17 unchanged sentences
During a period of falling interest rates, the opposite would be true.
−Removed: As of September 30, 2021, Great Southern's interest rate risk models indicate that, generally, rising interest rates are expected to have a positive impact on the Company's net interest income, while declining interest rates are expected to have a negative impact on net interest income.
+Added: As of March 31, 2022, Great Southern's interest rate risk models indicate that, generally, rising interest rates are expected to have a positive impact on the Company's net interest income, while declining interest rates are expected to have a negative impact on net interest income.
We model various interest rate scenarios for rising and falling rates, including both parallel and non-parallel shifts in rates.
−Removed: The results of our modeling indicate that net interest income is not likely to be significantly affected either positively or negatively in the first twelve months following a rate change, regardless of any changes in interest rates, because our portfolios are relatively well matched in a twelve-month horizon.
−Removed: In a situation where market interest rates decrease significantly in a short period of time, as they did in March 2020, our net interest margin decrease may be more pronounced in the very near term (first one to three months), due to fairly rapid decreases in LIBOR interest rates.
−Removed: In the subsequent months we expect that the net interest margin would stabilize and begin to improve, as renewal interest rates on maturing time deposits are expected to decrease compared to the current rates paid on those products.
−Removed: Subsequent to September 30, 2021, cumulative time deposit maturities are as follows:
+Added: The results of our modeling indicate that net interest income is not likely to be significantly affected either positively or negatively in the first twelve months following relatively minor changes in interest rates because our portfolios are relatively well matched in a twelve-month horizon.
+Added: In a situation where market interest rates increase significantly in a short period of time, our net interest margin increase may be more pronounced in the very near term (first one to three months), due to fairly rapid increases in LIBOR interest rates (or their replacement rates) and “prime” interest rates.
+Added: In a situation where market interest rates decrease significantly in a short period of time, as they did in March 2020, our net interest margin decrease may be more pronounced in the very near term (first one to three months), due to fairly rapid decreases in LIBOR interest rates (or their replacement rates) and “prime” interest rates.
+Added: In the subsequent months we expect that the net interest margin would stabilize and begin to improve, as renewal interest rates on maturing time deposits are expected to decrease compared to the then-current rates paid on those products.
+Added: During 2020, we did experience some compression of our net interest margin percentage due to the Federal Fund rate being cut by a total of 2.25% during the nine month period of July 2019 through March 2020.
+Added: Margin compression primarily resulted from changes in the asset mix, mainly the addition of lower-yielding assets and the issuance of subordinated notes during 2020 and the net interest margin remained lower than our historical average in 2021.
+Added: LIBOR interest rates decreased in 2020 and remained very low in 2021and into the first three months of 2022, putting pressure on loan yields, and strong pricing competition for loans and deposits remains in most of our markets.
+Added: Subsequent to March 31, 2022, cumulative time deposit maturities are as follows:
within three months --$265 million;
1 unchanged sentence
and within twelve months -- $735 million.
−Removed: At September 30, 2021, the weighted average interest rates on these various cumulative maturities were 0.61%, 0.61% and 0.60%, respectively.
+Added: At March 31, 2022, the weighted average interest rates on these various cumulative maturities were 0.45%, 0.49% and 0.52%, respectively.
The current level and shape of the interest rate yield curve poses challenges for interest rate risk management.
1 unchanged sentence
This was the first rate increase since September 29, 2006.
−Removed: The FRB also implemented rate change increases of 0.25% on eight additional occasions beginning December 14, 2016 and through December 31, 2018, with the Federal Funds rate reaching as high as 2.50%.
+Added: The FRB also implemented rate increases of 0.25% on eight additional occasions beginning December 14, 2016 and through December 31, 2018, with the Federal Funds rate reaching as high as 2.50%.
After December 2018, the FRB paused its rate increases and, in July, September and October 2019, implemented rate decreases of 0.25% on each of those occasions.
1 unchanged sentence
In response to the COVID-19 pandemic, the FRB decreased interest rates on two occasions in March 2020, a 0.50% decrease on March 3rd and a 1.00% decrease on March 16th.
−Removed: At September 30, 2021, the Federal Funds rate stood at 0.25%.
−Removed: A substantial portion of Great Southern’s loan portfolio ($1.80 billion at September 30, 2021) is tied to the one-month or three-month LIBOR index and will be subject to adjustment at least once within 90 days after September 30, 2021.
+Added: On March 17, 2022, the FRB implemented an increase of 0.25%.
+Added: Financial markets are currently anticipating aggressive increases to market interest rates in 2022.
+Added: If aggressive interest rate increases do occur, we anticipate that our net interest income and net interest margin will be positively impacted.
+Added: At March 31, 2022, the Federal Funds rate stood at 0.50%.
+Added: A substantial portion of Great Southern’s loan portfolio ($1.31 billion at March 31, 2022) is tied to the one-month or three-month LIBOR index and will be subject to adjustment at least once within 90 days after March 31, 2022.
Of these loans, $1.30 billion had interest rate floors at various rates.
−Removed: Great Southern also has a portfolio of loans ($533.8 million at September 30, 2021) tied to a “prime rate” of interest and will adjust immediately with changes to the “prime rate” of interest.
+Added: Great Southern also has a portfolio of loans ($613 million at March 31, 2022) tied to a “prime rate” of interest and will adjust immediately with changes to the “prime rate” of interest.
Of these loans, $592 million had interest rate floors at various rates.
−Removed: At September 30, 2021, $1.3 billion in LIBOR and “prime rate” loans were at their floor rate.
−Removed: If rates were to increase 25 basis points, loans of $284.6 million would move above their floor rate.
−Removed: If rates were to increase 50 basis points, an additional $344.8 million in loans would move above their floor rate.
−Removed: During 2020, we experienced some compression of our net interest margin due to Federal Fund rate cuts totaling 1.50%.
−Removed: Margin compression primarily resulted from generally slower changing average interest rates on deposits and borrowings and lower yields on loans and other interest-earning assets.
−Removed: LIBOR interest rates decreased further in April and May of 2020, putting pressure on loan yields during most of 2020 and 2021, and strong pricing competition for loans and deposits remains in most of our markets.
+Added: At March 31, 2022, $800 million in LIBOR and “prime rate” loans were at their floor rate.
+Added: If interest rates were to increase 50 basis points, approximately $460 million of these loans would move above their floor rate.
Interest rate risk exposure estimates (the sensitivity gap) are not exact measures of an institution’s actual interest rate risk.
30 unchanged sentences
The Company received a payment of $45.9 million from its swap counterparty as a result of this termination.
+Added: In February 2022, the Company entered into an interest rate swap transaction as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans.
+Added: The notional amount of the swap is $300 million with an effective date of March 1, 2022 and a termination date of March 1, 2024.
+Added: Under the terms of the swap, the Company will receive a fixed rate of interest of 1.6725% and will pay a floating rate of interest equal to one-month USD-LIBOR.
+Added: The floating rate will be reset monthly and net settlements of interest due to/from the counterparty will also occur monthly.
+Added: The initial floating rate of interest was set at 0.24143%.
+Added: Therefore, in
+Added: the near term, the Company will receive net interest settlements which will be recorded as loan interest income, to the extent that the fixed rate of interest continues to exceed one-month USD-LIBOR.
+Added: If USD-LIBOR exceeds the fixed rate of interest in future periods, the Company will be required to pay net settlements to the counterparty and will record those net payments as a reduction of interest income on loans.
The Company’s interest rate derivatives and hedging activities are discussed further in Note 16 of the Notes to Consolidated Financial Statements contained in this report.
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.