CMS Case Study

BASIC SURPLUS/DEFICIT

Liquid Assets Federal Funds Sold/FHLB Overnight

$X,XXX

US Government & Agencies (Mkt. Value)

$X,XXX $X,XXX $X,XXX

Mortgage Backed Securities (Mkt. Value less 5% haircut)

Less: Securities Pledged

Net Unencumbered Security Collateral

$XX,XXX

Maturities from Non-qualifying Collateral (<30 days) Government & Agency Guaranteed Loans (SBA, SLMA, etc.)

$X,XXX $X,XXX $X,XXX

Other Liquid Assets

Total Liquid Assets

$XX,XXX

Short-term Liabilities Federal Funds Purchased & Unsecured Borrowings

$X,XXX

Deposit Coverages XX% of CD’s Maturing (<30 days) XX% of Jumbo CD’s Maturing (<30 days)

$X,XXX $X,XXX $X,XXX $XX,XXX

XX% of Non-maturity Deposits (DDA, NOW, Savings, MMDA)

Total Short-term Liabilities and Coverages

Tier 1 Basic Surplus/Deficit = Total Liquid Assets - Total Short-term Liabilities Coverages.

It is acceptable under this policy for the Bank to utilize wholesale funding as a means of funding its asset base. It is recognized that the wholesale funding may be more sensitive to interest rate risk than retail deposits, and will, therefore, be subject to certain limits and parameters. It is also recognized that wholesale funding is an efficient and dependable source of funds for the Bank. Often, wholesale funding is cheaper than conventional retail deposits. Also, wholesale funding is readily available to the Bank with known cost. Prudently managed, wholesale funding can be beneficial to the Bank.

It is the Bank’s policy to utilize the following wholesale funding sources and to limit same as indicated:

Parameter

Policy Limit or Level 3 Risk

Level 2 Risk

Level 1 Risk

Federal Funds Purchased Federal Home Loan Bank Brokered (non-core) deposits

10.0% of Total Assets 10% of Total Assets

10% of Total Assets

20.0% of Total Assets 17.5% of Total Assets 15.0% of Total Assets 20.0% of Total Assets 17.5% of Total Assets 15.0% of Total Assets

Regardless of the per source limits noted above, total wholesale funding will be limited to 20% of total assets. Further, consideration will be given to maturity diversification that compliments the Bank’s interest rate risk profile and strategic priorities.

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Approved by Board of Directors 1/20/22