Supervisors Symposium - December 2023

Supervisor s Symposiu m

December 4 - 7, 2023 Le Meridien Hotel – New Orleans, LA

@ www.csbs.org ♦ @csbsnews

CONFERENCE OF STATE BANK SUPERVISORS 1300 I Street NW / Suite 700 / Washington, DC 20005 / (202) 296-2840

CSBS Board Mee Ɵ ngs & Supervisors Symposium December 4-7, 2023 | All Ɵ mes in Central Time Zone New Orleans, LA

Monday, December 4

Breakfast | Uptown 123

8:00 AM – 10:00 AM

Bankers Advisory Board Meeting | Esplanade Ballroom 1

10:00 AM – 4:00 PM

Lunch | Uptown 123

12:00 PM – 1:00 PM

SRR Board of Managers Meeting | Esplanade Ballroom 2

2:00 PM – 5:00 PM

Small Group Dinners

6:00 PM – 8:00 PM

Tuesday, December 5 8:00 AM – 9:00 AM

Breakfast | Uptown 123

MMC Annual Meeting | Marigny 2

9:00 AM – 5:00 PM

CSBS Board of Directors Meeting | Esplanade Ballroom

9:00 AM – 5:00 PM

Break

10:30 AM – 10:45 AM

Lunch | Uptown 123

12:00 PM – 1:30 PM

Break

2:30 PM – 2:45 PM

Off ‐ Site Reception | House of Blues 225 Decatur Street, New Orleans, LA 70130

6:00 PM – 8:00 PM

Wednesday, December 6

Breakfast | Uptown 123

8:00 AM – 9:00 AM

2023 Supervisors Symposium | Esplanade Ballroom

9:00 AM – 3:30 PM

Opening Remarks Sebas Ɵ en Monnet Vice President, Learning and Development Conference of State Bank Supervisors

9:00 AM – 9:05 AM

Welcome to Louisiana Sco Ʃ Jolly

9:05 AM – 9:15 AM

Commissioner Louisiana O ffi ce of Financial Ins Ɵ tu Ɵ ons

Current State and Outlook for Community and Regional Banks Donald Musso President & CEO FinPro

9:15 AM – 10:15 AM

Break

10:15 AM – 10:30 AM

Dialogue with FinCEN Jimmy Kirby Ac Ɵ ng Deputy Director Financial Crimes Enforcement Network

10:30 AM – 11:15 AM

Break

11:15 AM – 11:30 AM

Dialogue with FDIC Doreen Eberley Director, Division of Risk Management Supervision Federal Deposit Insurance Corpora Ɵ on Committee and Working Group Lunches Supervisors Symposium Lunch | Uptown 123 Legislative Committee Lunch | Marigny 2 State Supervisory Processes Committee Lunch | Marigny 1 Regulatory Committee Lunch | Bywater 2 Non ‐ Depository Supervisory Committee | Salon 1 Communica Ɵ on & Branding Strategies for State Agencies Charlie Clark Director Washington Department of Financial Ins Ɵ tu Ɵ ons Rhoshunda Kelly Commissioner Mississippi Department of Banking and Consumer Finance

11:30 AM – 12:30 PM

12:30 PM – 2:00 PM

2:00 PM – 3:00 PM

Kelly Lammers Director Nebraska Department of Banking and Finance Laura Fisher (moderator) Senior Vice President, Communica Ɵ ons Conference of State Bank Supervisors

Networking Break

3:00 PM – 3:30 PM

Mul Ɵ state Exams: The Landscape, Supervisory Highlights, and Current Ini Ɵ a Ɵ ves of the MMC And MMET Kris Ɵ n Rice

