2021 Ohio Bankers Day

September 1-2, 2021

2021 VIRTUAL OHIO BANKERS DAY CONFERENCE Wednesday September 1, 2021 1:00 – 1:15 Welcome and Introductions Kevin R. Allard , Superintendent, Division of Financial Institutions Sherryl Maxfield , Director, Ohio Department of Commerce

AML Act of 2020 and a FinCEN Update Thomas K. Lawler , Senior Liaison Officer, FinCEN

1:15 – 2:00

Economics and Banking (economics and sentiment index) Tom F. Siems, Ph.D., Sr. Economist and Director of Research, CSBS

2:00 – 2:45

2:45 – 3:15

Roundtable Discussion and Break

Coffee with the Regulators Steven Jenkins, Senior Vice President, Federal Reserve Bank of Cleveland Gregory Bottone, Regional Director, Federal Deposit Insurance Corporation, Chicago Region Kevin R. Allard, Superintendent, Division of Financial Institutions Thursday September 2, 2021

3:15 – 4:30

New Normal; Surviving Through a Pandemic Dave Martin, BankMechanics, Speak, Writer, Bank Advocate

1:00 – 2:00

Emerging Role of Alternative Data Adam D. Storch , Associate Director, US Securities and Exchange Commission (SEC ) Christopher A. Marino , Senior Securities Compliance Examiner, SEC Kevin C. Stemp, Senior Special Counsel to the Director, SEC

2:00 – 3:00

3:00 – 3:30

Break

ThinkTech Accelerator Panel Tony Gorrell, Chief Executive Officer, Sutton Bank Robert Johnston, President and Chief Executive, Adlumin, Inc. Charles Potts, SVP, Chief Innovation Officer, Independent Community Bankers of America David Shipley, Chief Executive Officer, Beauceron Security

3:30 – 4:45

Closing Remarks Ingrid E. White, Deputy Superintendent, Division of Financial Institutions Kevin R. Allard, Superintendent, Division of Financial Institutions

4:45 – 5:00

2021 Ohio Bankers Day September 2021

AGENDA

1. FinCEN’s Mission 2. Anti-Money Laundering Act of 2020 (AMLA)  Corporate Transparency Act (CTA) 3. Actions to date 4. Upcoming deliverables

FINCEN’S MISSION

1. FinCEN is the primary regulator and administrator of the Bank Secrecy Act (BSA) 2. FinCEN is the Financial Intelligence Unit, or FIU, of the United States

ANTI-MONEY LAUNDERING ACT OF 2020

Enacted by Congress on January 1, 2021 Includes significant reforms to the U.S. anti-money laundering (AML) regime  Corporate Transparency Act (CTA)

ANTI-MONEY LAUNDERING ACT OF 2020 (AMLA)

 Strengthens, modernizes, and streamlines the existing AML regime by promoting innovation, regulatory reform, and industry engagement.  Calls for the Secretary of Treasury and FinCEN to work closely with regulatory, national security, and law enforcement partners to identify risks and priorities and provide feedback to industry partners.

AMLA KEY REQUIREMENTS

 Establish national AML and countering the financing of terrorism priorities;  Enhance the whistleblower provisions to provide for a more robust whistleblower program including new anti-retaliation protections;  Review, and revise as appropriate, CTR and SAR reporting requirements, and other existing BSA regulations and guidance;  Expand BSA requirements and obligations to persons engaged in the trade of antiquities, and study on the potential expansion of BSA requirements to persons engaged in the art trade;

AMLA KEY REQUIREMENTS (continued)

 FinCEN Exchange program codified;  Host a Financial Crimes Tech Symposium, and establish new BSAAG subcommittees;  Establish a BSA Analytical Hub;  Establish procedures for additional feedback between FinCEN and financial institutions on the usefulness of SARs, publish a semi-annual review of SAR activity and other BSA reports; and  Codify a pilot program to allow financial institutions to share SARs with their foreign branches, subsidiaries, and affiliates.

CORPORATE TRANSPARENCY ACT (CTA)

Establishes uniform beneficial ownership reporting requirements for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States. Authorizes FinCEN to collect and share this information with authorized government authorities and financial institutions, subject to effective safeguards and controls.

