24 unchanged sentences
Management estimates that a gradual increase of 300 basis points in short-term rates and 100 basis points in long-term rates over two years would result in a 0.5% increase in net interest income in the first year and an increase of 1.8% in the second year, assuming a constant balance sheet and no management intervention.
−Removed: NPV Sensitivity.
+Added: Net Portfolio Value ("NPV") Sensitivity.
The NPV is an estimate of the market value of shareholders' equity at a point in time.
2 unchanged sentences
As of September 30, 2022, in the event of an immediate and parallel increase of 200 basis points in interest rates, the NPV is estimated to decrease by $617,000,000, or 20.9%, and the NPV-to-total assets ratio to decline to 12.6% from a base of 14.9%.
−Removed: As of September 30, 2020, in the event of an immediate and parallel increase of 200 basis points in interest rates, the NPV was estimated to increase by $141,000,000, or 5.3%, and the NPV-to-total assets ratio to rise to 15.6% from a base of 14.1%.
−Removed: The change in the sensitivity of the NPV ratio to this assumed change in interest rates is primarily due to the steepening of the yield curve and changes in balance sheet mix year over year.
+Added: As of September 30, 2021, in the event of an immediate and parallel increase of 200 basis points in interest rates, the NPV was estimated to decrease by $207,000,000, or 6.8%, and the NPV-to-total assets ratio to decline to 15.2% from a base of 15.5%.
+Added: The change in the sensitivity of the NPV ratio to this assumed change in interest rates is primarily due to the flattening of the yield curve and changes in balance sheet mix year over year.
Interest Rate Spread.
1 unchanged sentence
The period end interest rate spread was 3.36% at September 30, 2022 and 2.45% at September 30, 2021.
−Removed: As of September 30, 2021, the weighted-average rate on interest-earning assets decreased by 23 basis points to 2.80% compared to September 30, 2020.
−Removed: The lower rate on interest-earning assets is due primarily to repayments on fixed rate loans with higher rates than newly originated loans, as well as prepayments of fixed rate mortgage-backed securities at higher rates, which resulted in asset balance mix shifting to lower yielding cash and investments.
−Removed: As of September 30, 2021, the weighted-average rate on interest-bearing liabilities decreased by 34 basis points to 0.35% compared to September 30, 2020.
−Removed: The lower rate on interest-bearing liabilities primarily resulted from a greater mix of lower rate transaction deposit accounts, time deposits repricing at lower rates and a lower rate on FHLB borrowings due to repayment of advances with higher rates.
+Added: As of September 30, 2022, the weighted-average rate on interest-earning assets increased by 124 basis points to 4.04% compared to September 30, 2021.
+Added: The higher rate on interest-earning assets is due primarily to the Federal Reserve Bank's rate increases which have led to higher rates on adjustable rate loans, investment securities and cash as well as asset mix shifting to loans receivable.
+Added: As of September 30, 2022, the weighted-average rate on interest-bearing liabilities increased by 33 basis points to 0.68% compared to September 30, 2021.
+Added: The higher rate on interest-bearing liabilities primarily resulted from customer deposits repricing and a higher rate on new FHLB borrowings.
The period end interest rate spread for the last eight fiscal quarters is shown below:
7 unchanged sentences
Interest rate spread 3.36 % 3.07 % 2.57 % 2.48 % 2.45 % 2.31 % 2.30 % 2.34 %
+Added: (1) Represents the effective rate taking into consideration cash flow hedges on FHLB borrowings.
The chart below shows the volatility of our period end net interest spread (dashed line measured against the right axis) compared to the relatively consistent growth in net interest income (solid line measured against the left axis).
2 unchanged sentences
The net interest margin is measured using net interest income divided by average interest-earning assets for the period.
−Removed: The net interest margin decreased to 2.80% for the year ended September 30, 2021, from 2.93% for the year ended September 30, 2020.
−Removed: The yield on interest-earning assets decreased 58 basis points to 3.28% and the cost of interest-
−Removed: bearing liabilities decreased by 54 basis points to 0.61%.
−Removed: The lower yield on interest-earning assets is due primarily to repayments on fixed rate loans with higher rates than newly originated loans, as well as prepayments of fixed rate mortgage-backed securities at higher rates, which resulted in asset balance mix shifting to lower yielding cash and investments.
−Removed: The lower cost on interest-bearing liabilities primarily resulted from a greater mix of lower rate transaction deposit accounts, time deposits repricing at lower rates and a lower rate on FHLB borrowings due to repayment of advances with higher rates.
+Added: The net interest margin increased to 3.16% for the year ended September 30, 2022, from 2.80% for the year
+Added: ended September 30, 2021.
+Added: The yield on interest-earning assets increased 26 basis points to 3.54% and the cost of interest-bearing liabilities decreased by 11 basis points to 0.50%.
+Added: The higher yield on interest-earning assets was primarily due to the impact of rising rates on adjustable rate assets and cash.
+Added: Amortization of net loan origination fees on PPP loans declined to $6,536,000 during the year ended September 30, 2022 compared to $10,291,000 in the prior year.
+Added: The lower rate in interest-bearing liabilities was primarily due to replacing high-yielding, long-term FHLB borrowings with new borrowings at lower rates.
For the year ended September 30, 2022, average interest-earning assets increased by 4.3% to $18,812,481,000, up from $18,036,174,000 for the year ended September 30, 2021.
−Removed: The substantial balance sheet growth in 2021 was primarily due to the increase in customer deposits (noted below), which provided funding for growth in loans and other assets.
−Removed: During 2021, average loans receivable increased $943,212,000, or 7.7%, while the combined average balances of mortgage-backed securities, other investment securities and cash increased by $1,054,758,000 or 28.9%.
+Added: The substantial balance sheet growth in 2022 was primarily due to the growth in loans receivable.
+Added: During 2022, average loans receivable increased $1,873,469,000, or 14.2%, while the combined average balances of mortgage-backed securities, other investment securities and cash decreased by $1,061,655,000 or 22.6%.
Management views organic loan growth as the highest and best use of capital;
34 unchanged sentences
The following table shows the potential impact of rising interest rates on net income for one year.
−Removed: The Company's focus is primarily on the impact of rising rates generally, given the historically low current interest rate environment and the risk of abrupt upward or downward changes in short term rates.
+Added: The Company's focus is primarily on the impact of abrupt upward or downward changes in short term rates.
It is important to note that this is not a forecast or prediction of future events, but is used as a tool for measuring potential risk.
1 unchanged sentence
Potential Increase (Decrease) in Net Interest Income
−Removed: Basis Point Increase in Interest Rates September 30, 2021 September 30, 2020
+Added: Basis Point Increase (Decrease) in Interest Rates September 30, 2022 September 30, 2021
(In thousands, except percentages)
+Added: (200) $ (18,501) (2.40) % N/A N/A
+Added: (100) (10,525) (1.37) N/A N/A
100 4,788 0.62 $ 24,612 4.76 %
4 unchanged sentences
Improvement in the net interest income sensitivity during the year is primarily the result of interest rate swap activity and extension of the maturity of certain borrowings.
−Removed: Another method used to quantify interest rate risk is the net portfolio value (“NPV”) analysis.
+Added: Another method used to quantify interest rate risk is the NPV analysis.
This analysis calculates the difference between the present value of interest-bearing liabilities and the present value of expected cash flows from interest-earning assets and off-balance-sheet contracts.
19 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.