17 unchanged sentences
During a period of falling interest rates, the opposite would be true.
−Removed: As of March 31, 2023, 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 June 30, 2023, 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.
1 unchanged sentence
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/SOFR interest rates (or their replacement rates) and “prime” interest rates.
−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/SOFR interest rates (or their replacement rates) and “prime” 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 then-current rates paid on those products.
+Added: In a situation where market interest rates decrease
+Added: 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/SOFR interest rates (or their replacement rates) and “prime” interest rates.
+Added: In the subsequent months we expect that 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.
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% from July 2019 through March 2020.
−Removed: 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: 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 net interest margin remained lower than our historical average in 2021.
LIBOR/SOFR interest rates decreased significantly in 2020 and remained very low in 2021 and into the first three months of 2022, putting pressure on loan yields, and strong pricing competition for loans and deposits remained in most of our markets.
−Removed: Since March 2022, market interest rates have increased fairly rapidly and may increase further in the first half of 2023.
+Added: Since March 2022, market interest rates have increased fairly rapidly.
This increased loan yields and expanded our net interest income and net interest margin in the latter half of 2022 and the first three months of 2023.
−Removed: While market interest rate increases are expected to result in increases to loan yields, we expect that much of this benefit will be offset by increased funding costs, including changes in the funding mix, as seen in the first quarter of 2023.
−Removed: In the first three months of 2023, competition for deposits was very intense, resulting in significant increases in rates paid on various deposit types.
−Removed: Subsequent to March 31, 2023, cumulative time deposit maturities are as follows:
+Added: While market interest rate increases are expected to result in increases to loan yields, we expect that much of this benefit will be offset by increased funding costs, including changes in the funding mix, as seen in the first half of 2023.
+Added: In the first six months of 2023, competition for deposits was very intense, resulting in significant increases in rates paid on various deposit types.
+Added: In addition, the Company had over $500 million of time deposits that matured and repriced to significantly higher rates in the three months ended June 30, 2023.
+Added: Subsequent to June 30, 2023, cumulative time deposit maturities over the next 12 months are as follows:
within three months -- $188 million;
1 unchanged sentence
and within twelve months -- $1.03 billion.
−Removed: At March 31, 2023, the weighted average interest rates on these various cumulative maturities were 2.08%, 2.17% and 2.44%, respectively.
−Removed: Based on time deposit market rates in April 2023, replacement rates for these maturing time deposits are likely to be near or exceed 4.00%.
+Added: At June 30, 2023, the weighted average interest rates on these various cumulative maturities were 2.36%, 2.97% and 3.91%, respectively.
+Added: Based on time deposit market rates in July 2023, replacement rates for these maturing time deposits are likely to be near or exceed 4.00%.
The current level and shape of the interest rate yield curve poses challenges for interest rate risk management.
+Added: Short-term market interest rates are currently higher than intermediate-term and long-term interest rates, which has caused the funding cost of various liabilities to increase more rapidly in the last six months.
Prior to its increase of 0.25% on December 16, 2015, the FRB had last changed interest rates on December 16, 2008.
3 unchanged sentences
At December 31, 2019, the Federal Funds rate stood at 1.75%.
−Removed: 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.
+Added: In response to the COVID-19 pandemic, the FRB decreased interest rates on two occasions in March 2020, a 0.50% decrease on March 3 and a 1.00% decrease on March 16.
At December 31, 2021, the Federal Funds rate was 0.25%.
1 unchanged sentence
At December 31, 2022, the Federal Funds rate was 4.50%.
−Removed: In 2023, the FRB implemented rate increases of 0.25% and 0.25% in February and March 2023, respectively.
−Removed: At March 31, 2023 the Federal Funds rate was 5.00%.
−Removed: Financial markets expect the possibility of further increases in Federal Funds interest rates in the first half of 2023, with 0.25-0.50% of additional cumulative rate hikes currently anticipated.
−Removed: A substantial portion of Great Southern’s loan portfolio ($868.8 million at March 31, 2023) 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, 2023.
+Added: In 2023, the FRB implemented rate increases of 0.25%, 0.25% and 0.25% in February, March and May 2023, respectively.
