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For further discussion on the impact of market factors, see “Risk Factors” in Part I - Item 1A.
−Removed: of this report.
+Added: in this report.
Sensitivity Analysis
−Removed: To better reflect the impact of rate changes on financial performance, we have transitioned our sensitivity analysis from a fair-value based approach to an earnings-based approach.
−Removed: This revised approach estimates net interest income sensitivity to parallel interest rate changes based on current and projected funding levels, providing a view of how interest rate changes may affect earnings.
+Added: Using an earnings-based approach to provide a view of how interest rate changes may affect earnings, we estimate net interest income sensitivity to parallel interest rate changes based on current and projected funding levels.
To measure the sensitivity of net interest income to interest rate changes, we projected net interest income over the following 12 months, including forecasted business growth, anticipated funding needs, and expected interest rates.
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We did not enter into interest rate-sensitive financial instruments for trading or speculative purposes.
−Removed: Change from Prior Methodology:
−Removed: Previously we disclosed the potential changes in the fair values of receivables, investments and debt resulting from hypothetical interest rate changes.
−Removed: While this approach provided insight into balance sheet valuation impacts, it did not reflect the earnings exposure to interest rate risk, which is through changes in funding costs and the effects to earnings.
−Removed: The earnings-based analysis focuses on net interest income, a key component of our business performance.
−Removed: This change provides readers more meaningful insight into how interest rates could impact our results of operations, highlights the strength of our balance sheet and funding program, and provides relevant and useful disclosures.
−Removed: This revised approach enhances transparency, aligns with industry practices, and offers a clearer understanding of our exposure to interest rate risk and its potential impact on financial performance.
Readers should exercise care in drawing conclusions based on the above analysis.
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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.