CTA KEY REQUIREMENTS

Develop a Beneficial Ownership IT System  FinCEN is charged with establishing reporting requirements, safeguarding the data, and governing access protocols.  FinCEN will amend its existing Customer Due Diligence (CDD) Rule to account for the new reporting regime.

CTA KEY REQUIREMENTS (continued)

FinCEN will work with federal agencies, states, tribes, and private industry to: 1. Educate and assist potential reporting companies with reporting obligations and exclusions; 2. Ensure adequate information is being reported accurately; 3. Safeguard the reported information in a secure and confidential database; 4. Provide for appropriate audits and inspections, and 5. Govern access to the data.

ACTIONS TO DATE

• In accordance with Section 6211, FinCEN briefed the Senate Committee on Banking, Housing, and Urban Affairs and House Committee on Financial Services on the use of emerging technologies, including issues specified under the statute concerning artificial intelligence, digital identity technologies, distributed ledger technologies, and other innovative technologies, including best practices or significant concerns with respect to U.S. efforts to combat money laundering and other forms of illicit finance. • FinCEN issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment on a wide range of questions related to the implementation of the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA). Comment period closed May 5 and comments are currently under review.

DELIVERABLES

• Publish AML/CFT Priorities (Section 6101) • Issue first semi-annual publication of threat pattern and trend information (Section 6206) • Submit to Congress No Action Letter Assessment (Section 6305)

AML/CFT Priorities

Corruption; Cybercrime; Foreign and domestic terrorist financing; Fraud; Transnational criminal organization activity; Drug trafficking organization activity; Human trafficking and human smuggling; and Proliferation financing.

No Action Letter

Pursuant to Section 6305 of the Anti-Money Laundering Act of 2020 (AML Act), the report was delivered on June 28, 2021 to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services. FinCEN’s assessment included consultation with the Attorney General, the Federal functional regulators, State bank supervisors, State credit union supervisors, and other Federal agencies, as required by the AML Act.

No Action Letter

FinCEN concludes that a no-action letter process would be a useful complement to its current forms of regulatory guidance and relief,

No Action Letter

FinCEN concluded that it should undertake a rulemaking to establish a no-action letter process limited to the exercise of its own enforcement authority.

• FinCEN’s Enforcement Division is now …. • The FinCEN Enforcement and Compliance Division or ECD.

Nationwide SAR Filings by Industry Type January 1, 2016 – July 31, 2021 5,961,795 Depository Institutions 5,047,166 Money Services Businesses 290,587 Casinos & Card Clubs 173,193 Securities & Futures Industries 14,368 Insurance Companies 1,104,695 Other 100,488 Loan or Finance Company 15,967 Housing GSE

UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

18

2020 Top Suspicious Activity Information by Depository Institution

Fraud • Credit/debit card • Check • Consumer loan

Other Suspicious Activities • Transaction with no apparent economic, business, or lawful purpose • Suspicious use of multiple transaction locations • Identity theft • Two or more individuals working together Other Suspicious Activities • Identity theft • Transaction with no apparent economic, business, or lawful purpose • Counterfeit instrument • Account takeover

• ACH • Wire

Ohio

Fraud • Check • ACH • Credit/debit card • Consumer loan • Wire

Nationwide

UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

19

2020 Top Suspicious Activity Information by Depository Institution

Money Laundering • Suspicion concerning the source of funds • Transaction out of pattern for customer(s) • Suspicious EFT/wire transfers • Suspicious use of multiple accounts Money Laundering • Suspicious EFT/wire transfers • Suspicion concerning the source of funds • Transaction out of pattern for customer(s) • Suspicious use of noncash monetary instruments

Structuring • Transaction(s) below CTR threshold • Transaction(s) below BSA recordkeeping threshold • Alters or cancels transaction to avoid CTR requirement Structuring • Transaction(s) below • CTR threshold • Transaction(s) below BSA recordkeeping threshold • Alters or cancels transaction to avoid CTR requirement

Ohio

Nationwide

20

UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

Number of Ohio State SAR Filings by Year

160,000

135,404

140,000

122,453

120,000

100,000

94,335

82,316

79,475

77,756

80,000

60,000

40,000

30,271

29,298

26,529

19,457

16,646

20,000

9,480

0

2016

2017

2018

2019

2020

2021 (Through July 31)

Depository Institutions

Money Services Business (MSB)

Note: Suspicious Activity Report (SAR) statistics generated reflect the data submitted on FinCEN Form 111. Statistics above reflect data between January 1, 2016 through July 31, 2021. Statistical data for SARs are continuously updated as information is processed. For this reason, there may be minor discrepancies between the statistical figures contained in the various portions of this report.

UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

21

SAR Filing Rankings by Depository Institution & Money Services Business January 1, 2016 through July 31, 2021

Fi l ings (Overal l)

Percentage (Overal l)

Fi l ings (Overal l)

Percentage (Overal l)

Rank

State/Terri tory

Rank

State/Terri tory

1 California 2 New York

1,735,058

34% 16% 14% 12% 11%

1 California 2 New York

1,353,804

23% 14% 13% 11%

821,166 704,244 623,191 540,880 284,262 271,852 266,315 231,627 229,675 188,897 185,377 179,958 174,355 149,848 135,975 133,977 127,259 125,463 117,971

828,787 781,998 671,609 562,375 558,835 524,168 392,362 275,386 274,697 266,610 264,807 178,879 176,348 147,753 143,727 140,448 140,279 136,603 120,307

3 Texas

3 Ohio 4 Texas

4 Florida

5 Colorado 6 Georgia

5 Virginia 6 Florida

9% 9% 9% 7% 5% 5% 4% 4% 3% 3% 2% 2% 2% 2% 2% 2%

6% 5% 5% 5% 5% 4% 4% 4% 3% 3% 3% 3% 3% 2% 2%

7 North Carolina 8 New Jersey 9 Pennsylvania

7 North Carolina

8 Delaware

9 Pennsylvania

10 Virginia 11 Maryland

10 Illinois

11 New Jersey

12 Massachusetts

12 Georgia

13 Illinois 14 Ohio 15 Arizona

13 Utah

14 South Dakota

15 Michigan

16 Massachusetts

16 Tennessee 17 Michigan 18 Washington 19 Minnesota 20 South Carolina

17 Arizona

18 Washington 19 Maryland 20 Tennessee

Note: The above statistics reflect data from FinCEN Suspicious Activity Report (SAR) Form 111 submitted to FinCEN from January 1, 2016 through July 31, 2021. The percentage is based on overall total filings for that time period ( Depository Institutions (blue) – 5,961,795 and MSBs (orange) – 5,047,166 ). Statistical data for SARs are continuously updated as information is processed. For this reason, there may be minor discrepancies between the statistical figures contained in the various portions of this report.

UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

22

2020 National SAR Filings of Depository Institution Suspicious Activity Reports

AK 2,377

NH 3,325

ND 2,123

WA 21,708

MT 2,282

VT 1,308

MN 13,500

ME 4,264

MA 22,742

SD 31,623

ID 3,083

OR 12,599

WI 14,365

MI 25,078

WY 1,101

NY 121,901

IA 6,225

RI 5,353

NE 4,241

PA 42,583

IL 44,672

OH 135,804

IN 19,095

NV 17,680

UT 26,243

CT 11,572

CO 16,817

KS 6,290

WV 4,735

MO 12,343

NC 101,380 VA 93,862

KY 9,098

NJ 39,847

CA 222,553

TN 19,028

OK 13,404

AR 8,419

HI 8,971

DE 36,513

AZ 20,467

NM 6,180

SC 11,654

MS 13,525

MD 20,646

AL 20,606

GA 37,731

TX 107,906

LA 14,838

DC 4,670

FL 85,711

Total SAR Filings by Depository Institutions by State Number within parenthesis represents number of states in listed range

20,000 to 222,553 (20) 8,000 to 19,999 (16) 5,000 to 7,999 (4)

3,000 to 4,999 (6) 0 to 2,999 (5)

UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

23

Geographic Distribution of Ohio State Depository Institution SAR Filings From January 1, 2019 through December 31, 2019

FinCEN SARs by Depository Institutions Number within parenthesis represents total ZIP Codes in listed range 169 to 78,300 (65) 62 to 168 (162) 19 to 61 (146) 5 to 18 (141) 0 to 4 (922)

Note: Statistics based on Transaction Location Address

UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

24

FinCEN Official Website

www.fincen.gov UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

25

Interactive SAR Stats

UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE www.fincen.gov SAR Statistics (Interactive Suspicious Activity Report Statistics)

26

SAR Filing Trend Data by Industry

www.fincen.gov Resources SAR Stats UNCLASSIFIED//LAW ENFORCEMENT SENSITIVE

27

Questions?

