11 unchanged sentences
The Company’s Board has established an Asset Liability Committee (“ALCO”) consisting of members of management, responsible for reviewing asset liability policies and the IRR position.
−Removed: ALCO meets monthly and reports the Company’s IRR position and trends to the Board on a regular basis.
+Added: ALCO meets regularly and reports the Company’s IRR position and trends to the Board on a regular basis.
The Company utilizes a number of strategies to manage IRR including, but not limited to:
(1) managing the origination, purchase, sale, and retention of various types of loans with differing IRR profiles;
−Removed: (2) attempting to reduce the overall interest rate sensitivity of liabilities by emphasizing core and longer-term deposits;
−Removed: (3) selectively purchasing interest rate swaps converting the rates for customer loans to manage individual loans and the Bank’s overall IRR profile;
+Added: (2) attempting to reduce the overall interest
+Added: rate sensitivity of liabilities by emphasizing core and longer-term deposits;
+Added: (3) selectively purchasing interest rate swaps and caps converting the rates for customer loans to manage individual loans and the Bank’s overall IRR profile;
(4) managing the investment portfolio IRR profile;
−Removed: and (5) managing the maturities and rate structures of borrowings.
−Removed: During 2021, the Company generally retained newly originated mortgage loans in its portfolio.
−Removed: However, in 2020, the Company sold most of its 30-year fixed-rate residential real estate loan originations in the secondary market.
−Removed: The Company currently does not participate in financial futures contracts, interest rate swaps (other than for commercial loans for customers), or other activities involving the use of off-balance-sheet derivative financial instruments, but may do so in the future to manage IRR.
−Removed: The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive” and by monitoring an institution’s interest rate sensitivity “gap.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.
−Removed: The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that same time period.
−Removed: A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities.
−Removed: A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets.
−Removed: Accordingly, during a period of rising interest rates, an institution with a negative gap position theoretically would not be in as favorable a position, compared to an institution with a positive gap, to invest in higher-yielding assets.
−Removed: This may result in the yield on the institution’s assets increasing at a slower rate than the increase in its cost of interest-bearing liabilities.
−Removed: Conversely, during a period of falling interest rates, an institution with a negative gap might experience a repricing of its assets at a slower rate than its interest-bearing liabilities, which, consequently, may result in its net interest income growing at a faster rate than an institution with a positive gap position.
−Removed: Interest rate sensitivity is monitored through the use of an IRR model.
−Removed: Prepayment, rate sensitivity, and average life assumptions can have a significant impact on the IRR model results.
−Removed: There can be no assurance that those assumptions will be realized.
−Removed: The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at December 31, 2021, which were estimated by the Company, based upon certain assumptions, to reprice or mature in each of the future time periods shown.
−Removed: At December 31, 2021, the Company’s one-year gap was positive 14.15%, as compared to positive 18.05% at December 31, 2020.
−Removed: The decrease was primarily due to deployment of cash into loans and debt and equity securities.
−Removed: The table is intended to provide an approximation of the projected repricing of assets and liabilities at December 31, 2021 on the basis of contractual maturities, anticipated prepayments, scheduled rate adjustments, and the rate sensitivity of non-maturity deposits within a three month period and subsequent selected time intervals.
−Removed: At December 31, 2021 3 Months
−Removed: or Less More than
−Removed: to 1 Year More than
−Removed: 3 Years More than
−Removed: 5 Years More than
−Removed: 5 Years Total
−Removed: (dollars in thousands)
−Removed: Interest-earning assets:
−Removed: Interest-earning deposits and short-term investments $ 51,454 $ 1,430 $ 1,730 $ — $ — $ 54,614
−Removed: Debt securities 457,897 204,791 332,641 273,661 444,432 1,713,422
−Removed: Equity investments — 250 30,241 34,817 35,847 101,155
−Removed: Restricted equity investments — — — — 53,195 53,195
−Removed: Loans receivable (1)
−Removed: 2,305,614 1,303,970 2,208,622 1,462,527 1,342,137 8,622,870
−Removed: Total interest-earning assets 2,814,965 1,510,441 2,573,234 1,771,005 1,875,611 10,545,256
−Removed: Interest-bearing liabilities:
−Removed: Interest-bearing checking accounts 1,514,309 204,188 471,815 382,170 1,629,254 4,201,736
−Removed: Money market deposit accounts 70,139 48,349 112,434 91,943 413,225 736,090
−Removed: Savings accounts 85,891 134,368 300,813 235,604 851,257 1,607,933
−Removed: Time deposits 170,811 381,855 178,053 29,956 14,326 775,001
−Removed: Securities sold under agreements to repurchase and other borrowings 223,068 156 450 123,493 743 347,910
−Removed: Total interest-bearing liabilities 2,064,218 768,916 1,063,565 863,166 2,908,805 7,668,670
−Removed: Interest sensitivity gap (2)
−Removed: $ 750,747 $ 741,525 $ 1,509,669 $ 907,839 $ (1,033,194) $ 2,876,586
−Removed: Cumulative interest sensitivity gap $ 750,747 $ 1,492,272 $ 3,001,941 $ 3,909,780 $ 2,876,586 $ 2,876,586
−Removed: Cumulative interest sensitivity gap as a percent of total interest-earning assets 7.12 % 14.15 % 28.47 % 37.08 % 27.28 % 27.28 %
−Removed: (1) For purposes of the gap analysis, loans receivable includes loans held-for-sale and non-performing loans gross of the allowance for loan credit losses for loans, unamortized discounts, and deferred loan fees.
