CMS Case Study

Summary of Potential Strategies - 6/30/2021

STRATEGY

EXPECTED RESULTS

RISKS

1. Deposit/Funding Strategies :

 Discuss @ ALCO.

 Discuss @ ALCO.

 Retail

- Analysis of deposit growth. - New accounts/relationships? - Customer behavior? - How has recent deposit growth impacted average account balances? - Discuss timing/volume of potential deposit ‘surge’ outflows and impact on IRR. - Willingness to reduce NMDs again by 10bps on average on $400MM? Compared to $65MM, cash extension into 5-year treasury bond (75bp) for same $400,000 NII additional income. - Ability to lag betas in rising rate scenarios (discuss non-linear betas). - Discuss rate vs. spread. Compare pre-Covid. - Competition remains high given the amount of liquidity in the industry (e.g., Wells Fargo). - Comfort level with fixed rate lending at current levels. - Negotiated rates below desired spreads? - Update on residential strategy: hold vs. sell. - Loan pipeline vs. payoff activity & PPP forgiveness. - Prepayment penalties still important!

2. Lending :

 Discuss @ ALCO.

 Credit.

 90-day forecast. 2021 budget.

 Liquidity.

 Discuss @ ALCO.

Cloyd Bank & Trust - Page 36