Thomas K. Lawler Senior Liaison Officer Thomas.lawler@fincen.gov

The 2021 Pushmi-Pullyu Economic Recovery By Thomas F. Siems, Ph.D. CSBS Sr Economist & Director of Research

2021 Ohio Bankers Day September 1, 2021

The 2021 Pushmi-Pullyu Economic Recovery

Pushmi-Pullyu Evidence

What Does the CBSI Indicate?

How is Ohio Doing?

A Few High-Frequency Indicators Worth Watching

The 2021 Pushmi-Pullyu Economic Recovery

Pushmi-Pullyu Evidence

What Does the CBSI Indicate?

How is Ohio Doing?

A Few High-Frequency Indicators Worth Watching

Pushmi

Pullyu

Pushmi

Pullyu

A Do ‐ Little Economic Ride?

Pullyu

Pushmi

• Rising Confidence

• Q1 Vaccine hopes?

• Massive Stimulus • “Excess” Savings • Manufacturing Strength • Housing Strength • Re ‐ employment Growth & Jobs Available • GDP Growth

Pullyu

Pushmi

• Falling Confidence

• Rising Confidence

• Q3 Delta Variant Fears? • Employment Gap & Labor Shortages • Skyrocketing National Debt • Inflation Pressures? • Asset Bubbles Brewing?

• Q1 Vaccine hopes?

• Massive Stimulus • “Excess” Savings • Manufacturing Strength • Housing Strength • Re ‐ employment Growth & Jobs Available • GDP Growth

Daily Index of Consumer Sentiment (5 ‐ day moving average)

120

115

110

105

100

95

90

85

Source: Morning Consult https://morningconsult.com/form/econ ‐ intel ‐ global ‐ consumer ‐ confidence ‐ tracking ‐ demo ‐ request/

80

Sep ‐ 20

Mar ‐ 21

Sep ‐ 19

Mar ‐ 20

Sep ‐ 18

Mar ‐ 19

Mar ‐ 18

Nov ‐ 20

Jan ‐ 21

May ‐ 21

Jul ‐ 21

Nov ‐ 19

Jan ‐ 20

May ‐ 20

Jul ‐ 20

Nov ‐ 18

Jan ‐ 19

May ‐ 19

Jul ‐ 19

Jan ‐ 18

May ‐ 18

Jul ‐ 18

Federal Reserve System Balance Sheet (2004 ‐ 2021)

Estimated $1.6 Trillion in “Excess Savings”

Monthly Supply of Houses(1963 ‐ 2021)

National Home Price Index (1987 ‐ 2021)

ISM Purchasing Manager's Index 2021 Levels Near or Above 60

70

65

60

40 Diffusion Index, Seasonally Adjusted 45 50 55

35

30

Jan ‐ 90

Jan ‐ 91

Jan ‐ 92

Jan ‐ 93

Jan ‐ 94

Jan ‐ 95

Jan ‐ 96

Jan ‐ 97

Jan ‐ 98

Jan ‐ 99

Jan ‐ 00

Jan ‐ 01

Jan ‐ 02

Jan ‐ 03

Jan ‐ 04

Jan ‐ 05

Jan ‐ 06

Jan ‐ 07

Jan ‐ 08

Jan ‐ 09

Jan ‐ 10

Jan ‐ 11

Jan ‐ 12

Jan ‐ 13

Jan ‐ 14

Jan ‐ 15

Jan ‐ 16

Jan ‐ 17

Jan ‐ 18

Jan ‐ 19

Jan ‐ 20

Jan ‐ 21

Light Vehicle Sales (1976 ‐ 2021)

