2021 Strategic Planning Conference

2021 Strategic Planning Meeting

September 2 0-2 4 , 2021

@ www.csbs.org � @csbsnews

CONFERENCE OF STATE BANK SUPERVISORS

1129 20th Street NW / 9th Floor / Washington, DC 20036 / (202) 296-2840

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2021 Strategic Planning Meeting

Melanie Hall, CSBS Chair, Commissioner, Montana Division of Banking and Financial Institutions Tom Fite, CSBS Chair ‐ Elect, Director, Indiana Department of Financial Institutions John Ryan , President & CEO, CSBS Margaret Liu, Executive Vice President, Strategic Engagement, CSBS Cassie Solomon, President, The New Group Consulting

Partnerships & Preempting Preemption Objectives Partnerships Objective: Leverage partnerships with our state and federal counterparts and collaborate with those we regulate and their vendors. Goals: 1. States are the assumed entry-point by fintech companies 2. Most of the federal agencies are routinely using data collected and maintained in NMLS and SES

Partnerships & Preempting Preemption Objectives Preempting Preemption Objective: Empower a strong, efficient, and assertive state system of financial regulation that results in fewer calls for federal preemption. Goals: 1. No state to federal charter conversions

2. Routinely performing coordinated multistate exams 3. No federal charters or licenses for non-bank entities

Collaboration with State Regulatory Community During COVID

Mary Gallagher , Commissioner, Massachusetts Division of Banks Kevin Allard , Superintendent, Ohio Department of Banking

Building Strong & Effective Partnerships. All Begins with Trust.

Trust & Building Successful Partnerships Presenters

Tom Fite (CSBS Chair-Elect)

Cheryl Swans (VP of Talent and Organization Development @ CSBS)

What is Trust… It’s (you) choosing to be vulnerable and to take risks. James Davis, Professor of Strategic Management & Chairman of the Management Department at Utah State University

Ken Blanchard’s ABCD Trust Model Factors that affect trustworthiness…

A – ABLE Demonstrates competence. Able to do the work that needs to be done.

B – BELIEVABLE Acts with integrity. Honest, respectful, sincere, and dependable.

“Blanchard’s ABCDs of trust says that trustworthy people are: Able , Believable , Connected and Dependable . You feel (personally) included at work, make better leaders and build better relationships. These skills can be learned .”

ABCD of TRUST

C – CONNECTED Cares about others. Listens well, open, empathetic and interested in others.

D – DEPENDABLE Honors commitments. Do what you say you’ll do, when you said you’d do it.

Build Your Reputation as a Trustworthy Leader

Pre-Read Reflection & Our Key Take-Aways…

by Ron Carucci

The Trust Continuum

Blind Trust “I trust everyone until they PROVE untrustworthy”

Blind Mistrust “I trust no one until they prove trustworthy.”

Reality Testing Trust

Reality Testing Trust = Tested Expectations Yvonne Agazarian 1997

Concept research and shared by Beulah Trey PhD (CEO Vector Group Consulting)

Test How You Build Trust (Six Key Steps)

TEST EXPECTATIONS On ‐ going assessment of mutually agreed upon expectations (how is it going?)

KNOW YOUR EXPECTATIONS State goals of the partnership.

LEARN ABOUT THE OTHERS Clarify expectations (yours and theirs).

COMMUNICATE RESULTS Be aware & recognize an increase and/or decrease in trust?

AGREE ON SHARED EXPECTATIONS

COMMIT TO NEXT STEPS Acknowledge challenges, discuss & share concerns, manage expectations, agree to commitments.

Identify and agree on partnership goals and how to handle ‘recovery’.

Beulah Trey PhD (CEO Vector Group Consulting)

Pre-Read Reflection & Our Key Take-Aways… “Someone who is silent for the whole conversation and then jumps in with a suggestion may not be seen as credible.” “Someone who seems combative or critical and then tries to give advice may not be seen as trustworthy.”

What Great Listeners Actually Do

by Jack Zenger and Joseph Folkman

How Does Psychological Safety Fit In… • Frame “issues” as a learning opportunity . View as an experiment . Outcome shouldn’t be exclusively about output but instead learning how to do it better. • Acknowledge your own fallibility . Be willing to admit mistakes or that you don’t know the answer. Encourage others to do the same. • Model curiosity and ask questions. Be curious, ask others what they think, and ask them to contribute. Create a “safe space” so others will want to ask questions, listen attentively and speak up.

Dr Amy Edmondson explains these core principles in her book, The Fearless Organization .

When forming and building partnerships… • Establish shared expectations ; state goals of the partnership. • Practice active listening . • Agree on shared expectations. • Communicate openly & with sincerity; revisit mutually agreed upon expectations and discuss progress. • Acknowledge and celebrate “wins” & “lessons learned”.