3:30 PM – 4:30 PM

MMC Chair & Deputy Commissioner for Legal A ff airs North Carolina O ffi ce of the Commissioner of Banks Rick St. Onge MMET Member & Program Manager/Examina Ɵ ons Chief Washington Department of Financial Ins Ɵ tu Ɵ ons Anya Tabb MMC Immediate Past Chair & Financial Examiner Supervisor Washington Department of Financial Ins Ɵ tu Ɵ ons Ingrid White MTRA President, MMET Member, Deputy Superintendent Ohio Division of Financial Ins Ɵ tu Ɵ ons Tony Vasile (moderator) Vice President, Non ‐ Bank Supervision and Enforcement Conference of State Bank Supervisors

Networking Recep Ɵ on | LMNO (Lobby Level)

5:30 PM – 7:30 PM

Thursday, December 7

Breakfast | Uptown 123

8:00 AM – 9:00 AM

2023 Supervisors Symposium | Esplanade Ballroom

9:00 AM – 3:00 PM

Looking Ahead – Forces Shaping Banking Lee Wetherington Senior Director, Corporate Strategy Jack Henry & Associates

9:00 AM – 10:15 AM

Break

10:15 AM – 10:30 AM

Bank Resolu Ɵ on Refresher Varanessa Marshall Assistant Director, Monitoring & Risk Analysis – Division of Resolu Ɵ ons & Partnerships Federal Deposit Insurance Corpora Ɵ on

10:30 AM – 11:30 AM

District Lunches and Conversa Ɵ ons

11:30 AM – 1:30 PM

District 1 | Uptown 2 District 2 | Marigny 1 District 3 | Uptown 3 District 4 | Uptown 4 District 5 | Marigny 2

Dialogue with the Federal Reserve Jennifer Burns Deputy Director, Division of Supervision and Regula Ɵ on Federal Reserve Board of Governors

1:30 PM – 2:30 PM

Year in Review & Looking Ahead to 2024 Jim Cooper President & CEO Conference of State Bank Supervisors

2:30 PM – 3:00 PM

Internal Use Only #

CSBS Supervisors Symposium New Orleans, LA

December 6-7, 2023

ATTENDEES Alabama State Banking Department Carver, Jay

jay.caver@banking.alabama.gov mike.hill@banking.alabama.gov John.Russell@banking.alabama.gov

Hill, Mike

Russell, John

Alaska Division of Banking and Securities Schmidt, Robert

rob.schmidt@alaska.gov

Arizona Department of Insurance and Financial Institutions Ousounov, Deian

deian.ousounov@difi.az.gov

Arkansas State Bank Department Ahlen, John

jahlen@banking.state.ar.us smarshall@banking.state.ar.us dpatel@banking.state.ar.us jpowell@banking.state.ar.us jwallace@banking.state.ar.us

Marshall, Susannah

Patel, Dharmin Powell, Jacklyn Wallace, Jessica

California Department of Financial Protection and Innovation Hewlett, Cloey

Cloey.Hewlett@dfpi.ca.gov

Connecticut Department of Banking Chambers, Joseph

joseph.chambers@ct.gov

Perez, Jorge

jorge.perez@ct.gov

Delaware Office of the State Bank Commissioner Collison, Lisa

Lisa.Collison@delaware.gov christopherL.Hall@delaware.gov

Hall, Christopher

District of Columbia Department of Insurance, Securities and Banking Fuller, Samuel

