Capital Markets School - Case Study

FUNDING STRATEGIES AND PRIORITIES Listed below are specific funding sources, which have been prioritized to maximize efficiency and earnings to the Bank. Should a need arise the Bank will draw down these funding sources to meet liquidity needs:

Rate as of December, 2021 0.00 – 0.25%

Amount

Priority

Source

Maturity

Issues

1

Reduce Excess Cash

Overnight

Up to $44.0 million Up to $222.3 million Up to $31.4 million Up to $11.5 million Up to $134.5 million If needed

Correspondent bank charges

2

Investment Portfolio Fed Funds Purchased*

Various

0.10 – 1.50%

Reduces investment portfolio Short term only

3

Overnight

0.10 – 0.25%

4

FHLB advances*

1 month – 20 years 6 months – 5 years Overnight – 30 days 6 months – 3 years 30 days – 3 years Overnight – 5 years Various

0.15 – 2.50%

Timing

5

Brokered CDs*

0.25 – 1.50%

Regulatory concerns, cost Short-term only Competition, cost Regulatory concerns, cost Availability, collateral, competition

6

FRB Discount* Window Deposit program

0.10 – 0.25%

If needed

7

0.15 – 1.25%

If needed

8

Internet Deposits

0.25 – 1.00%

If needed

9

Public funds

0.10 – 1.25%

If needed and available

10

Repurchase agreements

0.25 – 1.50%

If needed

Collateral

11

Loan Participations* *

If needed

Yield give-up, client service

Various

~5.00%

Page 12 Smith Shellnut Wilson, LLC  Investment Counsel and Management  SEC Registered Investment Advisor 661 Sunnybrook Rd., Suite 130  Ridgeland, MS 39157  Telephone 601-605-1776  Fax 601-605-1710 When funding is needed, it is recommended the Bank consider the cost, as well as regulatory opinion, for longer-term wholesale sources. Also, it is recommended the Bank consider terms to match up with loans booked, as this will offset interest rate risk embedded in the balance sheet. Notes: * Combined wholesale sources of funds are limited by policy to 20% of total assets. Brokered CDs are also limited to 10% of total deposits. However, regulatory guidelines allow for reciprocal deposits up to the lesser of $5 billion or 20% of total liabilities. ** A specific list of loans available for sale will be produced in the unlikely event items one through eleven are exhausted.