Thank you!

CSBS Strategic Planning The 3C's – Climate Risk, Cryptocurrency and Cybersecurity

The 3C's – Climate Risk, Cryptocurrency and Cybersecurity

Jim Cooper , Executive Vice President, Policy, CSBS

The 3 C’s

Climate

Crypto

Cyber

Questions to consider for the breakouts It is 2031, what is the state regulatory system doing regarding (Climate Risk/Cryptocurrency/Cybersecurity)?

How did we get to that point?

Do you see your agency as having a role?

What would you like CSBS to begin doing or not do?

Cyber The Outlook and Risks

• Cyber threats are accelerating and becoming more sophisticated. • Cybersecurity risks are a priority. • Staying ahead of the cyber criminal and state actors is a challenge. • Recruiting, training, and retaining IT professionals is a constant problem. • Information sharing between state and federal regulators should be improved.

Cyber - What have we done so far?

State Response

CSBS Activities • Educate • Convene • Collaborate • Develop Standards • Advocate

• Routine exams • Nonbank supervision a public priority • Active training • Third ‐ party service providers

• Statutory Changes • Coordinating efforts • Industry Outreach

Crypto The Outlook and Risks

• Market is Growing to nearly $2 Trillion • Potentially starts to reshape the way people borrow, save, and invest. • Broad concerns about: • Illicit finance • Tax avoidance • Data protection • Disintermediation • Regulatory Gaps, Silos, and Regulatory arbitrage

SEC Chair Gensler: “We (SEC) need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks,”

Crypto - What have we done so far?

State Response

CSBS Response • Educate • Convene • Develop Standards • Advocate

• Beginning to train • Convening • Regulatory approaches vary • Specific License • Special Purpose Institutions

• Activity Based licensure • Authorizing custodians

Climate The Outlook and Risks

• The severity and frequency of extreme weather events are increasing. • Physical risks risk from hurricanes, flood, drought and wildfire threaten asset values. • Transition risks result from a shift toward a lower carbon economy. • Data is limited but evolving.

Treasury Secretary Janet Yellen called climate change “an existential threat” and the biggest emerging risk to the health of the U.S. financial system, pledging to marshal regulatory forces to guard against its harmful effects.

Climate - What have we done so far?

State Response

CSBS Response Beginning to Educate and Convene • Prepared a Literature Review • Various briefings on federal actions

Overall, the response varies: • States are always first responders. • Evaluate disaster recovery capabilities. • States issued guidance on Climate Risk. • District 1 working group in formation. • Participation in FSOC activities .

Climate - What have we done so far?

State Response

CSBS Response Beginning to Educate and Convene • Prepared a Literature Review • Various briefings on federal actions

Overall, the response varies: • States are always first responders. • Evaluate disaster recovery capabilities. • States issued guidance on Climate Risk. • District 1 working group in formation. • Participation in FSOC activities .

Questions to consider for the breakouts It is 2031, what is the state regulatory system doing regarding (Climate Risk/Cryptocurrency/Cybersecurity)?

How did we get to that point?

Do you see your agency as having a role?

What would you like CSBS to begin doing or not do?

MSB One Company, One Exam CSBS Strategic Planning

“ I think the worst thing we can do is do nothing, to continue as we’ve always been without facing the preemption challenge and the fintech environment challenge head on. If we do nothing, that’s the biggest threat we face.”

Panel Objectives

Highlight the progress of the MSB OCOE Initiative and how it has enhanced other components of Networked Supervision. Provide a holistic view of the MSB initiatives underway and what opportunities they present to the state system.

Defining Networked Supervision

Regulatory Workforce

CSBS will serve as a platform for state financial regulators to collaborate on the supervision of the firms they regulate. States will bring their knowledge and experience of working at the local level to form the collective intelligence of the network. CSBS will provide the technology and data for states to efficiently know the financial health and compliance of the firms they regulate.

Networked Supervision

Supervisory Tools

Data Utilization

Components of MSB Networked Supervision

Why are We Changing? To empower a strong and assertive state system of financial regulation that will reduce regulatory burden, create new efficiencies, and improve the overall effectiveness of the state system. Why now? State Regulators must consider how constant disruption due to emerging technologies, big data, artificial intelligence and automation will impact their organization, customers, tools and partnerships What is the risk of not changing? If state supervision does not improve, the state system will risk their ability to supervise these entities to the federal government.

The Purpose of MSB One Company, One Exam

To transform a 50 ‐ state system into an inclusive national system using common policies to prioritize work based on risk and resource availability. This will empower a strong, efficient, and assertive state system of financial regulation.