Total U.S. Nonfarm Payroll Employment

155,000

150,000

145,000

135,000 Thousands of Persons 140,000

130,000

Source: U.S. Bureau of Labor Statistics

125,000

Jan ‐ 00

Oct ‐ 00

Jan ‐ 03

Oct ‐ 03

Jan ‐ 06

Oct ‐ 06

Jan ‐ 09

Oct ‐ 09

Jan ‐ 12

Oct ‐ 12

Jan ‐ 15

Oct ‐ 15

Jan ‐ 18

Oct ‐ 18

Jan ‐ 21

Jul ‐ 01

Apr ‐ 02

Jul ‐ 04

Apr ‐ 05

Jul ‐ 07

Apr ‐ 08

Jul ‐ 10

Apr ‐ 11

Jul ‐ 13

Apr ‐ 14

Jul ‐ 16

Apr ‐ 17

Jul ‐ 19

Apr ‐ 20

Total U.S. Nonfarm Payroll Employment

155,000

150,000

5.7 million

145,000

135,000 Thousands of Persons 140,000

130,000

Source: U.S. Bureau of Labor Statistics

125,000

Jan ‐ 00

Oct ‐ 00

Jan ‐ 03

Oct ‐ 03

Jan ‐ 06

Oct ‐ 06

Jan ‐ 09

Oct ‐ 09

Jan ‐ 12

Oct ‐ 12

Jan ‐ 15

Oct ‐ 15

Jan ‐ 18

Oct ‐ 18

Jan ‐ 21

Jul ‐ 01

Apr ‐ 02

Jul ‐ 04

Apr ‐ 05

Jul ‐ 07

Apr ‐ 08

Jul ‐ 10

Apr ‐ 11

Jul ‐ 13

Apr ‐ 14

Jul ‐ 16

Apr ‐ 17

Jul ‐ 19

Apr ‐ 20

U.S. Unemployment Rate

16

14

12

10

6 Unemployment Rate (%) 8

4

2

Source: U.S. Bureau of Labor Statistics

0

Help Wanted! 10.1 Million Open Jobs Available in the United States

12000

10000

8000

4000 Job Openings (in Thousands) 6000

2000

0

Dec ‐ 00

Aug ‐ 01

Apr ‐ 02

Dec ‐ 02

Aug ‐ 03

Apr ‐ 04

Dec ‐ 04

Aug ‐ 05

Apr ‐ 06

Dec ‐ 06

Aug ‐ 07

Apr ‐ 08

Dec ‐ 08

Aug ‐ 09

Apr ‐ 10

Dec ‐ 10

Aug ‐ 11

Apr ‐ 12

Dec ‐ 12

Aug ‐ 13

Apr ‐ 14

Dec ‐ 14

Aug ‐ 15

Apr ‐ 16

Dec ‐ 16

Aug ‐ 17

Apr ‐ 18

Dec ‐ 18

Aug ‐ 19

Apr ‐ 20

Dec ‐ 20

U.S. Real Gross Domestic Product

10

‐ 5 Real GDP (Year ‐ over ‐ Year Percent Change) 0 5

‐ 10

U.S. Real Gross Domestic Product

10

Baseline Forecast

‐ 5 Real GDP (Year ‐ over ‐ Year Percent Change) 0 5

Slower Growth Forecast

‐ 10

The 2020 Reverse ‐ Radical Recession in Comparison to Past Recessions

100 102 104 106

88 90 92 94 96 98 Real GDP Indexed to 100 at Expansion Peak

0

1

2

3

4

5

6

7

8

9

10

Quarters Since Expansion Peak

1949

1953 ‐ 54 1990 ‐ 91

1957 ‐ 58

1960 ‐ 61 2008 ‐ 09

1970

1974 ‐ 75

1981 ‐ 82

2001

2020 Actual

2020 Forecast

U.S. Publically Held Debt ‐ to ‐ GDP

160%

140%

120%

100%

80%

60%

40%

20%

0%

Jan ‐ 93

Jan ‐ 94

Jan ‐ 95

Jan ‐ 96

Jan ‐ 97

Jan ‐ 98

Jan ‐ 99

Jan ‐ 00

Jan ‐ 01

Jan ‐ 02

Jan ‐ 03

Jan ‐ 04

Jan ‐ 05

Jan ‐ 06

Jan ‐ 07

Jan ‐ 08

Jan ‐ 09

Jan ‐ 10

Jan ‐ 11

Jan ‐ 12

Jan ‐ 13

Jan ‐ 14

Jan ‐ 15

Jan ‐ 16

Jan ‐ 17

Jan ‐ 18

Jan ‐ 19

Jan ‐ 20

Jan ‐ 21

Stock and Bond Market Indicators after COVID ‐ 19 Hits the USA

2.00

36,000

1.80

34,000

1.60

32,000

10 ‐ year Constant Maturity Treasury Bond Yield (percent)

DJIA

1.40

30,000

Dow Jones Industrial Average Index

1.20

28,000

1.00

26,000

10 ‐ year T ‐ Note

0.80

24,000

0.60

22,000

0.40

20,000

0.20

18,000

0.00

1/2/2020 4/2/2020 7/2/2020 10/2/2020 1/2/2021 4/2/2021 7/2/2021

The 2021 Pushmi-Pullyu Economic Recovery

Pushmi-Pullyu Evidence

What Does the CBSI Indicate?

