1 unchanged sentence
Market risk is defined as the sensitivity of income to fluctuations in interest rates, foreign exchange rates, equity prices, commodity prices and other market-driven rates or prices.
−Removed: The Bank’s market risk is primarily limited to interest rate risk.
−Removed: The Bank’s goal is to maximize long term profitability while minimizing its exposure to interest rate fluctuations.
−Removed: The first priority is to structure and price the Bank’s assets and liabilities to maintain an acceptable interest rate spread while reducing the net effect of changes in interest rates.
+Added: The Bank’s market risk is primarily limited to interest rate risk.
+Added: The Bank’s goal is to maximize long term profitability while minimizing its exposure to interest rate fluctuations.
+Added: The first priority is to structure and price the Bank’s assets and liabilities to maintain an acceptable interest rate spread while reducing the net effect of changes in interest rates.
In order to accomplish this, the focus is on maintaining a proper balance between the timing and volume of assets and liabilities re-pricing within the balance sheet.
6 unchanged sentences
This Committee reports to the Board of Directors.
−Removed: In addition to the Management Asset and Liability Committee, there is a Board Asset and Liability Committee (“ALCO”), which meets quarterly.
−Removed: ALCO monitors the interest rate risk analyses, reviews investment transactions during the period and determines compliance with the Bank’s Investment, ALCO and Liquidity policies.
−Removed: Management analyzes the Bank’s interest rate sensitivity position to manage the risk associated with interest rate movements through the use of interest income simulation and GAP analysis.
−Removed: The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest sensitive.”
−Removed: An asset or liability is said to be interest sensitive within a specific time period if it will mature or reprice within that time period.
−Removed: Management’s goal is to manage asset and liability positions to moderate the effects of interest rate fluctuations on net interest income.
+Added: In addition to the Management Asset and Liability Committee, there is a Board Asset and Liability Committee (“ALCO”), which meets quarterly.
+Added: ALCO monitors the interest rate risk analyses, reviews investment transactions during the period and determines compliance with the Bank’s Investment, ALCO and Liquidity policies.
+Added: Management analyzes the Bank’s interest rate sensitivity position to manage the risk associated with interest rate movements through the use of interest income simulation and GAP analysis.
+Added: The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest sensitive.” An asset or liability is said to be interest sensitive within a specific time period if it will mature or reprice within that time period.
+Added: Management’s goal is to manage asset and liability positions to moderate the effects of interest rate fluctuations on net interest income.
Interest income simulations are completed quarterly and presented to ALCO.
2 unchanged sentences
The simulation incorporates assumptions regarding the potential timing in the repricing of certain assets and liabilities when market rates change and the changes in spreads between different market rates.
−Removed: Simulation analysis is only an estimate of the Company’s interest rate risk exposure at a particular point in time.
+Added: Simulation analysis is only an estimate of the Company’s interest rate risk exposure at a particular point in time.
Management regularly reviews the potential effect changes in interest rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities.
The tables below set forth examples of changes in estimated net interest income and the estimated net portfolio value based on projected scenarios of interest rate increases and decreases.
−Removed: The analyses indicate the rate risk embedded in the Company’s portfolio at the dates indicated should all interest rates instantaneously rise or fall.
+Added: The analyses indicate the rate risk embedded in the Company’s portfolio at the dates indicated should all interest rates instantaneously rise or fall.
The results of these changes are added to or subtracted from the base case;
5 unchanged sentences
Net Portfolio Value - Performance Summary
−Removed: As of December 31, 2021
−Removed: As of December 31, 2020
−Removed: Projected Interest
−Removed: Rate Scenario
−Removed: (In thousands)
+Added: As of December 31, 2022 As of December 31, 2021
+Added: Projected Interest Rate Scenario Estimated Value Change from Base ($) Change from Base (%) Estimated Value Change from Base ($) Change from Base (%)
+Added: +200 $ 146,888 $ (15,357) (9.47) % $ 116,941 $ (15,137) (11.46) %
+Added: +100 157,368 (4,877) (3.01) % 126,152 (5,926) (4.49) %
+Added: BASE 162,245 — — 132,078 — —
+Added: -100 163,472 1,227 0.76 % 135,803 3,725 2.82 %
+Added: -200 155,386 (6,859) (4.23) % 134,277 2,199 1.66 %
Net Interest Income - Performance Summary
−Removed: December 31, 2021
−Removed: December 31, 2020
−Removed: Projected Interest
−Removed: Rate Scenario
+Added: December 31, 2022 December 31, 2021
+Added: Projected Interest Rate Scenario Estimated Value Change from Base ($) Change from Base (%) Estimated Value Change from Base ($) Change from Base (%)
+Added: +200 $ 46,131 $ (1,177) (2.49) % $ 31,521 $ 45 0.14 %
+Added: +100 46,938 (370) (0.78) % 31,575 99 0.31 %
+Added: BASE 47,308 — — 31,476 — —
+Added: -100 47,657 349 0.74 % 31,587 111 0.35 %
+Added: -200 46,747 (561) (1.19) % 31,548 72 0.23 %
Impact of Inflation and Changing Prices
−Removed: Patriot’s financial statements have been prepared in terms of historical dollars, without considering changes in relative purchasing power of money over time due to inflation.
+Added: Patriot’s financial statements have been prepared in terms of historical dollars, without considering changes in relative purchasing power of money over time due to inflation.
Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature.
−Removed: As a result, interest rates have a more significant impact on the Bank’s performance than the effect of general levels of inflation.
+Added: As a result, interest rates have a more significant impact on the Bank’s performance than the effect of general levels of inflation.
Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services.
Notwithstanding this, inflation can directly affect the value of loan collateral, in particular, real estate.
−Removed: Inflation, or disinflation, could significantly affect Patriot’s earnings in future periods.
+Added: Inflation, or disinflation, could significantly affect Patriot’s earnings in future periods.
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.