2021 MSB OCOE Highlights

Different States have participated as Joint States

States have indicated they will accept an ROE of an OCOE exam in lieu of an independent exam for a total of 145 accepted ROE's

States led these exams

OCOE Exams have taken place

The average exam consist of 4 states

As of 9/17/2021

2016-2021State MSB Examination Comparison

Number of Companies

Companies Examined

Year

Exams Conducted % Examined Redundant Exams % Redundant

2021 (To date)

7%

313

119

129

38%

10

32%

2020

275

175

258

64%

83

40%

2019

265

167

278

63%

111

45%

2018

253

160

292

63%

132

43%

2017

251

164

289

65%

125

48%

2016

243

153

293

63%

140

As of 9/17/2021

The Enabling Feature of Networked Supervision is the Model Law

MMLA

People

NMLS Modernization

Money Transmitter Model Law

One Company, One Exam

Technology

Systems

SES

The Need for Common Standards

States continue to have different standards for the same situation States with substantially similar standards continue to utilize different requirements Independent processes for nationally operating companies persist

“Create a federal money transmitter license. State money transmitter laws date back to the days when Wells Fargo actually operated a stagecoach and the federal government played a minimal role in financial regulation. There’s no good case for maintaining state-specific money transmitter regulation particularly given the number of large, national money transmitters . There’s no obvious benefit from the 50-state regime, as the substantive requirements are materially similar. Money transmitters that operate nationally merely end up complying with the strictest of regimes. A federal money transmitter license, coupled with some sort of federal insurance for funds held by money transmitters (such as balances in a PayPal or Venmo account) would be a simple move that would help reduce unnecessary regulatory burdens.”

‐ Adam Levitin’s recommendations to the House Financial Services Committee

The Future of MSB Supervision

A streamlined supervisory system • Exam cycles based on risk and resource availability • National standards and common policies • Harmonized regulation that relies on technology and data analytics The Vision

Current Environment

A manual supervisory system

• Calendar year exam cycles • 50 sets of standards and varying policies • Independent regulation hindered by state specific requirements

How to be the Agent for Change Leadership

Work hard on outreach to states that don't participate regularly in CSBS. We all need to be on board.

We need to urgently visualize the future now and not be afraid of letting go of what we are familiar with today . Put what we visualized here in writing so that we can use it to educate and influence our stakeholders at home.

Change Leadership By Terrie Szucs

Poll Question

When you think of effective Change Leadership what does it look like? Type words or phrases to describe

Our Focus Today

Change Leadership Defined

Actions and Behaviors

Connecting to ADKAR

Next Up—How to Apply

Strategic Planning and Change

Good business leaders create a vison, articulate the vision, passionately own the vision, and relentlessly drive it to completion ‐‐ Jack Welch

Strategic Planning: • Creates Change • Guides CSBS and the agencies • Identifies and focuses on who we want to be and how we get there

Change Leadership : • Equips the agency to bring the changes to life to achieve the strategies • Delivers change outcomes through bringing the people/employees along • Demonstrating commitment by ensuring the people side of the changes have the right effort, time and resources

Change Management versus Change Leadership

•

• No. 1 contributor to change success

Change Leadership is a Verb

ADKAR Refresher

ADKAR: • Equips leadersw ith the rightstrategiesand tools • Enables leadersand change m anagem entresources to focustheiractivitieson w hatw ildrive individual change and therefore achieve agency results • Providesindividualsw ith the rightinform ation • Createsm otivation and ability to successfuly m ove through changesin the agency

The Prosci ADKAR® Model | Prosci

ADKAR-ing “becoming a good change leader/sponsor”

What does Change Leadership look like?

• Getting past the head nod • Demonstrating commitment • Remaining Visible throughout • Demonstrating support and advocacy • Championing the change • Influencing others

• Asking probing questions • Setting strategic direction • Focusing on What, Why, How actually matter • Building trust • Showing up everyday

In Life, change is inevitable. In business, change is vital ‐‐ Warren Bennis

Poll Question

What would you like CSBS to provide you/your agency around change and change leadership to support the priorities?

Connecting ADKAR to Networked Supervision

How high is your/your agency AWARENESS of the need to change to meet this objective?

How great is your/your agency DESIRE to support, participate and engage?

Do you/your agency have the right level of KNOWLEDGE to implement networked supervision?

How strong is your/your agency ABILITY to demonstrate the necessary skills and behaviors of networked supervision?

What kind of REINFORCEMENT do you need to commit and embrace this change?

How can we apply what we just heard about change leadership to network supervision? How can you/will you lead these changes in your agency? How can CSBS support?

