10 unchanged sentences
The composition of the investment portfolio was 45.9% variable rate and 54.1% fixed rate as of September 30, 2023 to provide some protection against rising rates.
−Removed: In addition, the Bank is producing more commercial loans that have shorter terms and/or variable rates and has increased less rate sensitive transaction deposit accounts to 79.2% of the deposit portfolio.
+Added: In addition, the Bank is producing more commercial loans that have shorter terms and/or variable rates.
+Added: There has also been focus on increasing less rate sensitive transaction deposit accounts.
+Added: These accounts make up 67.0% of the deposit portfolio as of September 30, 2023.
The Company's balance sheet strategy, in conjunction with low operating costs, has allowed the Company to manage interest rate risk, within guidelines established by the Board, through all interest rate cycles.
7 unchanged sentences
Actual results would differ from the assumptions used in this model, as management monitors and adjusts loan and deposit pricing and the size and composition of the balance sheet to respond to changing interest rates.
−Removed: In the event of an immediate and parallel increase of 200 basis points in both short- and long-term interest rates, the model estimates that net interest income would increase by 1.9% in the next year.
+Added: In the event of an immediate and parallel increase of 200 basis points in both short- and long-term interest rates, the model estimates that net interest income would decrease by 2.0% in the next year.
This compares to an estimated increase of 1.9% as of the September 30, 2022 analysis.
It is noted that a flattening yield curve where the spread between short-term rates and long-term rates decreases would likely result in lower net interest income and vice versa for a steepening yield curve.
−Removed: 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.
+Added: 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 0.2% increase in net interest income in the first year and a decrease of 1.0% in the second year, assuming a constant balance sheet and no management intervention.
+Added: Alternatively, in the event of an immediate and parallel decrease of 100 basis points in both short and long-term interest rates, the model estimates that net interest income would increase by 4.94%.
Net Portfolio Value ("NPV") Sensitivity.
4 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 was 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: 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.
−Removed: Interest Rate Spread.
−Removed: The interest rate spread is measured as the difference between the rate on interest-earning assets and the rate on interest-bearing liabilities at the end of each period.
+Added: The change in the sensitivity of the NPV ratio to this assumed change in interest rates is primarily due to the
+Added: flattening of the yield curve and changes in balance sheet mix year over year.
+Added: Prepayment speeds for single family mortgages are low at September 30, 2023 with the Bank's conditional payment rate ("CPR") for this portfolio segment at 7.0%, down from 8.1% the year before.
+Added: As of September 30, 2023, in the event of an immediate and parallel decrease of 100 basis points in interest rates, the NPV is estimated to increase NPV by $327,000,000, or 12.38%, and increase the NPV to total assets ratio to 13.59% from a base of 12.4%.
+Added: Interest Rates.
+Added: The Company measures the difference between the rate on interest-earning assets and the rate on interest-bearing liabilities at the end of each period.
The period end interest rate spread was 2.61% at September 30, 2023 and 3.36% at September 30, 2022.
2 unchanged sentences
As of September 30, 2023, the weighted-average rate on interest-bearing liabilities increased by 178 basis points to 2.46% compared to September 30, 2022.
−Removed: The higher rate on interest-bearing liabilities primarily resulted from customer deposits repricing and a higher rate on new FHLB borrowings.
+Added: The higher rate on interest-bearing liabilities primarily resulted from customer deposits repricing and higher rates on new borrowings.
The period end interest rate spread for the last eight fiscal quarters is shown below:
12 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 increased to 3.16% for the year ended September 30, 2022, from 2.80% for the year
−Removed: ended September 30, 2021.
−Removed: 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 net interest margin increased to 3.40% for the year ended September 30, 2023, from 3.16% for the year ended September 30, 2022.
+Added: The yield on interest-earning assets increased 159 basis points to 5.13% and the cost of interest-bearing liabilities increased by 168 basis points to 2.18%.
The higher yield on interest-earning assets was primarily due to the impact of rising rates on adjustable rate assets and cash.
−Removed: 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.
−Removed: The lower rate in interest-bearing liabilities was primarily due to replacing high-yielding, long-term FHLB borrowings with new borrowings at lower rates.
+Added: The higher rate in interest-bearing liabilities was primarily due to replacing maturing borrowings at higher rates.
For the year ended September 30, 2023, average interest-earning assets increased by 8.1% to $20,327,301,000, up from $18,812,481,000 for the year ended September 30, 2022.
−Removed: The substantial balance sheet growth in 2022 was primarily due to the growth in loans receivable.
+Added: Balance sheet growth in 2023 was primarily due to the growth in loans receivable.
During 2023, average loans receivable increased $2,011,903,000, or 13.3%, while the combined average balances of mortgage-backed securities, other investment securities and cash decreased by $536,288,000 or 14.7%.
−Removed: Management views organic loan growth as the highest and best use of capital;
−Removed: thus the focus on primarily growing loans receivable.
−Removed: During 2022, average interest-bearing customer deposit accounts increased $775,955,000 or 6.5% and the average balance of FHLB borrowings decreased by $502,917,000, or 22.5%, from 2021.
+Added: Management views organic loan growth as the highest and best use of capital, thus the focus on primarily growing loans receivable.
+Added: During 2023, average interest-bearing customer deposit accounts increased $167,664,000 or 1.3% and the average balance of borrowings increased by $1,530,807,000, or 88.4%, from 2022.
The following table sets forth the information explaining the changes in the net interest income and net interest margin.
30 unchanged sentences
(3) Net interest income divided by average interest-earning assets.
−Removed: The following table shows the potential impact of rising interest rates on net income for one year.
+Added: The following table shows the potential impact of changing interest rates on net income for one year.
The Company's focus is primarily on the impact of abrupt upward or downward changes in short term rates.
4 unchanged sentences
(In thousands, except percentages)
−Removed: (200) $ (18,501) (2.40) % N/A N/A
−Removed: (100) (10,525) (1.37) N/A N/A
(200) $ 57,103 7.79 % $ (18,501) (2.40) %
1 unchanged sentence
100 (9,507) (1.30) 4,788 0.62
+Added: 200 (14,907) (2.03) 14,381 1.87
+Added: 300 (22,737) (3.10) 21,110 2.74
Actual results will differ from the assumptions used in this model, as management monitors and adjusts both the size and the composition of the balance sheet in order to respond to changing interest rates.
13 unchanged sentences
No change 2,639,130 — 12.42
+Added: (100) 2,965,913 326,783 13.59
+Added: (200) 3,221,892 582,792 14.33
September 30, 2022
6 unchanged sentences
No change 2,944,463 — 14.93
−Removed: As of September 30, 2022, the Company was in compliance with all of its interest rate risk policy guidelines.
+Added: (100) 2,981,579 37,115 14.77
+Added: (200) 3,163,345 218,882 15.08
+Added: As of September 30, 2023, the Company was in compliance with all of its interest rate risk policy limits.
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.