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

Investment and Financial Strategy Issues

1. Keep the Objectives of your Portfolio in the appropriate balance:

-Assist in managing liquidity needs of the bank -Assist in managing the interest rate risk of the bank -Earnings/Yield

(Assess and re-balance these objectives each quarter based on your bank's needs)

2. Liquidity and Funding Needs, including Contingency Funding Plan

3. Anticipated Loan Growth and Asset Mix Changes

4. Competitive position -- Deposit and Loan Pricing

5. Interest Rate Risk and Liquidity Risk Positions

6. Capital Position/Needs - Growth and Leverage including Borrowing Capacity

7. Other Risk Profile Changes including Non-core Funding and Funding Mix

8. Investment and ALL Policy Risk Limits and Compliance

9. Investment Portfolio Strategy

Interest rate environment and yield curve considerations Value in the markets Sector allocation goals Assessment of current holdings/position Review for credit risk/deterioration and impairment Duration target -- overall and by sector Cash flow projections and volatility ASC 320 (FAS 115) classification— AFS vs HTM Strategy for anticipated purchases Yield and performance enhancement opportunities

10.Tax Optimization and Subchapter S Considerations

Tax-exempt income Alternative minimum tax Built in gains Anticipated dividend levels "AAA" account issues Tax oriented portfolio restructuring

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