CMS Case Study

Investment/ALCO Committee Meeting Minutes 11/19/2020

off. The committee agreed the opportunity cost of sitting on so much excess is substantial and that investment purchases should be increased to supplement residential mortgage loan retention if other loan demand is not sufficient to use up some of the excess liquidity. Mr. Frank presented the EVE calculation and that the Committee noted that although the calculation in the -100 bps scenario had improved from -26.5 to -22.2 for the quarter, the Bank is still outside of the policy of -10 in this one scenario. The Committee agreed that no corrective action was necessary in this regard and that the calculation would continue to be monitored but is comfortable with the position and will continue to monitor changes that may warrant aggressive, but not desirable, actions previously discussed such as: o Aggressive deposit rate reductions o Extend assets after a strong bond market rally o Push depositors out the door and replace funds with lower “all in cost” wholesale alternatives. As of quarter-end, the Bank’s Tier 1 Leverage Ratio including the $40+MM PPP loans, was adequate at 9.00%, and above the regulatory minimum. As previously stated, Management continues to actively projecting capital needs for future growth and exploring capital options to support it with one being a Holding Company Sub Debt Issue.

The ALCO committee adjourned at 10:00 am.