Large Bank Examination Workshop February 2026

Part I: Executive Summary

Strategic Financial Solutions, Inc. was retained to conduct a model validation of the asset/liability

management model (“ the Model”) used by Sample Bank (“ the Bank ”) , a state-chartered commercial

bank based in Anywhere, USA. The Model, has been in use at the Bank since Q2 2012. The Model,

which incorporates current market data as well as the Bank ’s current position and IRR modeling

assumptions, is utilized primarily to quantify the potential impact of changes in interest rates on

earnings and capital.

This project comprised a validation of the Model and supporting processes and was designed to

ensure that the overall modeling process does not have material deficiencies. The validation is

divided into the following sections:

I.

Data and Assumptions

II.

Model Theory and Model Code and Mathematics

III.

Model Reports

For each of the above areas, SFS leveraged internal model risk, audit, regulatory examination and

other reports where possible, as well as the most current prior model validation which was also

conducted by SFS as of March 30, 2020. There was also reliance on information provided by

knowledgeable internal staff (Bank Treasurer) and external consulting resources around processes,

controls, and modeling methodologies. This validation report and subsequent discussions regarding

any observations is intended to provide feedback to the Bank that can be used to benchmark

processes against observed industry best practices and regulatory requirements. The validation

report provides findings and suggestions for enhancements where such observations are warranted

or requested by the client.

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