BAS Case Study - March 2023

Sunny State Bank

LIQUIDITY - WHOLESALE FUNDING

Wholesale Funding to Total Assets

14.0%

12.5%

12.0%

10.0%

8.9%

8.7%

7.7%

Metrics

7.4%

8.0%

6.4%

6.2%

7.7%

Bank State All Banks

5.7% 5.5% 5.5%

5.4%

5.2%

6.0%

5.0%

4.8%

4.9%

4.8%

4.8%

4.7%

4.0%

4.2%

3.7%

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

Net Noncore Funding Dependency Ratio

10.0% 12.0% 14.0% 16.0% 18.0%

16.9%

11.5%

10.8%

11.5%

9.4%

9.1%

9.0% 9.5%

Metrics

8.1%

8.2%

7.7%

2.0% 4.0% 6.0% 8.0%

6.8%

Bank State All Banks

6.5%

7.0%

6.5%

6.0%

5.9%

5.8%

5.7%

5.3%

5.0%

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

• Wholesale funding includes brokered deposits, listing service deposits, FHLB borrowings, other borrowings, and Federal Funds purchased. Note that this is different from what is included as noncore funding on the UBPR. • Reliance on wholesale funding contributes to liquidity risk because these funding sources may not be available in times of financial stress. However, the strategic use of a moderate amount of wholesale funding should not be criticized at banks in good financial condition with adequate risk management practices. Examiners should be quicker to criticize the use of wholesale funding if there is a lower level of capital, asset quality problems, or weak risk management. • Net Noncore Funding Dependency Ratio matches the UBPR. The UBPR definition of noncore funding includes: TCDs > insurance limit, brokered deposits, FHLB borrowings, other borrowings, and federal funds purchased.