Additional Resources

Broad Change Management Topics: Change Management Articles | Prosci Change Management Free Downloads | Prosci

Sponsor Role: Primary Sponsor's Role and Importance (prosci.com) Change Leaders, Do You Have Authority on Your Side? (prosci.com)

CSBS Innovation Station: Iowa Report and Crowd Sourced Analytics Development

Tracy Bergmann, Chief Examiner – Iowa Division of Banking Brennan Zubrick, Senior Director, Analytics and Research – CSBS September 20, 2021

• Background • Data Analytics Uses

IowaDivisionof Banking DataAnalytics “Journey”

• Exit Meeting Data • Examination Report Information • Presentations • Public Website Charts/Graphs • Assess Impact of New Regulatory Proposals • The “Iowa Report”

IowaDivisionof Banking DataAnalytics“Journey”

Strategic Planning

CSBS Data Working Group

Form Exploratory Task Force

Internal Use

Brainstorming And Testing

Implementation And Adoption

Kick ‐ off Meeting With CSBS

CSBS Support

CSBS Self ‐ Service Feature

Exit Meeting • Liquid Assets • Reliance on Wholesale Funding • Risk of Falling Below Well Capitalized • Asset Quality Problems • Interest Rate Risk

ExaminationReport • Utilize Charts to “tell the story” • Provide Greater Insight • Historical Perspective • Comparisons to State and National Peers

(Fake report for illustrativepurposes only)

Presentations • Standard set of charts • Updated easily • Add new charts to fit audience and talking points

IDOBPublicWebsite • 32 charts • Published Quarterly • Comparisons to FDIC Community Banks • State Chartered Bank Data (CSBS Chart Pack)

Assess Impact of New Regulatory Proposals Community Bank Leverage Ratio (CBLR)

“IowaReport” Pre-ExamPlanning • Asset Quality • Capital

• Earnings • Liquidity • Interest Rate Risk

“IowaReport” Features • 96 Charts/Graphs • Customizable Time Periods/Horizons • Peer Comparisons • Calculation Glossary • Training Tool

34 REPORT PAGES

• Open “Iowa Report” in My Reports (without data) • Enter FDIC cert # and “play” report • Export to PDF (entire dossier)

• Combine Assets, Capital & Earnings, and Liquidity & IRR reports in Acrobat • Save as one report, share and analyze

“Iowa Report” Step by Step Instructions tell you how to: • Sign into the CSBS Data Analytics platform • Open, Export, and Combine the “Iowa Report”

“Iowa Report” How do we plan to use it:

Through the remainder of the year: • EIC will use it in the exam planning process • Submit report to RM and BA with PEPR • Provide feedback When given the thumbs up: • Share with bankers

Iowa Report

How to access user guide for Prep Dashboard/Iowa Report 1. Visit https://csbs.org/data 2. Click “All CSBS Analytics Training and Education Resources” 3. Click “Prep Dashboard”/ “Iowa Report”

How to access Prep Dashboard / Iowa Report

1. Visit https://csbs.org/data 2. Click “Login to CSBS BI” 3. Enter credentials 4. Click “Bank Data” 5. Click “Member Created Reports” 6. Click “Iowa Report” Folder

Let’s take a closer look at the “Iowa Report”

Assets

Bank Profile - Cover - Overview

BANK PROFILE Fidelity Bank (West Des Moines, Iowa)

CONTENTS * Asset information (including size and growth) * Capital and concentrations

* Earnings * Liquidity * Interest Rate Risk

DATA SOURCE: Call Reports PEER INFORMATION: Comparisons are made to MEDIAN ratios for all U.S. banks and the state of the selected bank. Chart colors are consistent throughout the report. Bank = Purple State median = Blue All U.S. banks median = orange DATE FILTERS: Slider format within the Chapter filter is used to select a date range for all charts using a data range. Drop-down format is used when only one quarter should be selected.

Check-boxes format is used for ratios based on cumulative year-to-date earnings and loss figures. The suggestion for these is to select Q4 of prior years and the current quarter.

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Assets

Bank Profile - Asset Size & Growth - Overview

ASSET SIZE & GROWTH

Fidelity Bank (West Des Moines, Iowa)

Asset Size - Bank vs. State Median

Asset Growth

$120M

Quarter

2021Q2

Total Assets

State Median

$100M

$240M

$80M

$208,808,500

$200M

$60M

$160M

$40M Total Assets

$120M

$108,573,000

$20M

$80M

$40M

2008Q2

2008Q4

2009Q2

2009Q4

2010Q2

2010Q4

2011Q2

2011Q4

2012Q2

2012Q4

2013Q2

2013Q4

2014Q2 Quarter

2014Q4

2015Q2

2015Q4

2016Q2

2016Q4

2017Q2

2017Q4

2018Q2

2018Q4

2019Q2

2019Q4

2020Q2

2020Q4

2021Q2

Asset Growth Rate

35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% (5.0%) (10.0%) (15.0%)

