CMS Case Study

Investment/ALCO Committee Meeting Minutes 11/18/2021

bring the numbers back into policy. However, outside of taking rates negative, there is no way to hedge against a simulation that further pressures rates on the asset side. The entire industry has exposure to rates at the zero bound. In terms of Balance Sheet strategy, the reality of margin pressure is not only resulting in continued emphasis on lowering the rates on deposits, but also on re-evaluating all fee structures to offset some of the lost income. EVE showed an improvement at Yr1-12.3, and Yr2 6.6 in the -100bps scenario, versus policy of - 10.0, and 6.0 respectively. However, the +200, +300, and +400 bp scenarios changed such that they are outside of the policy guidelines as a direct result of the significant investment purchases made that are funded by NMDA with an “assumed” average life of 5 years. The Committee accepted the policy exceptions, agreeing that corrective action was still not necessary, but ongoing monitoring and discussion was necessary. As of quarter-end, the Bank’s Tier 1 Leverage Ratio including the $ 9.5 MM PPP loans, was unchanged at 9.26% The ALCO committee adjourned at 9:45 am.