states of the issuing municipalities.
−Removed: Auction Rate Securities
−Removed: During 2022, the Corporation sold its investments in ARCs.
−Removed: The fair values of the ARCs in 2021 were derived using significant unobservable inputs based on an expected cash flows model.
−Removed: The expected cash flows model produced fair values which assumed a return to market liquidity sometime within the next five years.
−Removed: All of the loans underlying the ARCs had principal payments which were guaranteed by the federal government.
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.