31.7%

23.9%

22.7%

18.5%

16.0%

18.6%

20.8%

17.5%

12.8%

9.2% 9.3% 7.8%

8.9%

14.1%

11.1%

Metrics

7.5%

8.6%

8.5%

8.2%

6.7%

3.9%

3.1%

8.4%

Bank State All Banks

1.5%

3.8%

0.3%

0.5%

2.7%

1.7%

1.3%

(0.2%)

(1.0%)

1.3% 1.1%

1.0%

(1.8%)

0.2%

(0.5%)

(1.4%)

(4.3%)

(2.7%)

(5.5%)

(3.6%)

(6.8%)

(10.0%)

(7.7%)

(11.8%)

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

Asset Size Date

The risk management practices suggested in regulatory guidance are often based on the size and risk profile of a bank, making it important to be aware of the relative size of a bank. Something to keep in mind is that it can be difficult to achieve asset growth without taking on risk. E.g. loosening loan underwriting standards to grow loan volume, funding asset growth with wholesale sources, etc.

2021Q2

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Assets

Bank Profile - Asset Mix - Overview

ASSET MIX

Fidelity Bank (West Des Moines, Iowa)

Asset Mix (% of Assets)

Asset Mix Over Time

100%

Q...

2021Q2

80%

9.0%

60%

Metrics

13.5%

Other Highly Liquid Securities Loans

1.9%

40%

20%

75.6%

2008Q2

2008Q4

2009Q2

2009Q4

2010Q2

2010Q4

2011Q2

2011Q4

2012Q2

2012Q4

2013Q2

2013Q4

2014Q2

2014Q4

2015Q2

2015Q4

2016Q2

2016Q4

2017Q2

2017Q4

2018Q2

2018Q4

2019Q2

2019Q4

2020Q2

2020Q4

2021Q2

Asset Mix - Subject Bank vs. State Averages

Q...

2021Q2

Loans-Bank

Loans-State

Securities-Bank

Securities-State

Highly Liquid-Bank Highly Liquid-State

Other-Bank

Other-State

10.0% 40.0% 30.0% 20.0% 80.0% 70.0% 60.0% 50.0%

75.6%

58.7%

20.2%

16.5%

13.5%

9.0%

4.4%

1.9%

Asset Mix Date

Evaluating the overall asset mix can provide insight into the risk profile of a bank. Loans are generally the highest-risk asset category.

2021Q2

3 / 17

Assets

Bank Profile - Loan Growth - Overview

LOAN GROWTH

Fidelity Bank (West Des Moines, Iowa)

Loan Volume by Category

100M

80M

Metrics

60M

Other Agricultural Consumer 1-4 Family Commercial CRE

40M

20M

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

Loan Growth Rate

50.0%

49.2%

42.3%

41.3%

35.9%

40.0%

30.0%

28.9% 24.6%

28.5%

21.9%

20.8%

20.0%

14.4%

22.2%

12.5%

Metrics

18.7%

14.3%

10.8%

10.0%

9.4%

4.8% 3.9%

7.5%

Bank State All Banks

3.3%

10.1%

4.0%

(0.6%)

2.0%

0.7%

(3.9%)

0.0%

(4.6%)

1.2% (0.6%)

(6.6%)

(3.5%)

(4.0%)

(1.4%)

(2.0%)

(3.1%)

(4.0%)

(8.9%)

(10.0%)

(8.9%)

(10.3%)

(10.7%)

(14.5%)

(20.0%)

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

If strong loan growth is occuring, consider how this is being achieved. E.g. loosening underwriting standards, new market areas or new lending niche, etc.

4 / 17

Assets

Bank Profile - Loan Concentrations - Overview

POSSIBLE LENDING CONCENTRATIONS (% of Tier 1 Capital + ALLL)

Fidelity Bank (West Des Moines, Iowa)

Possible Concentrations (% of Tier One Capital + ALLL)

Q...

2021Q2

CRE

Agricultural

Commercial

156%

140%

100%

60%

29%

20%

7%

Concentration Levels Over Time

450% 350% 250% 150% 50% 100% 20% CRE Agricultural Commercial 60% 20% 100% 60%

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

Concentration Level Date

The horizontal dotted lines correspond to the concentration threshold of 100% of Tier One Capital and reserves. Note that for this calculation CRE does not include owner occupied properties.

2021Q2

7 / 17

Assets

Bank Profile - CRE Mix & Growth - Overview

CRE MIX & GROWTH

Fidelity Bank (West Des Moines, Iowa)

Commercial Real Estate Mix (% of Total CRE)

CRE Loan Volume and Mix Over Time

32M

CRE Mix and Subsets Date

28M

2021Q2

24M

■ Multifamily

20M

■ Non Owner Occ.

16M

■ Owner Occ.

12M

5.1%

■ Other Construction

8M

12.1%

4M

■ 1-4 Family Const.

