BAS Case Study - March 2023

SUNNY STATE BANK EARNINGS IMPROVEMENT PLAN October 2018

The Board of Directors sets forth the following as the earnings improvement plan for Sunny State Bank. This document outlines principles, strategies and/or actions to be applied to the Bank’s operations for the purpose of improved profitability. This earnings plan should be viewed and implemented in conjunction with the current and updated Strategic Plan and operating budget. Operating Performance

The Board of Directors shall seek to improve the Bank’s operating performance in the following manner:

• Securities – The Board of Directors will conduct a bond portfolio analysis with FTN Financial Advisors for the purpose of determining bond swap possibilities within the Bank’s investment portfolio. Earnings improvement from the bond portfolio will in all probability be gradual, but an opportunity may exist at the short end of the yield curve to pick up yield and further reduce duration risk. Additional attention will be given to utilizing cash flow from the portfolio to 1) pay down fed funds purchased and/or other borrowings, reducing interest expense; and 2) reinvest into short-term bonds as rates rise in order to decrease the portfolio duration and average life while improving yields. • Loans – Restore profitability through growing loans, increasing net interest income, improving gross margins by elevating loan rates and actively seeking loan participants. The Senior Lenders, with support from the CEO, are developing loan participation contacts through the independent bankers’ bank and directly with other community banks. • Loans – Rising loan rates are beginning to improve interest income and afford Management the opportunity to pursue business development in a more competitive and profitable environment than in the recent past environment of artificially low interest rates. The addition of branch and lending staff and the enhanced training of key positions allows for improved customer relationships within our market areas, resulting in higher loan demand. - Focus on growing the loan portfolio overall with emphasis on in-house real estate loans. The strategic planning goal for 2019 is an overall loan portfolio growth of 6%. - Secondary Market Loans – Increase promotion of FNMA loans to borrowers and train additional lenders to maximize the gain potential for sales of 30-year loans. The 2019 goal will be one secondary market loan sold each month. • Deposits – Deposit growth is desirable and should be targeted and controlled in a rising rate environment in order to control interest expense. In conjunction with the management and monitoring of the Bank’s liquidity position, Management will seek to retain current deposits and

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