2 unchanged sentences
Market risk is defined as the sensitivity of income, fair value measurements and capital to changes in interest rates, foreign currency exchange rates, commodity prices and other relevant market rates or prices.
−Removed: The primary market risks to which we are exposed are price and interest rate risks.
+Added: The primary market risks that we are exposed to are price and interest rate risks.
Price risk is defined as the risk to current or anticipated earnings or capital arising from changes in the value of either assets or liabilities that are entered into as part of distributing or managing risk.
1 unchanged sentence
For the Company, price and interest rate risks arise from the financial instruments and positions we hold.
−Removed: This includes loans, mortgage servicing rights, investment securities, deposits, borrowings, long-term debt and derivative financial instruments.
+Added: This includes loans, MSRs, investment securities, deposits, borrowings, long-term debt and derivative financial instruments.
Due to the nature of our current operations, we are not subject to foreign currency exchange or commodity price risk.
−Removed: Our real estate loan portfolio is subject to risks associated with the local economies of our various markets and, in particular, the regional economy of the western United States, including Hawaii.
+Added: Our real estate loan portfolio is subject to risks associated with the local economies of our various markets, in particular, the regional economy of the western United States, including Hawaii.
The spread between the yield on interest-earning assets and the cost of interest-bearing liabilities and the relative dollar amounts of these assets and liabilities are the principal items affecting net interest income.
14 unchanged sentences
Cash & cash equivalents $ 72,828 $ — $ — $ — $ — $ — $ — $ — $ 72,828
−Removed: $ 65,214 $ — $ — $ — $ — $ — $ — $ — $ 65,214
−Removed: 1,733 — — — — — 8,628 — 10,361
+Added: FHLB Stock 714 — — 18,000 22,000 — 8,591 — 49,305
Investment securities (1)
13 unchanged sentences
FHLB advances 16,000 — — 450,000 550,000 — — — 1,016,000
−Removed: Borrowings — — — — — — — — —
Long-term debt (3)
12 unchanged sentences
(3) Based on contractual maturity.
−Removed: As of December 31, 2021, the Company is considered liability-sensitive as exhibited by the gap table but our net interest income sensitivity analysis shows positive results in the increasing interest rate scenarios.
−Removed: This is because of the impact of our historical deposit repricing betas which result in an assumed delay in repricing of deposits in an increasing interest rate scenario and a lower magnitude of repricing compared to the repricing of loans and other interest-earning assets.
−Removed: Net interest income would be expected to rise in the long term if interest rates were to rise due to the Bank’s cumulative asset-sensitive position.
+Added: As of December 31, 2022, the Company is considered liability-sensitive as exhibited by the gap table and our net interest income sensitivity analysis.
Changes in the mix of interest-earning assets or interest-bearing liabilities can either increase or decrease the net interest margin, without affecting interest rate sensitivity.
−Removed: In addition, the interest rate spread between an earning asset and its funding
−Removed: liability can vary significantly, while the timing of repricing for both the asset and the liability remains the same, thereby impacting net interest income.
+Added: In addition, the interest rate spread between an earning asset and its funding liability can vary significantly, while the timing of repricing for both the asset and the liability remains the same, thereby impacting net interest income.
This characteristic is referred to as basis risk.
Varying interest rate environments can create unexpected changes in prepayment levels of assets and liabilities that are not reflected in the interest rate sensitivity analysis.
−Removed: These prepayments may have a significant impact on our net interest margin.
+Added: These prepayments may have a significant impact on
+Added: our net interest margin.
Because of these factors, an interest sensitivity gap analysis may not provide an accurate assessment of our actual exposure to changes in interest rates.
14 unchanged sentences
(1) For purposes of our model, we assume interest rates will not go below zero.
−Removed: This "floor" limits the effect of a potential negative interest rate shock in a low rate environment like the one we are currently experiencing.
+Added: This "floor" limits the effect of a potential negative interest rate shock in a low rate environment.
(2) This percentage change represents the impact to net interest income for a one-year period, assuming there is no change in the structure of the balance sheet.
(3) This percentage change represents the impact to the net present value of equity, assuming there is no change in the structure of the balance sheet.
−Removed: At December 31, 2021 and 2020 we believe our net interest income sensitivity did not exhibit a strong bias to either an increase in interest rates or a decline in interest rates.
−Removed: The changes in interest rate sensitivity between December 31, 2021 and 2020 reflected the impact of higher market interest rates, a steeper yield curve and changes to overall balance sheet composition.
+Added: The changes in interest rate sensitivity between December 31, 2022 and 2021 reflected the impact of higher market interest rates, a flatter yield curve and changes to overall balance sheet composition.
Some of the assumptions made in the simulation model may not materialize and unanticipated events and circumstances will occur.
−Removed: We do not allow for negative rate assumptions in our model, but actual results in extreme interest rate decline scenarios may result in negative rates that may cause the modeling results to be inherently unreliable.
+Added: We do not allow for negative rate assumptions in our model, but actual results in extreme interest rate decline scenarios may result in negative rate assumptions which may cause the modeling results to be inherently unreliable.
In addition, the simulation model does not take into account any future actions that we could undertake to mitigate an adverse impact due to changes in interest rates from those expected, in the actual level of market interest rates or competitive influences on our deposits.
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.