9.5%

2008Q2

2008Q4

2009Q2

2009Q4

2010Q2

2010Q4

2011Q2

2011Q4

2012Q2

2012Q4

2013Q2

2013Q4

2014Q2

2014Q4

2015Q2

2015Q4

2016Q2

2016Q4

2017Q2

2017Q4

2018Q2

2018Q4

2019Q2

2019Q4

2020Q2

2020Q4

2021Q2

CRE Subsets as % of Tier 1 Capital + ALLL

56.4%

Q...

2021Q2

Construction

Non Owner Occupied

Multifamily

16.9%

140%

126%

120%

100%

80%

60%

40%

21%

20%

9%

For the chart showing CRE subsets as a percentage of capital, construction loans include both 1-4 family construction and other construction and land development loans. Owner occupied CRE loans are not included in this chart.

8 / 17

Assets

Bank Profile - AQ Ratios - Level - Overview

ASSET QUALITY RATIOS - LEVEL

Fidelity Bank (West Des Moines, Iowa)

Texas Ratio

Nonaccrual to Total Loans

Q...

2021Q2

Q...

2021Q2

0.35%

3.38%

0.32%

3.50%

3.34%

0.30%

3.00%

0.25%

2.50%

2.12%

0.20%

2.00%

0.16%

0.15%

1.50%

0.12%

0.10%

1.00%

0.05%

0.50%

Bank

State

All Banks

Bank

State

All Banks

ALLL to Total Loans

Total Past Due (>30 Days) to Total Loans

Q...

2021Q2

Q...

2021Q2

0.76%

0.10% 0.30% 0.20% 0.40% 0.80% 0.70% 0.60% 0.50%

1.35%

0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40%

1.31%

0.67%

0.67%

0.92%

Bank

State

All Banks

Bank

State

All Banks

Date for Asset Quality Ratios

High levels of delinquent and nonaccrual loans are often a sign of asset quality problems. Call Report Instructions state loans should be placed on nonaccrual status if they are over 90 days past due unless they are both well-secured and in the process of collection.

2021Q2

12 / 17

Assets

Bank Profile - Calculations - Overview

ASSETS - CALCULATIONS GLOSSARY

Fidelity Bank (West Des Moines, Iowa)

Asset Size & Asset Growth Asset Growth Rate Asset Mix

Total assets (UBPR2170) Total assets growth rate (UBPR7316) • Loans = Net loans (UBPRE348) • Securities = All AFS & HTM securities (UBPRE352+UBPRE353) • Highly Liquid = Interest-bearing balances, Federal Funds Sold, Cash & due; (UBPRE349 + UBPRE350 + UBPRE355) • Other = Trading Assets, Premises & fixed assets, Other real estate owned, Other assets (UBPRE351 + UBPRE356 + UBPRE357 + UBPRE358)

Loan Volume Loan Growth Rate Loan Mix Non-Construction Real Estate Loans Land Development Loans CRE Mix and Volume

Same as Asset Mix Net loans and leases growth rate (UBPRE027) Same as Asset Mix Non-Construction Real Estate Loans % of Loans = Real estate loans/average loans less Construction and development loans/average loans (UBPRE420 - UBPRE414) Land Development Loans % of Loans = Other construction and land development loans/average loans (UBPRE394) 1-4 family construction (RCONF158), Other construction and land development loans (RCONF159), Owner occupied (RCONF160), Non owner occupied (RCONF161), and Multifamily loans (RCON1460) Farmland loans (RCON1420) and Agricultural production and other loans to farmers (RCON1590) Farmland (UBPRE880); Agricultural loans (UBPRE886) • CRE = Non-owner occupied commercial real estate (UBPRD647) • Agricultural = Farmland (UBPRE880) and Agricultural loans (UBPRE886) • Commercial = Commercial and industrial loans (UBPRE887) Net loss to average total loans (UBPRE019) Losses by loan type (each as percent of loan type): Construction (UBPRE019); Non-construction CRE = nonfarm nonresidential and multifamily (UBPRE404 + UBPRE405); Commercial (UBPRE408); 1-4 Family (UBPRE401); Consumer (UBPRE410); Agricultural = Farmland and agricultural (UBPRE400 + UBPRE407) Current year loan recoveries / prior year gross loan losses (UBPRE388) Restructured loans + Nonaccrual loans + Other real estate owned / Equity capital + ALLL (UBPRE026) Nonaccrual loans / Total loans (UBPRE542) Past due loans / Total loans (UBPRE547) Allowance for loan and lease losses / Total loans (UBPRE023) Other Real Estate Owned / Average Total Assets (UBPRE130 / RCON3368) - this is a custom ratio RIAD5415 • U.S. Treasury & Agency bonds (UBPRM027) • Municipal bonds (UBPRM028 • Pass-through mortgage-backed securities (UBPRM029) • Collateralized mortgage obligations (UBPRM030) • Commerical MBS (UBPRM031) • Asset-backed securities (UBPRM032) • Corporates & other domestic debt securities (UBPRM034) • Other securities = Structured financial products + Foreign debt securities + Mutual funds and other marketable securities (UBPRM033 + UBPRM035 + UBPRM036) Construction and development (UBPRD490); Non-owner occupied commercial real estate (UBPRE392); Multifamily (UBPR E881)

