CMS Case Study

2. Authority and Responsibilities The Asset/Liability Committee is charged with exercising due diligence in its implementation of the policies set forth in this document. The Asset/Liability Committee is composed four members of the Board of Directors in addition to the Bank’s: President/CEO, Senior Lending Officers, CFO (or equivalent), and two City Presidents. Authority to make investments under the approved guidelines will be delegated by the Committee to appropriate officers. Also, investment activities will complement and reflect the goals of the Asset/Liability Committee (ALCO), whose responsibilities are described in the Bank’s Asset/Liability and Funds Management Policy. While general investment strategies will be developed and authorized by the Asset/Liability Committee, the execution of specific actions rests with the President/CEO and CFO (or equivalent). These Officers are authorized to execute investment transactions up to $1.5 $10 million per transaction without the prior approval of the Asset/Liability Committee and within the scope of the established investment policy. Each transaction in excess of $1.5 $10 million must receive prior approval of the Asset/Liability Committee. In addition, the President/CEO and CFO (or equivalent) is authorized to execute overnight sales of Federal Funds or like alternatives to pre-approved institutions. Movement of collateral for pledging purposes is limited to those persons authorized for investment transactions. The CFO (or equivalent) or other designated officer shall report all investment transactions to the Board of Directors for ratification at the next regular meeting following the completion of any purchase or sale. At each monthly meeting of the Board of Directors, the CFO (or equivalent) or other designated officer shall also report all gains and losses on all securities transactions. Daily cash management is the responsibility of the CFO (or equivalent). The CFO (or equivalent) will also provide a monthly written report on investment activities and portfolio status to the Board of Directors. A requirement for all securities transactions is that they be conducted in a safe and sound manner. Investment decisions will be based upon a thorough analysis of each security instrument to determine its quality, inherent risks, fit within the overall asset/liability management objectives of the Bank, effect on the bank’s risk-based capital measurement and prospects for yield and/or appreciation. Only then, and in accordance with guidelines established by Federal and State regulations and the Board of Directors, will a commitment be placed. 3. Investment Philosophy Effective management of the investment portfolio takes place within regulatory guidelines and oversight of both State and Federal entities. The portfolio must be coordinated with the overall asset/liability management of the balance sheet. It cannot be managed in isolation. The use of the investment portfolio for market oriented trading activities or speculative purposes is expressly prohibited unless otherwise approved by the Board of Directors. Specific limits determine the types, maturities and amounts of securities the Bank intends to hold. Guidelines on liquidity requirements, as well as an acknowledgment of the Bank’s credit profile and capital position may affect the Bank’s ability to hold securities to maturity. From time to time it can be expected that securities may be sold: • To raise liquidity to support increasing loan demand or deposit withdrawals. • To improve asset and liability maturity matching. • To improve credit quality. • To improve portfolio yield. • To offset capital losses with capital gains. The Bank currently has no authorized trading accounts. It is not the intention of management to profit from short term securities price movements. Turnover is expected to be relatively low. Business reasons for securities purchases and sales will be noted at the time of the transaction. Accounting classifications to meet this philosophy follow.

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Board Approval 8/19/21