How is Ohio Doing?

A Few High-Frequency Indicators Worth Watching

Chart 1: Community Bank Sentiment Index (CBSI)

130

122

121 123

120

115

115

110

90 CBSI (100 = Neutral Sentiment) 100

98

97

91

90

80

70

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021

Community Bank Sentiment Index Q2 2021

Q1 Q ‐ Q YOY 2

143

‐ 1 +50

BC

5

44

48

89

‐ 7 ‐ 3

MP

26

46

15

26 +5 ‐ 31

RB

75

22

1

138 ‐ 1 +27

CS

7

46

46

145 ‐ 4 +19

OE

1

52

46

107

+2 +52

PR

34

24

41

FV

155 +5 +57

3

32

58

115

0 +25

CBSI:

Positive

Neutral

Negative

Uncertain

Community Bank Sentiment Index 2021 Q2 and 2021 Q1

Index

BC Q2 BC Q1 MP Q2 MP Q1 RB Q2 RB Q1 CS Q2 CS Q1 OE Q2 OE Q1 PR Q2 PR Q1 FV Q2 FV Q1

143 144

48

44 32

5

‐ 1

54

10

15

46

26

89 96

‐ 7

16

53

20

26 21 139 140 145 149 107 105

1

22

75

+5

2

15

81

46

46 40

7

‐ 1

49

9

46

52

1

‐ 4

50

45

1

41

24

34

+2

38

28

33

155 150 115 115

58

32

3

+5

57

30

7

CBSI Q1: CBSI Q2:

0

Positive Neutral

Negative Uncertain

CBSI Trends from Q2 2019 to Q2 2021

100 120 140 160 180

20 40 60 80

‐ 20 0

CBSI

Business Conditions

Monetary Policy

Regulatory Burden

Operations Expansion

Capital Spending

Profitability Franchise Value

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021

Regulatory Burden

Operations Expansion

Business Conditions

Monetary Policy

70

70

70

70

20

20

20

20

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

‐ 30

‐ 30

‐ 30

‐ 30

‐ 80

‐ 80

‐ 80

‐ 80

RBp

RBn

RBi

BCp

BCn

BCi

MPp

MPn

MPi

OEp

OEn

OEi

CBSI (minus 100) and Uncertainty

Franchise Value

Capital Spending

Profitability

70

70

70

70

22 21 22

15 15

20

20

20

20

‐ 3 ‐ 2

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

‐ 30

‐ 30

‐ 30

‐ 30

‐ 9 ‐ 10

‐ 80

‐ 80

‐ 80

‐ 80

BCu CSu

MPu RBu

OEu CBSI

CSp

CSn

CSi

PRp

PRn

PRi

FVp

FVn

FVi

PRu

FVu

Community Bankers' Outlook for Economic Sectors...

5.0

4.5

4.10

4.0

1.0 Economic Outlook (5=Positive, 3=Neutral, 1=Negative) 1.5 2.0 2.5 3.0 3.5

3.74

3.72

3.71

3.60

3.54

3.52

3.47

3.17

2.97

USA

Community Bankers' Are Concerned About...

4.0

3.5

3.37

3.35

3.28

3.27

3.14

2.99

1.0 Level of Concern (1=Not At All, 4=Extremely) 1.5 2.0 2.5 3.0

2.68

2.52

1.93

1.90

1.77

1.64

USA

The 2021 Pushmi-Pullyu Economic Recovery

Pushmi-Pullyu Evidence

What Does the CBSI Indicate?

How is Ohio Doing?

A Few High-Frequency Indicators Worth Watching

The 2021 Pushmi-Pullyu Economic Recovery

Pushmi-Pullyu Evidence

What Does the CBSI Indicate?

How is Ohio Doing?