CRE Subsets % of Tier 1 Capital + ALLL

Agricultural Mix and Volume Ag Subsets % of Tier 1 Capital + ALLL Concentrations

Loan Loss History

Recoveries to Prior Credit Losses Texas Ratio Nonaccrual to Total Loans Total Past Due to Total Loans ALLL to Total Loans OREO / Average Total Assets OREO Gains/Losses Securities Mix

16 / 17

Capital & Earnings

Bank Profile - Capital - Level - Overview

CAPITAL RATIOS - LEVEL

Fidelity Bank (West Des Moines, Iowa)

Tier One Leverage Ratio

Total Capital Ratio

2021Q2

2021Q2

Qu...

Qu...

Bank

State

All Banks

Bank

State

All Banks

16.07%

10.11%

15.47%

9.85%

14.82%

9.42%

10.00%

14.00% 10.00%

6.00%

6.00% 2.00%

2.00%

Tier One Capital Ratio

Common Equity Tier One Ratio

2021Q2

2021Q2

Qu...

Qu...

Bank

State

All Banks

Bank

State

All Banks

14.96%

14.92%

14.36%

14.36%

13.78%

13.78%

14.00%

10.00% 14.00%

6.00% 10.00%

Constant 6.50%

2.00% 6.00%

2.00%

Tier One Leverage Ratio = Tier One Capital / Average Total Assets Total Capital Ratio = Total Capital / Risk Weighted Assets Tier One Capital Ratio = Tier One Capital / Risk Weighted Assets Common Equity Tier One Ratio = Common Equity Tier One Capital / Risk Weighted Assets

Capital Ratios Date

2021Q2

Using risk-weighted assets as a denominator requires banks with riskier assets to have a higher amount of capital. Low risk assets (e.g. cash, interest-bearing bank balances, U.S. Treasury and Agency bonds, Municipal general obligation bonds) carry low risk weightings such as 0% or 20%. Higher risk assets (e.g. several loan categories and corporate bonds) carry higher risk weightings such as 100%. Banks can opt into the Community Bank Leverage Ratio framework to avoid the burden of reporting risk-weighted assets. The risk-weighted capital ratios will not populate for these banks. To be eligible for this framework, a bank must be less than $10 billion in assets, maintain a Tier One Leverage above 9%, and off-balance sheet exposures cannot exceed 25% of assets. The horizontal dotted lines in the charts reflect Prompt Corrective Action well capitalized thresholds. The consequences of falling below well capitalized are severe and include limitations on the use of brokered and high-rate deposits. Keep in mind the level of minimum capital plus the full conservation buffer is 50 basis points higher than well capitalized for the three risk-based capital ratios. Falling below the conservation buffer affects the ability to pay dividends and discretionary payments to executive officers.

1 / 13

Capital & Earnings

Bank Profile - Ratios Glossary - Overview

CAPITAL - CALCULATIONS GLOSSARY

Fidelity Bank (West Des Moines, Iowa)

Tier One Leverage Ratio Total Capital Ratio Tier One Capital Ratio Common Equity Tier One Ratio Dividends to Net Income Retained Earnings to Average Total Equity Equity Capital Growth Rate

Tier One Capital / Average Total Assets (UBPRD486) Total Capital / Risk Weighted Assets (UBPRD488) Tier One Capital / Risk Weighted Assets (UBPRD487) Common Equity Tier One Capital / Risk Weighted Assets (UBPRR029) UBPR7402

UBPRE025 UBPRE635

Equity Growth Less Asset Growth

UBPRE636

EARNINGS - CALCULATIONS GLOSSARY Return on Average Assets (Adjusted Subchapter S)

Fidelity Bank (West Des Moines, Iowa)

Net income (adjusted for Subchapter S tax status) / Average Total Assets (UBPRE012)

Return on Equity

Net Income / Average Bank Equity (UBPRE630)

Net Income

UBPR4340

Net Interest Margin

One Quarter Annualized Net Interest Income / Average Earning Assets (UBPRE680)

Yield on Assets

One Quarter Annualized Interest Income / Average Earning Assets (UBPRE678)

Cost of Funds

One Quarter Annualized Interest Expense / Average Earning Assets (UBPRE679)

Loans to Total Assets

UBPRE024

Yield on Loans (Tax Equivalent)

One Quarter Annualized Interest and fees on loans plus the tax benefit on tax-exempt loan income / Average Total Loans (UBPRE686)

