QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: Interest rate risk is defined as the exposure to changes in net interest income and capital that arises from movements in interest rates.
+Added: Interest rate risk is defined as the exposure to changes in NII and capital that arises from movements in interest rates.
Depending on the composition of the balance sheet, increasing or decreasing interest rates can negatively affect the Company’s results of operations and financial condition.
The Company measures interest rate risk over the short and long term.
−Removed: The Company measures interest rate risk as the change in net interest income caused by a change in interest rates over twelve and twenty-four months.
−Removed: The Company’s net interest income simulations provide information about short-term interest rate risk exposure.
+Added: The Company measures interest rate risk as the change in NII caused by a change in interest rates over twelve and twenty-four months.
+Added: The Company’s NII simulations provide information about short-term interest rate risk exposure.
The Company also measures interest rate risk by measuring changes in the values of assets and liabilities due to changes in interest rates.
1 unchanged sentence
Economic value of equity simulations reflect the interest rate sensitivity of assets and liabilities over a longer time period, considering the maturities, average life and duration of all balance sheet accounts.
−Removed: The Company’s net income is largely dependent on its net interest income.
−Removed: Net interest income is susceptible to interest rate risk to the extent that interest-bearing liabilities mature or re-price on a different basis than interest-earning assets.
−Removed: When interest-bearing liabilities mature or re-price more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income.
−Removed: Similarly, when interest-earning assets mature or re-price more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.
−Removed: Net interest income is also affected by changes in the portion of interest-earning assets that are funded by interest-bearing liabilities rather than by other sources of funds, such as noninterest-bearing deposits and stockholders’ equity.
−Removed: The Company’s interest rate risk management goals are (1) to increase net interest income at a growth rate consistent with the growth rate of total assets, and (2) to minimize fluctuations in net interest margin as a percentage of interest-earning assets.
+Added: The Company’s net income is largely dependent on its NII.
+Added: NII is susceptible to interest rate risk to the extent that interest-bearing liabilities mature or re-price on a different basis than interest-earning assets.
+Added: When interest-bearing liabilities mature or re-price more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect NII.
+Added: Similarly, when interest-earning assets mature or re-price more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in NII.
+Added: NII is also affected by changes in the portion of interest-earning assets that are funded by interest-bearing liabilities rather than by other sources of funds, such as noninterest-bearing deposits and stockholders’ equity.
+Added: The Company’s interest rate risk management goals are to (1) increase NII at a growth rate consistent with the growth rate of total assets, and (2) minimize fluctuations in net interest margin as a percentage of interest-earning assets.
Management attempts to achieve these goals by balancing, within policy limits, the volume of floating-rate liabilities with a similar volume of floating-rate assets;
3 unchanged sentences
The board of directors has approved the Company’s interest rate risk policy and assigned oversight to the Board Risk Oversight Committee.
−Removed: The policy establishes limits on risk, which are quantitative measures of the percentage change in net interest income and economic value of equity resulting from changes in interest rates.
−Removed: Both net interest income and economic value of equity simulations assist in identifying, measuring, monitoring and controlling interest rate risk and along with mitigating strategies are used by management to maintain interest rate risk exposure within Board policy guidelines.
−Removed: The Company’s interest rate risk model uses assumptions which include factors such as call features, prepayment options and interest rate caps and floors included in investment and loan portfolio contracts.
+Added: The policy establishes limits on risk, which are quantitative measures of the percentage change in NII and economic value of equity resulting from changes in interest rates.
+Added: Both NII and economic value of equity simulations assist in identifying, measuring, monitoring and controlling interest rate risk and along with mitigating strategies are used by management to maintain interest rate risk exposure within Board policy guidelines.
+Added: The Company’s interest rate risk model uses assumptions that include factors such as call features, prepayment options and interest rate caps and floors included in investment and loan portfolio contracts.
The interest rate risk model estimates the lives and interest rate sensitivity of the Company’s non-maturity deposits.
5 unchanged sentences
The Company prepares a current base case and several alternative simulations at least quarterly.
−Removed: Current interest rates are shocked by +/- 100, 200, 300, and 400 basis points.
+Added: Current interest rates are shocked by +/- 100, 200, 300, basis points and 400 basis points.
In addition, the Company simulates additional rate curve scenarios.
1 unchanged sentence
The Company’s internal limits for parallel shock scenarios are as follows:
−Removed: Shock in Basis Points Net Interest Income
−Removed: Economic Value of Equity
+Added: Shock in Basis Points Net Interest Income Economic Balance of Equity
+/- 400 - 25% - 40%
2 unchanged sentences
+/- 100 - 10% - 10%
−Removed: It is management’s goal to manage the Bank’s portfolios so that net interest income at risk over twelve and twenty-four-month periods and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels.
−Removed: As of December 31, 2024, the Company exceeded Board approved limits for the percentage change in economic value of equity in the interest rate shock of -200 due to average lives and low level of market rates on non-maturing deposit instruments.
−Removed: As of December 31, 2023, the Company did not exceed any Board approved limits.
−Removed: Measures of net interest income at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments.
−Removed: The below schedule estimates the changes in net interest income over a twelve-month period for parallel rate shocks for up 400, 300, 200, 100 and down 100, and 200 scenarios:
+Added: It is management’s goal to manage the Bank’s portfolios so that NII at risk over 12 and 24-month periods and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels.
+Added: As of December 31, 2025, the Company did not exceed any Board-approved limits for the percentage changes in NII or economic value of equity.
+Added: As of December 31, 2024, the Company exceeded Board approved limits for the percentage change in economic value of equity in the interest rate shocks of -200 and -300 due to average lives and the low level of market rates on non-maturing deposit instruments.
+Added: Measures of NII at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments.
+Added: The following schedule estimates the changes in NII over a 12-month period for parallel rate shocks for up 400, 300, 200 and 100, and down 100, 200 and 300 scenarios.
Estimated Changes in Net Interest Income
Change in Interest Rates:
−Removed: + 400 basis points + 300 basis points + 200 basis points + 100 basis points - 100 basis points - 200 basis points
+Added: + 400 basis points + 300 basis points + 200 basis points + 100 basis points - 100 basis points - 200 basis points - 300 basis points
Policy limit - 25% - 20% - 15% -10% - 10% - 15% - 20%
2 unchanged sentences
Measures of equity value at risk indicate the ongoing economic value of the Company by considering the effects of changes in interest rates on all of the Company’s cash flows, and by discounting the cash flows to estimate the present value of assets and liabilities.
−Removed: The below schedule estimates the changes in the economic value of equity at parallel shocks for up 400, 300, 200, 100 and down 100 and 200 scenarios:
+Added: The following schedule estimates the changes in the economic value of equity over a 12-month period for parallel shocks for up 400, 300, 200 and 100, and down 100, 200 and 300 scenarios.
Estimated Changes in Economic Value of Equity
Change in Interest Rates:
−Removed: + 400 bp + 300 bp + 200 bp + 100 bp - 100 bp - 200 bp
+Added: + 400 basis points + 300 basis points + 200 basis points + 100 basis points - 100 basis points - 200 basis points - 300 basis points
Policy limit - 40% - 30% - 20% - 10% - 10% - 20% - 30%
7 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.