A Few High-Frequency Indicators Worth Watching

Weekly Economic Index

13

8

3

‐ 2

1/5/2008

2/5/2011

3/8/2014

7/4/2015

10/29/2016 4/8/2017

8/4/2018

11/22/2008 5/2/2009

12/24/2011 6/2/2012

11/30/2019 5/9/2020

5/21/2016

6/14/2008

3/20/2010

8/28/2010

7/16/2011

4/20/2013

9/28/2013

8/16/2014

1/24/2015

9/16/2017

2/24/2018

1/12/2019

6/22/2019

12/12/2015

10/10/2009

11/10/2012

10/17/2020

03/27/2021

‐ 7

Data Source: Federal Reserve Bank of New York

‐ 12

U.S. Restaurant Reservations ~10% Below 2019 Levels

60%

40%

20%

0%

‐ 20%

‐ 40%

‐ 60%

‐ 80%

Source: OpenTable

‐ 100%

‐ 120%

Daily Air Travel ~24% Below 2019 Levels

3,000,000

2,500,000

2019

2,000,000

2021

1,500,000

1,000,000

2020

500,000

Source: TSA

0

1/1 1/15 1/29 2/12 2/26 3/12 3/26 4/9 4/23 5/7 5/21 6/4 6/18 7/2 7/16 7/30 8/13 8/27

2021 Traveler Throughput

2020 Traveler Throughput

2019 Traveler Throughput

Conclusion • US Economic Growth Coming Back…But Confidence Waning • Job growth will lag; virus/vaccine concerns will drive pace of growth • Bankers Optimistic in Q2 • Profitability up, but concerns regarding policy and regulatory burden • The States are Slowly Returning to a New Normal • Six States with Back-to-Normal levels above 100 • Significant Risks Could Undermine Outlook • Virus…Job Growth…Debt…Inflation…Bubbles…Geopolitical

Questions?

Paycheck Protection and 4013 Deferral Numbers

Paycheck Protection Loan Activity

Paycheck Protection Loans (Actual #s)

Balance of Paycheck Protection Loans ($000)

June 30, 2020

34,589

$

4,078,660

September 30, 2020

36,354

$

4,112,829

December 31, 2020

27,466

$

3,023,306

March 31, 2021

36,960

$

3,391,806

32,323

$

2,246,883

June 30, 2021

Deferred Loan Activity 4013 Deferred Loans (Actual #s)

Balance of 4013 Deferred Loans ($000)

Deferrals / T1LLR

June 30, 2020

15,651

$

6,639,312

96.44%

September 30, 2020

10,451

$

4,408,177

62.37%

December 31, 2020

3,788

$

1,305,584

18.00%

March 31, 2021

2,772

$

910,979

12.05%

1,987

$

718,699

9.42%

June 30, 2021

New Normal: Surviving Through a Pandemic

The thoughts and opinions expressed by Dave Martin today are his and do not necessarily represent the thoughts and opinions of The Ohio Department of Commerce, the CDC, NIH, FDA, FBI, CIA or Kiwanis International.

Equal Housing Lender, Member FDIC

A kind of embodiment of the past 18 months.

Like it or not, the pandemic will teach you patience and that not everything will happen on your terms.

“March 5 th , 2020 Denver, CO

1994 (Another accidental banker)

First, can we acknowledge something?

There are lots of folks out there who hate only two things: 1) Change 2) The way things are

What most bankers seemed to want in past years:

What most bankers seem to want after 2020:

Nostradamus

Therapist

Okay, no one truly knows the future… but let’s ponder a few things.

Evolution does not mean elimination.

Failing to evolve almost guarantees elimination.

Clinging too long to the business models that brought you past success will almost assuredly lead to your demise.

Steve Sasson, 26 years old, 1975

I personally do not believe that very many banks AT ALL have made structural changes during the pandemic that they weren’t either planning or were already doing, anyway.

What do we consider convenient…enough?

Okay, these PhD’s call it “gravity fields”

Not saying that’s all good or all bad.

These things aren’t going anywhere; and are becoming more central to our lives than ever.

As the tools of our trades get better,

they will either work for us or against us.

Today’s golfers hit the balls so much farther than in the old days!

Self-service was once perceived as something banks did TO customers.

Now, it is something banks do FOR customers.

“Digital first” does not mean digital only. It does, however, mean our approach to the game must change.

Talented bankers matter more than ever. Their day-to-day roles and activities, however, are evolving.

