BAS Case Study - March 2023

by the Board. A monthly report of budget variances to actual results is monitored by Management and the Board. • Specific depositors with 0.50% or more of the Bank’s deposits – Large depositors may present a significant funding need if the funds are unexpectedly withdrawn. See the Liquidity Risk Rating Section below. This is monitored by the Board and Senior Management on the High Deposit report. In addition to the evaluation factors listed above, the following metrics will be monitored to illustrate the Bank’s performance and highlight any areas of concern. Evaluation Metrics Guideline Non-core funding ratio < 20% Loans-to-deposit ratio (Maximum) 80% Unfunded commitments (% of Available Liquidity) > 20% Decrease in core deposits > 10% Board of Directors A monthly High Depositor Report identifies all depositors’ holdings as a percent of total Bank deposits. The High Depositor Report is presented at each meeting of the Board of Directors. The top depositors having 1.00% or more of total bank deposits are discussed as to the likelihood of changes having an effect on the future liquidity of the Bank. Depositors having deposits between 0.50% and 0.99% are also presented on the report for informational purposes. Senior Management Senior Management reviews and adjust, if necessary, the pricing of all deposit and loan products. Additionally, Senior Management will evaluate the following in its efforts to manage the liquidity position of the Bank. A variety of causes may exist for each of the factors and metrics listed above. Management is directed to exercise reasonable caution when evaluating the reasons for changes and the impact on the Bank’s liquidity funding. Liquidity Risk Ratings Large depositors, as previously defined, will be identified by the Board of Directors and/or Senior Management as having a low, medium, or high liquidity risk. Liquidity Risk Definition Action Required Low No specific action is required.

The account balance would not create a significant funding need if withdrawn and/or an analysis of the deposit history shows that a significant decrease in the account balance is highly unlikely. The account balance is large enough to create a significant funding need; however, a detailed analysis of the depositor relationship and the deposit history shows that a significant decrease in the account balance is unlikely in the near future. The account balance is large enough to create a significant funding need, and an analysis of the depositor relationship and deposit history show that a significant decrease in the account balance and/or closing of the account in the near future is probable.

Medium

Senior management will monitor the relationship with the depositor and the trends in the account activity for significant changes. Any significant changes will be reported to the Board of Directors. The Board of Directors and Senior Management will closely monitor the relationship. Considering the current environment, the most feasible liquidity contingency option(s) in relation to the deposit account will be identified and the necessary steps will be taken to implement the option(s) as soon as needed.

High

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