−Removed: (2) Interest sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities.
−Removed: Certain shortcomings are inherent in gap analysis.
−Removed: For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates.
−Removed: Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market interest rates.
−Removed: Additionally, certain assets, such as adjustable-rate loans, have features which restrict changes in interest rates both on a short-term basis and over the life of the asset.
−Removed: Further, in the event of a change in interest rates, loan prepayment rates and average lives of deposits would likely deviate significantly from those assumed in the calculation.
−Removed: Finally, the ability of many borrowers to service their adjustable-rate loans may be impaired in the event of an interest rate increase.
−Removed: Another method of analyzing an institution’s exposure to IRR is by measuring the change in the institution’s economic value of equity (“EVE”) and net interest income under various interest rate scenarios.
+Added: (5) managing the maturities and rate structures of borrowings;
+Added: and (6) purchasing interest rate swaps to manage overall balance sheet interest rate risk.
+Added: The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive.” Interest rate sensitivity is monitored through the use of an IRR model, which measures the change in the institution’s economic value of equity (“EVE”) and net interest income under various interest rate scenarios.
EVE is the difference between the net present value of assets, liabilities and off-balance-sheet contracts.
11 unchanged sentences
100 1,646,301 (4.3) 13.9 438,280 0.6 1,621,984 11.1 14.2 325,960 3.7
−Removed: 100 1,621,984 11.1 14.2 325,960 3.7 1,578,917 15.7 13.9 309,644 5.8
Static 1,719,619 — 14.1 435,492 — 1,459,706 — 12.5 314,395 —
(100) 1,762,678 2.5 14.0 428,519 (1.6) 1,230,947 (15.7) 10.3 299,994 (4.6)
−Removed: The change in interest rate sensitivity year over year was impacted by the deployment of cash into loans and investments.
−Removed: As is the case with the gap calculation, certain shortcomings are inherent in the methodology used in the EVE and net interest income IRR measurements.
+Added: The change in interest rate sensitivity was impacted by the deployment of cash into loans and securities, an increase in term borrowings, a slowdown in loan and securities prepayment speeds, use of increased derivatives, and a significant increase in market interest rates.
+Added: Certain shortcomings are inherent in the methodology used in the EVE and net interest income IRR measurements.
The model requires the making of certain assumptions which may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates.
1 unchanged sentence
Second, the model assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities.
−Removed: Third, the model does not take into account the Company’s business or strategic plans.
−Removed: Accordingly, although the above measurements provide an indication of the Company’s IRR exposure at a particular point in time, such measurements are not intended to provide a precise forecast of the effect of changes in market interest rates on the Company’s EVE and net interest income and can be expected to differ from actual results.
+Added: Third, the model does not take into account the Company’s business or strategic plans or any steps it may take to respond to changes in rates.
+Added: Fourth, prepayment, rate sensitivity, and average life assumptions can have a significant impact on the IRR model results.
+Added: Lastly, the model utilizes data derived from historical performance.
+Added: Accordingly, although the above measurements provide an indication of the Company’s IRR exposure at a particular point in time, such measurements are not intended to provide a precise forecast of the effect of changes in market interest rates, given the unique nature of the post-pandemic interest rate environment and the speed with which interest rates have been changing, the projections noted above on the Company’s EVE and net interest income and can be expected to significantly differ from actual results.
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.