People do not visit branches. People visit bankers.

Our customer contact personnel are evolving into the vital human

interfaces of increasingly on-line operations.

Is a visit to a branch like a visit to a post office?

As the number of annual branch visits have gone down, the impact and value of each individual visit has gone up.

Any customer giving you the opportunity to serve them in person is giving you the opportunity to truly solidify a relationship.

For an increasing number of branch visitors, acknowledgment, engagement , empathy, and appreciation matter even more than efficiency.

Are your lines worth waiting in?

“You have to help people learn. In our world, we know that change itself hits the same part of your brain as the pain center.” Tim Parsey Your top

performers are often the people

who resist change the most.

To this day: Too many bankers overestimate what the public –and even their own customers - know about their bank.

The following statement shouldn’t be controversial.

“Sales” is oxygen.

Every organization you respect has a sales culture. growth

The uphill stages of a race are when the leads change hands.

(external and internal competition)

The 10 Word Philosophy For A Successful Sales and Service Culture

Market Hard, Sell Soft Make A Friend, Earn A Customer

What do people like talking about?

Themselves Kids/Grandkids Pets Hobbies/Sports Teams Jobs

Fact: Most folks have never in their lives been personally asked for their business by a banker. Most have a bank. Most do not know a banker.

Modern technology lets you learn when something strikes a nerve.

When I was your age, I had to walk a mile

uphill both ways in the snow to deposit a check.

Who are the home teams in your hometowns?

Question: Who in your market(s) puts more business cards into circulation each month?

Question: What do your parking lots, landscaping, and drive-up facilities look like daily?

The one skill that will get you the furthest in sales, customer service, marriage, parenting, friendship and pretty much any situation involving other human beings: Payi g Compliments

A person whom you pay a compliment to:

…is a person you will see again. He or she will make sure you have the opportunity to do that again. …is a person who likes the way you think and absolutely wants to trust your judgment.

Try to recognize and avoid the bubbles leaders often unknowingly have develop around them.

Attention Leaders: Never underestimate the

importance of thespian skills. Also: Always

remember that lack of communication communicates plenty.

Our direct supervisors provide the prism through which we tend to see our company and our future with it.

I want to become a better leader a better spouse/partner

a better teammate a better person a better parent healthier happier until it’s easy.

Everything is hard…

There are millions on the sidelines who would trade places with you today.

Congratulations. You’re in the game.

Most of the biggest “problems” you have today are associated with things you once only daydreamed about having. Most of the biggest “problems” you have today are associated with things you once only daydreamed about having.

Good people win. TM

Dave.Martin@bankmechanics.com

2021 Virtual Ohio Bankers Day Conference Charles E. Potts Senior Vice President and Chief Innovation Officer Independent Community Bankers of America

“Should banks build, buy, or partner for new technologies?”

Independent Community Bankers of America

Questions • What are the primary challenges to community banks partnering with technology companies? How can those challenges be addressed? • What are the primary challenges that community banks face when they try to bring a new product or service to market? • What sort of pain points have your customers identified that may be solved by a fintech partnership? • What more can ICBA do to help community banks partner with fintechs?

Independent Community Bankers of America

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Independent Community Bankers of America

High ‐ Tech, High ‐ Touch: The Future of Community Banking

Business Driven by Human Interaction

Business Driven by Digital Experience

The Community Bank Way HIGH ‐ TECH & HIGH ‐ TOUCH

Independent Community Bankers of America

● Recruit up to 10 early ‐ stage ventures or startups with community bank enabling solutions ● De ‐ risk up to 10 ventures ○ Connections, Content, Capital, Communications ● Accelerate each company’s timeline to validate ● Contribute meaningfully to the innovation culture among ICBA and its members ● Development and support for further revenue diversification ● Create Innovation content opportunities for ICBA marketing & social media efforts ● Create a potential investment return opportunity to ICBA ICBA ThinkTECH Objectives

Independent Community Bankers of America

Mission Driven

Independent Community Bankers of America

Independent Community Bankers of America

Independent Community Bankers of America

Independent Community Bankers of America

Thank You!

Charles E. Potts Senior Vice President, Chief Innovation Officer charles.potts@icba.org

p: 202 ‐ 821 ‐ 4323 c: 678 ‐ 575 ‐ 0971 @charlesepotts

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Independent Community Bankers of America