CMS Case Study

Deposits360°® Cloyd Bank & Trust March 4, 2022

Confidential Page 2 of 6

1.

Proposed Services

1.1 Objectives There are two primary objectives within this engagement:

1) Provide a clear understanding of and empirical support for the critical non-maturity assumptions impacting your institution’s balance sheet risk measurement activities, including income simulation, economic valuation, and operating/contingency liquidity , and 2) Elevate your institution’s understanding of its core deposit base to a new level, with product and customer insights that will bring valuable clarity to your tactical and strategic deposit initiatives 1.2 Deposits360°® Level 1: Core Deposit Study & Assumption Monitoring Understanding the behavior of your non-maturity deposit base is an important part of effective balance sheet management. This has been accentuated greatly by the notable industry-wide changes in non-maturity deposit levels and patterns since the great recession, as well as the degree of increased uncertainty regarding future deposit retention and pricing sensitivities. For good reason, regulators are also paying much closer attention to a Bank’s ability to substantiate the assumptions used in its risk management and related decision-making activities. Accordingly, DCG will conduct a robust historical non-maturity deposit study in order to establish a clear baseline understanding of your institution’s deposit patterns, including beta sensitivities, decay rates, core/non-core balances, and average lives. Our consultants will work with you to ensure that appropriate potential qualitative factors impacting the quantitative analysis are incorporated into the core deposit assessment and final determination of assumptions. A formal detailed report will be delivered and reviewed in conjunction with a focused WebEx presentation of the deposit study results and related implications. The WebEx presentation (or on-site if preferred) is designed to ensure that all appropriate members of management/ALCO have a clear understanding of the study results, related quantitative/qualitative analyses, risk model implementation implications, and potential strategic insights. Additionally, you will have access to our Deposits360°® tool for quarterly monitoring of the model assumptions, including trend analysis for: • Core deposit rate/beta sensitivity and changes in bank pricing, • Core versus non-core balance estimates, and • Non-maturity average lives based upon updated deposit retention / decay estimates.

DCG  260 Merrimac Street  Newburyport, MA 01950  978.463.0400  Fax: 978.465.6033  darlingconsulting.com