samuel.fuller@dc.gov

Florida Office of Financial Regulation Smith, Jeremy

Jeremy.Smith@flofr.gov

Georgia Department of Banking and Finance Fears, Oscar

bfears@dbf.state.ga.us khagler@dbf.state.ga.us msneed@dbf.state.ga.us

Hagler, Kevin Sneed, Melissa

Hawaii Division of Financial Institutions Hirai, Mark

mhirai@dcca.hawaii.gov

Internal Use Only #

Ikeda, Iris

iikeda@dcca.hawaii.gov

Idaho Department of Finance Polidori, Anthony

anthony.polidori@finance.idaho.gov

Indiana Department of Financial Institutions Dietz, Christopher

cdietz@Dfi.in.gov tfite@dfi.IN.gov

Fite, Thomas

Iowa Division of Banking Plagge, Jeff

jeff.plagge@idob.state.ia.us shauna.shields@idob.state.ia.us

Shields, Shauna

Kansas Office of the State Bank Commissioner Herndon, David

David.Herndon@osbckansas.org Tim.Kemp@osbckansas.org

Kemp, Tim

Louisiana Office of Financial Institutions Finley, Jonathan

jfinley@ofi.la.gov

Jeansonne, Michelle

mjeansonne@ofi.la.gov pjolly@ofi.la.gov ckirkland@ofi.la.gov

Jolly, P. Scott

Kirkland, Christine

Maine Bureau of Financial Institutions LaFountain, Lloyd Maryland Office of Financial Regulation Salazar, Tony

lloyd.p.lafountain.iii@maine.gov

tony.salazar@maryland.gov

Massachusetts Division of Banks Begin, Cindy

cindy.begin@mass.gov kevin.cuff@mass.gov mary.l.gallagher@mass.gov

Cuff, Kevin

Gallagher, Mary

Michigan Department of Insurance and Financial Services Luetzow, Aaron

LuetzowA@michigan.gov

Minnesota Department of Commerce Crow, Michael

michael.crow@state.mn.us mark.hastie@state.mn.us jacqueline.olson@state.mn.us William.thompson@state.mn.us

Hastie, Mark

Olson, Jacqueline Thompson, William

Mississippi Department of Banking & Consumer Finance Hubbard, Sam

sam.hubbard@dbcf.ms.gov rhoshunda.kelly@dbcf.ms.gov

Kelly, Rhoshunda

Internal Use Only #

Montana Division of Banking and Financial Institutions Hall, Melanie

mghall@mt.gov

Nebraska Department of Banking and Finance Bailar, Darcy

darcy.bailar@nebraska.gov kelly.lammers@nebraska.gov

Lammers, Kelly

North Carolina Office of Commissioner of Banks Bosken, Katherine

kbosken@nccob.gov krice@nccob.gov sryals@nccob.gov

Rice, Kristin

White, Stephanie

North Dakota Department of Financial Institutions Kruse, Lise

lkruse@nd.gov

Ohio Division of Financial Institutions Allard, Kevin

kevin.allard@com.ohio.gov

Prude-Smithers, Pamela

pamela.prude-smithers@com.ohio.gov

White, Ingrid

ingrid.white@com.ohio.gov

Oregon Division of Financial Regulation Anderson, Kirsten

kirsten.l.anderson@dcbs.oregon.gov

Keen, TK

tk.keen@dcbs.oregon.gov

South Dakota Division of Banking Afdahl, Bret

Bret.Afdahl@state.sd.us

Texas Department of Banking Cooper, Charles

charles.cooper@dob.texas.gov

Texas Department of Savings & Mortgage Lending Retta, Hector

hretta@sml.texas.gov

Utah Department of Financial Institutions Berrett, Shaun

shaunberrett@utah.gov

Rude, Darryle

drude@utah.gov

Vermont Department of Financial Regulation Ferenc, Aaron Washington Department of Financial Institutions Clark, Charlie

aaron.ferenc@vermont.gov

charles.clark@dfi.wa.gov

Hollinshead, Roberta

roberta.hollinshead@dfi.wa.gov rick.st.onge@dfi.wa.gov anya.tabb@dfi.wa.gov shannon.tushar@dfi.wa.gov

