Bank Directors Seminar, Coeur d'Alene, ID, September 15-17, 2019

TT&L, etc.) is added to the spreadsheet to provide total information on both assets and liabilities. (See attached Exhibit #1)

• Loan pipeline reports showing anticipated funding needs within 30, 60, and 90 days are produced and reviewed weekly. (See attached Exhibit #2)

• The Credit Availability Report is also reviewed in conjunction with the pipeline reports. (See attached Exhibit #3)

As an indication of management's emphasis on the funding strategy, an internal ALCO committee meets weekly and reviews all reports and data listed above. Thus, all of the above information systems are used in concert to provide senior management with the information and data necessary to analyze and reach an informed business decision.

Strategy

The following are summaries of actions being taken and options available to improve the Bank's funding sources:

1. The first priority of management and the Board is to improve core deposits. This will decrease the Bank's cost of funds, will diversify funding sources, and will provide the greatest opportunity for improved earnings. Personal and business DDA checking accounts, as well as, personal NOW accounts are needed in this regard. A separate comprehensive Marketing Plan is being developed which will focus on core deposit growth. All advertising in the near future will focus on attracting these deposits. All employees will focus on cross selling and bringing in deposits from existing customers. The Bank's MCIF software will be fully utilized in this effort. In addition, Directors have been asked to increase their business development efforts. Progress in raising core deposits will improve liquidity and dependency measures, and will relieve the need for options discussed below. 2. The Bank's primary funding need has been exacerbated by strong loan growth, primarily generated by Premier. Management has communicated with the Federal Home Loan Bank ("FHLB") and increased its Credit Availability Line to 20% of the Bank's total assets. The primary purpose of the Credit Availability Line will be used to fund commercial, acquisition, development, and construction lending activities. (Note: Commercial, acquisition, and development loans have an average maturity of 18 months.

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