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Accordingly, effective risk management that maintains interest rate risk at prudent levels is essential to our safety and soundness.
−Removed: MERCANTILE BANK CORPORATION
Evaluating the exposure to changes in interest rates includes assessing both the adequacy of the process used to control interest rate risk and the quantitative level of exposure.
5 unchanged sentences
MERCANTILE BANK CORPORATION
−Removed: The following table depicts our GAP position as of September 30, 2022:
+Added: The following table depicts our GAP position as of March 31, 2023:
Commercial loans (1)
4 unchanged sentences
Securities (2)
−Removed: Other interest-earning assets
+Added: Interest-earning deposits
Allowance for credit losses
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Floating rate loans that are currently at interest rate floors are treated as fixed rate loans and are reflected using maturity date and not repricing frequency.
−Removed: Mortgage-backed securities are categorized by average life calculations based upon prepayment trends as of September 30, 2022.
−Removed: MERCANTILE BANK CORPORATION
+Added: Mortgage-backed securities are categorized by average life calculations based upon prepayment trends as of March 31, 2023.
The second interest rate risk measurement we use is commonly referred to as net interest income simulation analysis.
1 unchanged sentence
The simulation model assesses the direction and magnitude of variations in net interest income resulting from potential changes in market interest rates.
+Added: MERCANTILE BANK CORPORATION
Key assumptions in the model include prepayment speeds on various loan and investment assets;
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Actual results will differ from simulated results due to timing, magnitude, and frequency of interest rate changes and changes in market conditions and our strategies, among other factors.
−Removed: We conducted multiple simulations as of September 30, 2022, in which it was assumed that changes in market interest rates occurred ranging from up 300 basis points to down 300 basis points in equal quarterly instalments over the next twelve months.
−Removed: The following table reflects the suggested dollar and percentage changes in net interest income over the next twelve months in comparison to the $197 million in net interest income projected using our balance sheet amounts and anticipated replacement rates as of September 30, 2022.
+Added: We conducted multiple simulations as of March 31, 2023, in which it was assumed that changes in market interest rates occurred ranging from up 300 basis points to down 300 basis points in equal quarterly instalments over the next twelve months.
+Added: The following table reflects the suggested dollar and percentage changes in net interest income over the next twelve months in comparison to the $186 million in net interest income projected using our balance sheet amounts and anticipated replacement rates as of March 31, 2023.
The resulting estimates are generally within our policy parameters established to manage and monitor interest rate risk.
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.