10 unchanged sentences
In an attempt to manage our exposure to changes in interest rates and comply with applicable regulations, we monitor Great Southern’s interest rate risk.
−Removed: In monitoring interest rate risk, we regularly analyze and manage assets and liabilities based on their payment streams and interest rates, the timing of their maturities and their sensitivity to actual or potential changes in market interest rates.
+Added: In monitoring interest rate risk, we regularly analyze and manage assets and liabilities based on their
+Added: payment streams and interest rates, the timing of their maturities and their sensitivity to actual or potential changes in market interest rates.
The ability to maximize net interest income is largely dependent upon the achievement of a positive interest rate spread that can be sustained despite fluctuations in prevailing interest rates.
1 unchanged sentence
The difference, or the interest rate repricing “gap,” provides an indication of the extent to which an institution’s interest rate spread will be affected by changes in interest rates.
−Removed: A gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-rate sensitive liabilities repricing during the same period, and is considered negative when the amount of interest-rate sensitive
−Removed: liabilities exceeds the amount of interest-rate sensitive assets during the same period.
+Added: A gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-rate sensitive liabilities repricing during the same period, and is considered negative when the amount of interest-rate sensitive liabilities exceeds the amount of interest-rate sensitive assets during the same period.
Generally, during a period of rising interest rates, a negative gap within shorter repricing periods would adversely affect net interest income, while a positive gap within shorter repricing periods would result in an increase in net interest income.
During a period of falling interest rates, the opposite would be true.
−Removed: As of March 31, 2024, Great Southern’s interest rate risk models indicate that, generally, rising interest rates are expected to have a modestly positive impact on the Company’s net interest income, while declining interest rates are expected to have a modestly negative impact on net interest income.
+Added: As of June 30, 2024, Great Southern’s interest rate risk models indicate that, generally, rising interest rates are expected to have a modestly positive impact on the Company’s net interest income, while declining interest rates are expected to have a modestly negative impact on net interest income.
The negative impact of a falling Federal Funds rate and other market interest rates also falling could be more pronounced if we are not able to decrease non-maturity deposit rates accordingly.
4 unchanged sentences
In the subsequent months, we would expect that net interest margin would stabilize and begin to improve, as renewal interest rates on maturing time deposits decrease compared to the then-current rates paid on those products.
−Removed: During 2020, we experienced some compression of our net interest margin percentage due to the Federal Fund rate being cut by 2.25% from July 2019 through March 2020.
−Removed: Margin compression primarily resulted from changes in the asset mix;
−Removed: 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.
+Added: During 2020, we experienced some compression of our net interest margin percentage due to the Federal Funds rate being cut by 2.25% from 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 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.
2 unchanged sentences
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 experienced in the year ended December 31, 2023.
−Removed: As of March 31, 2024, time deposit maturities over the next 12 months were as follows:
+Added: As of June 30, 2024, time deposit maturities over the next 12 months were as follows:
within three months -- $463 million with a weighted-average rate of 4.46%;
1 unchanged sentence
and within six to twelve months -- $259 million with a weighted-average rate of 3.98%.
−Removed: Based on time deposit market rates in March 2024, replacement rates for these maturing time deposits are likely to be approximately 4.00-4.50%.
+Added: Based on time deposit market rates in June 2024, replacement rates for these maturing time deposits are likely to be approximately 4.00-4.35%.
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.
5 unchanged sentences
In 2023, the FRB implemented rate increases of 0.25%, 0.25%, 0.25% and 0.25% in February, March, May and July 2023, respectively.
−Removed: At March 31, 2024, the Federal Funds rate was 5.50%.
+Added: At December 31, 2023, the Federal Funds rate was 5.50%.
+Added: To date in 2024, the FRB has not implemented any rate changes and at June 30, 2024, the Federal Funds rate was 5.50%.
Financial markets now expect the possibility of significant further increases in Federal Funds interest rates in 2024 to be unlikely, with interest rate decisions being made at each FRB meeting based on economic data available at the time.
