Large Bank Supervision Forum 2023

The 2013 Guidance Risk Rating Expectations

Regulator Concerns  Slow to adjust risk grade when warranted  Unrealistic expectation of cash flow to de ‐ lever the borrower  Inappropriate reliance on Enterprise Value Best Practices  Separate risk grade process, definitions, scale for leveraged loans  Review risk grade quarterly after re ‐ assessment of cash flow against budget / projections (or with new information)  Independent review of Enterprise Value quarterly  Re ‐ grade early  Divest the loan early

For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public.

53

53

The 2013 Guidance Ongoing Portfolio Management Expectations

Regulator Concerns  Not actively monitored after booking

Best Practices  Portfolio Based Approach  Borrower financial results reviewed at least quarterly against Plan/Budget  Be aware of refi risk  Development of reliable independent news sources  Overall portfolio parameters reviewed against approved policy

 ALLL impact updated quarterly  Annual independent loan review

For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public.

54

54