CMS Case Study

Strategy Formulation - 12/31/2021

Objectives:  Increase current earnings  Maintain interest rate risk exposure within policy limits  Targeted Liquidity Minimums:  Tier 1 Basic Surplus 0%: Tier 2 Basic Surplus with FHLB > 4%; Tier 3 Basic Surplus with FHLB and Brokered > 8%  Targeted minimum capital ratios:  Leverage = 8.00%; Risk-based = 12.50%

Elements of Strategies: Lending

 Update on credit quality and concentrations  Discuss pricing, term, and structure trends

 Impact of excess liquidity and industry wide?  Competition?  Impact of higher market rates?  Review ability to fund loan growth with investment cashflow

Investments  Significant purchases over the last 3 quarters, update on plan going forward

 Review impact of recent purchases on interest rate risk  Discuss reinvestment strategy in light of yield curve changes

Deposits/Funding  Update on pricing and strategy: In context of current liquidity and/or rising rates?  Update on deposit monitoring process/strategy (is money being spent/invested, or leaving due to rate?)  Discuss impact of our liquidity profile vs. market/competition on pricing decisions  Review ability to lag market rate movements  Review and discuss prime indexed NMD accounts (NOW vs. MMDA)  Update on Kasasa pricing and strategy  Discuss MCOF and future offensive/defensive product offerings  Update on CD Strategy

Other Discussion Items:  Liquidity Management Review – Discuss public deposit collateral management alternatives (ICS) and ways to bolster FHLB loan collateral  Review Key Assumptions within IRR models, NII Lookback testing & Stress Testing  Review and discuss NII risk metrics relative to policy levels

Cloyd Bank & Trust - Page 34