−Removed: However, the FRB has further indicated, and financial markets now have begun to price in, that it is likely that the Federal Funds interest rate will remain near this peak level for several months before any rate cuts occur.
−Removed: Great Southern’s loan portfolio includes loans ($1.28 billion at March 31, 2024) tied to various SOFR indices that will be subject to adjustment at least once within 90 days after March 31, 2024.
−Removed: These loans had interest rate floors at various rates.
−Removed: Great Southern also has a portfolio of loans ($826.7 million at March 31, 2024) tied to a “prime rate” of interest that will adjust immediately or within 90 days of a change to the “prime rate” of interest.
−Removed: These loans had interest rate floors at various rates.
−Removed: In addition, Great Southern has a portfolio of loans ($6.7 million at March 31, 2024) tied to an AMERIBOR index that will adjust immediately or within 90 days of a change to the “prime rate” of interest.
−Removed: These loans had interest rate floors at various rates.
−Removed: At March 31, 2024, nearly all of these SOFR and “prime rate” loans had fully indexed rates that were at or above their floor rate and so are expected to move fully if there are future market interest rate increases.
+Added: However, the FRB has further indicated, and financial markets now have begun to price in, that it is likely that the Federal Funds interest rate will remain near this peak level for a few more months before any rate cuts occur, possibly as early as September 2024.
+Added: Great Southern’s loan portfolio includes loans ($1.41 billion at June 30, 2024) tied to various SOFR indexes that will be subject to adjustment at least once within 90 days after June 30, 2024.
+Added: All of these loans have interest rate floors at various rates.
+Added: Great Southern has a portfolio of loans ($826 million at June 30, 2024) 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: All of these loans had interest rate floors at various rates.
+Added: addition, Great Southern has a portfolio of loans ($7 million at June 30, 2024) tied to an AMERIBOR index that will adjust immediately or within 90 days of a change to the “prime rate” of interest.
+Added: All of these loans had interest rate floors at various rates.
+Added: At June 30, 2024, nearly all of these SOFR, “prime rate” and AMERIBOR 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.
1 unchanged sentence
They do not necessarily indicate the impact of general interest rate movements on the Bank’s net interest income because the repricing of certain categories of assets and liabilities is subject to competitive and other factors beyond the Bank’s control.
−Removed: As a result, certain assets and liabilities indicated as maturing or otherwise repricing within a stated
−Removed: period may in fact mature or reprice at different times and in different amounts and cause a change, which could be material, in the Bank’s interest rate risk.
+Added: As a result, certain assets and liabilities indicated as maturing or otherwise repricing within a stated period may in fact mature or reprice at different times and in different amounts and cause a change, which could be material, in the Bank’s interest rate risk.
In order to minimize the potential for adverse effects of material and prolonged increases and decreases in interest rates on Great Southern’s results of operations, Great Southern has adopted asset and liability management policies to better match the maturities and repricing terms of Great Southern’s interest-earning assets and interest-bearing liabilities.
21 unchanged sentences
Due to lower market interest rates, the Company received net interest settlements which were recorded as loan interest income.
−Removed: If USD-SOFR exceeded the fixed rate of interest, the Company was required to pay net settlements to the counterparty and record those net payments as a reduction of interest income on loans.
+Added: If USD-SOFR exceeded the fixed rate of interest, the Company was required to pay net settlements
+Added: to the counterparty and record those net payments as a reduction of interest income on loans.
The effective portion of the gain or loss on the derivative was reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affected earnings.
3 unchanged sentences
In March 2022, the Company entered into another interest rate swap transaction as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans.
−Removed: The notional amount of the swap was $300 million with an effective date of
−Removed: March 1, 2022 and a termination date of March 1, 2024.
+Added: The notional amount of the swap was $300 million with an effective date of March 1, 2022 and a termination date of March 1, 2024.
Under the terms of the swap, the Company received a fixed rate of interest of 1.6725% and paid a floating rate of interest equal to one-month USD-LIBOR (now SOFR).
20 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.