Yield on Securities (Tax Equivalent)

One Quarter Annualized Income on investment securities plus the estimated tax benefit on tax exempt Municipals / Average Total Securities (UBPRE694)

Noninterest Income/Average Assets

UBPRE004 • Deposit service charges (RIAD4080) • Mortgage banking = Net servicing fees and Loan and lease net gains/losses (RIADB492 + RIAD5416) •Investment Advisory/Insurance/Trust = Investment banking and advisory income, Insurance commisions and fee income, and Income from fiduciary activities (UBPRB490 + UBPRE080 + RIAD4070) • Other = Other noninterest income, Other net gains/losses, and securitization income (RIADB497 + UBPRE081 + UBPR7452).

Noninterest Income Amounts

Overhead to Average Assets Overhead Costs Less Noninterest Income/Average Assets Efficiency Ratio Personnel Expenses/Average Assets Occupancy Expenses/Average Assets Other Operating Expenses/Average Assets Provisions/Average Assets Realized Bond Gains/Losses/Average Assets

UBPRE005 UBPRE087

Total Overhead Expenses / Net Interest Income (tax equivalent) + Noninterest Income (UBPRE088) UBPR7400 UBPRE084 UBPRE085 UBPRE006 UBPRE008

12 / 13

Liquidity & Interest Rate Risk

Bank Profile - Liquidity - On-Balance Sheet - Overview

LIQUIDITY - ON-BALANCE SHEET

Fidelity Bank (West Des Moines, Iowa)

Liquid Assets to Total Assets

35%

30%

30%

29%

25%

22% 25%

20%

20%

19%

Metrics

17%

17%

15%

Bank State All Banks

12% 11%

11% 10%

10%

12% 15% 13%

9%

7% 8% 8% 8%

9%

10%

5% 3% 3% 5% 4%

8% 8%

8% 7% 5% 3%

7%

5%

2% 4% 4% 3% 4%

3% 3%

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

Liquid Assets to Total Assets (Breakout by Type)

Net Loans to Assets Ratio

87% 90%

32%

90%

85%

85%

28%

83% 84% 84%

85%

81%

80% 81% 81%

80%

81% 82%

24%

79%

80%

78% 77% 79% 76% 77%

79%

20%

Metrics

76%

75%

74%

74%

Metrics

73%

16% 12%

71%

FFS Unpl. Sec IBB Cash

70%

69% 70%

Bank State All Banks

65%

8%

64%

60%

60%

4%

59%

2010Q4

2013Q4

2016Q4

2019Q4

2010Q2

2016Q4

2018Q4

2020Q4

2008Q2

2008Q4

2009Q2

2009Q4

2010Q2

2011Q2

2011Q4

2012Q2

2012Q4

2013Q2

2014Q2

2014Q4

2015Q2

2015Q4

2016Q2

2017Q2

2017Q4

2018Q2

2018Q4

2019Q2

2020Q2

2020Q4

2021Q2

2008Q2

2008Q4

2009Q2

2009Q4

2010Q4

2011Q2

2011Q4

2012Q2

2012Q4

2013Q2

2013Q4

2014Q2

2014Q4

2015Q2

2015Q4

2016Q2

2017Q2

2017Q4

2018Q2

2019Q2

2019Q4

2020Q2

2021Q2

• For these charts, liquid assets include: unpledged securities, Federal Funds sold, interest-bearing bank balances, and cash & due. • Keep in mind there is some nuance with liquid assets. For example, small nonrated Municipal bonds might be difficult to sell or pledge, and some loans could be sold fairly easily (e.g. government guaranteed SBA or FSA loans, conforming 1-4 family loans). • Since loans are generally illiquid, the Loans to Assets Ratio will typically move inversely of changes in liquid assets. For example, higher loan volume as a percentage of assets would lead to a lower amount of liquid assets as a percentage of assets.

1 / 12

Liquidity & Interest Rate Risk

Bank Profile - Liquidity - Funding Cont'd - Overview

LIQUIDITY - FUNDING (continued)

Fidelity Bank (West Des Moines, Iowa)

Funding Amounts Over Time (Granular)

100M

80M

Metrics

FFP Other Borrowings FHLB Listing Service Brokered Deposits

60M

40M

20M

TCD>Ins Limit Core Deposits

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

Funding Amounts Over Time (Broad)

100M

80M

60M

Metrics

40M

Wholesale Core Dep & TCDs>250M

20M

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

Funding is a critical aspect of liquidity. Local core deposits are preferable as these are generally more stable and lower cost than wholesale funding. It is easier for banks operating in areas with more local deposits than loan demand to maintain a solid amount of liquid assets. Banks which struggle to obtain local deposits often rely on wholesale sources to fund growth.

3 / 12