CMS Case Study

Section 5. ALCO Meetings The full Committee will meet at least quarterly. More frequent sessions may be required in periods of increased economic activity, in times of significant unanticipated deposit flow volatility, and when specific issues require immediate further study and follow-up. It is the responsibility of the Chairman to call unscheduled meetings. All Committee members will plan their schedules around ALCO meetings. ALCO will receive an information package that is of sufficient content so as to permit it to carry out both its stated and implied duties. On at least a quarterly basis, a summary reporting package will be prepared and presented to the Board of Directors. The Board will be informed of expected changes in strategies/tactics as well as the performance and status of specific ALCO actions previously implemented.

Section 6. Membership of Committee The Committee will consist of the following:

President and Chief Executive Officer

    

Chief Financial Officer

Executive Vice President, Retail Banking Executive Vice President, Lending

Others as deemed appropriate A board member will serve as Chairman.

Section 7. Liquidity and Funding Management Liquidity is a financial institution’s capacity to meet its cash and collateral obligations at a reasonable cost. Maintaining an adequate level of liquidity depends on the institution’s ability to efficiently meet both expected and unexpected cash flows and collateral needs without adversely affecting either daily operations or the financial condition of the institution. It is the Bank’s policy to maintain the following static liquidity parameters.

Policy Limit or Level 3 Risk 10.0% Minimum 100.0% Maximum 10.0% Maximum 100.0% Maximum

Parameter

Level 2 Risk

Level 1 Risk

Liquidity Ratio

12.5% Minimum 80.0% Maximum 7.5% Maximum 95.0% Maximum

15.0% Minimum 60.0% Maximum 5.0% Maximum 90.0% Maximum

Pledged Securities/Securities Brokered Deposits/Deposits

Net Loans and Leases/Deposits

Net Non-core Funding Dependence

20.0% Maximum

17.5% Maximum

15.0% Maximum

Additionally, the Bank will utilize a static analysis of the relationship between liquid assets and short-term (i.e. potentially volatile) liabilities, which are vulnerable to non-replacement under abnormally stringent conditions. This measurement is the Tier 1 Basic Surplus/Deficit, the general structure of which is set forth below.

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Approved by Board of Directors 1/20/22