CMS Case Study

monitor on a periodic basis the capital adequacy of the Bank in terms of ratio analysis, the quality of the Bank’s management, asset quality, earnings, deposit structure, and the ability of the Bank to accommodate any and all factors affecting capital adequacy. It is the Bank’s policy to maintain the following capital parameters. Parameter Policy Limit or Level 3 Risk Level 2 Risk Level 1 Risk Tier 1 Common Risk Based Ratio 7.0% Minimum 8.0% Minimum 9.0% Minimum Tier 1 Risk Based Ratio 8.5% Minimum 9.5% Minimum 10.5% Minimum Risk Based Capital Ratio 10.5% Minimum 11.5% Minimum 12.5% Minimum Tier 1 Leverage Ratio 5.0% Minimum 7.0% Minimum 9.0% Minimum

The Bank recognizes that maintaining a capital ratio sufficient to withstand unexpected loan or operating losses is imperative. Therefore, it is the Bank’s policy to pay regular dividends, as long as such dividends will not lower capital ratios below the minimum level specified.

 Loan and Deposit Pricing - Our pricing policy is to have neither the cheapest loan rates in the market nor the highest rates on deposits. Our loans are priced to achieve a fair return on our capital while also being fair to our customers. Our deposits are priced so that we are reasonably competitive without unduly running up the Bank's costs of funds. Section 11. Annual Budget ALCO will be responsible for reviewing the Annual Budget, which should have, as its foundation, a set of economic and interest rate assumptions. The Bank's IRR exposure and liquidity limits must be incorporated into this planning process. Potential impacts of changes in rates on new product introduction, expansion, deposit and loan pricing, investment strategy and customer behavior must be considered. Section 12. Financial Performance Objectives It is ALCO's responsibility to understand and be guided by the annual goals related to certain financial performance objectives, as set forth by the Executive Committee. Among these may be targeted levels of return on equity (ROE), return on assets (ROA), and capital. It should be noted that many of the objectives are interrelated and thus must be viewed as interdependent components of the Bank's overall financial performance. Section 13. Compliance with Banking Laws & Regulations Current banking laws and regulations, as well as prudent and generally acceptable banking practices, will be the foundation for and act as the guiding hand in the development of policies, procedures, strategies and tactics relating to the management of the Bank's assets and liabilities. Section 14. Other Matters ALCO is also responsible for keeping itself, as well as the Board of Directors, abreast of state-of-the-art technology, procedures and asset/liability management practices that will be of assistance in carrying out its duties and meeting its responsibilities as managers of the Bank's balance sheet.

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Approved by Board of Directors 1/20/22