+Added: At June 30, 2023 the Federal Funds rate was 5.25%.
+Added: On July 26, 2023, the FRB implemented another 0.25% rate increase, bringing the Federal Funds rate to 5.50%.
+Added: Financial markets now expect the possibility of further increases in Federal Funds interest rates in the latter half of 2023 to be less likely.
+Added: However, the FRB has indicated that interest rate decisions will be made at each meeting based on economic data available to the FRB at the time.
+Added: A substantial portion of Great Southern’s loan portfolio ($499.7 million at June 30, 2023) is tied to the one-month or three-month LIBOR index and will be subject to adjustment at least once within 90 days after June 30, 2023.
Of these loans, $499.4 million had interest rate floors.
−Removed: Great Southern’s loan portfolio also includes loans ($693.4 million at March 31, 2023) tied to various SOFR indexes that will be subject to adjustment at least once within 90 days after March 31, 2023.
+Added: Great Southern’s loan portfolio also includes loans ($890.9 million at June 30, 2023) tied to various SOFR indexes that will be subject to adjustment at least once within 90 days after June 30, 2023.
Of these loans, $890.9 million had interest rate floors.
−Removed: Great Southern also has a portfolio of loans ($738.6 million at March 31, 2023) tied to a “prime rate” of interest that will adjust immediately or within 90 days of a change to the “prime rate” of interest.
+Added: Great Southern also has a portfolio of loans ($769.3 million at June 30, 2023) tied to a “prime rate” of interest that will adjust immediately or within 90 days of a change to the “prime rate” of interest.
Of these loans, $769.3 million had interest rate floors at various rates.
−Removed: Great Southern also has a portfolio of loans ($6.7 million at March 31, 2023) tied to an AMERIBOR index that will adjust immediately or within 90 days of a change to the “prime rate” of interest.
+Added: Great Southern also has a portfolio of loans ($6.7 million at June 30, 2023) tied to an AMERIBOR index that will adjust immediately or within 90 days of a change to the “prime rate” of interest.
Of these loans, $6.7 million had interest rate floors at various rates.
−Removed: At March 31, 2023, nearly all of these LIBOR/SOFR and “prime rate” loans had fully-indexed rates that were at or above their floor rate and so are expected to move fully with future market interest rate increases.
+Added: At June 30, 2023, nearly all of these LIBOR/SOFR and “prime rate” loans had fully-indexed rates that were at or above their floor rate and so are expected to move fully with future market interest rate increases.
Interest rate risk exposure estimates (the sensitivity gap) are not exact measures of an institution’s actual interest rate risk.
4 unchanged sentences
Management recommends and the Board of Directors sets the asset and liability policies of Great Southern, which are implemented by the Asset and Liability Committee.
−Removed: The Asset and Liability Committee is chaired by the Chief Financial Officer and is comprised of members of Great Southern’s senior management.
+Added: Asset and Liability Committee is chaired by the Chief Financial Officer and is comprised of members of Great Southern’s senior management.
The purpose of the Asset and Liability Committee is to communicate, coordinate and control asset/liability management consistent with Great Southern’s business plan and board-approved policies.
25 unchanged sentences
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.
−Removed: 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: 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 (now SOFR).
The floating rate will be reset monthly and net settlements of interest due to/from the counterparty will also occur monthly.
The initial floating rate of interest was set at 0.24143%.
−Removed: The Company will receive net interest settlements, which will be recorded as loan interest income, to the extent that the fixed rate of interest exceeds one-month USD-LIBOR.
−Removed: 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.
+Added: The Company will receive net interest settlements, which will be recorded as loan interest income, to the extent that the fixed rate of interest exceeds one-month USD-SOFR.
+Added: If the USD-SOFR rate exceeds the fixed rate of interest (as it does currently), 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.
In July 2022, the Company entered into two interest rate swap transactions as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans.
4 unchanged sentences
To the extent the fixed rate of interest exceeds the floating rate of interest, the Company will receive net interest settlements, which will be recorded as loan interest income.
−Removed: If the floating rate of interest exceeds the fixed rate of interest, 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.
+Added: If the floating rate of interest exceeds the fixed rate of interest (as it does currently), 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.
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.