St. Onge, Rick Tabb, Anya Tushar, Shannon

Internal Use Only #

West Virginia Division of Financial Institutions Holstein, Dawn Wisconsin Department of Financial Institutions Swissdorf, Kim

dholstein@wvdob.org

kim.swissdorf@dfi.wisconsin.gov

Wyoming Division of Banking Bishop, Jeremiah

jeremiah.bishop@wyo.gov tyson.floyd@wyo.gov yvonne.shafer-shaw@wyo.gov

Floyd, Tyson

Shafer-Shaw, Yvonne

SPEAKERS Federal Deposit Insurance Corporation Eberley, Doreen

deberley@fdic.gov vamarshall@fdic.gov

Marshall, Varanessa

Federal Reserve Board of Governors Burns, Jennifer Financial Crimes Enforcement Network Kirby, Jimmy

jennifer.j.burns@frb.gov

sheri.james@fincen.gov

FinPro Musso, Donald

dmusso@finpro.us

Jack Henry & Associates Wetherington, Lee

LWetherington@jackhenry.com

CSBS STAFF Alcala, Alejandro Azizzada, Ghazal Barbieri, Dana Boyce, Sean Byers, Kevin Cooper, James Cross, Chuck Fisher, Laura Green, Leila Jarmin, Jennifer Lawson, Karen Liu, Margaret Lucernoni, Shannon Haire, Kelly

aalcala@csbs.org gazizzada@csbs.org dbarbieri@csbs.org sboyce@csbs.org kbyers@csbs.org jcooper@csbs.org ccross@csbs.org lfisher@csbs.org lgreen@csbs.org Khaire@csbs.org jjarmin@csbs.org klawson@csbs.org slucernoni@csbs.org mmiano@csbs.org smonnet@csbs.org Vpeck@csbs.org bplitt@csbs.org mbquist@csbs.org mliu@csbs.org

Miano, Mary

Monnet, Sebastien

Peck, Vickie Plitt, Bridget

Quist, Mary Beth

Internal Use Only #

Richardson, Amy Samowitz, Joey

arichardson@csbs.org jsamowitz@csbs.org

Szucs, Terrie Vasile, Tony

tszucs@csbs.org tvasile@csbs.org

Internal Use Only

The Current State and Outlook for Community Banking

46 East Main Street • Suite 303• Somerville, NJ 08876 • P: (908) 234 ‐ 9398• finpro@finpro.us • www.finpro.us

© 2023 –FinPro, Inc.

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A starting list of issues that will impact banking . . .

• Economy

•

Technology  AI

 Inflation vs Real Prices  Interest Rates  Unemployment and Labor Participation Rate  Consumer Confidence and Spending  Retail Sales  GDP  Recession • Regulation  Bank Failures  Liquidity  Fears of Credit Decline  Crypto, Fintech, BAAS and Other  CRA  FHLB Mission • Politics  2024 Election  Social Media Threats  ESG  Tariffs and Subsidies

 Shift to Cloud  FedNow

 Digital Dollar  Cybersecurity  Delivery Channels  Boomers retiring  Wealth Turnover  Flight from Urban  NIM  Funding  Asset Quality  Talent Management

• Demographics

•

Banking

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Today, financial institutions are clearly in the Preserve Phase of the Banking Cycle . . .

Create

Build

Preserve

Restore

Realize

Form an Institution or Acquire a Charter

Stock Repurchase Strategy

Accelerate Strategic Plan

Identify and Mitigate Risks

Liquidate Problem Loans

Eliminate Unprofitable Customers and Channels

Ensure Compliance with Regulation

Acquire Loan and Deposits

Fully Leverage Capital

Dividend Strategy

Acquire Fee Generating businesses

Market Multiple Flooring

Grow Balance Sheet

Stress Test Extensively

Bank Sale Strategy

Review and Tighten Governance like Policies

Acquire Customers and Markets

Expand Target Customers

The key to managing through the Preserve Phase is having an effective tool to identify the major risk areas.

Utilize Capital Markets Effectively

Enhance Delivery Channels

Educate and Train

Bundle Products and Services

Fortress Balance Sheet

Market Multiple Expansion

Market Multiple Locking

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© 2023 –FinPro, Inc.

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Economic Environment

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The Story:

The Loss of Rationality Leading indicators point toward recession But: Consumer and Federal Spending are at all time highs (bubble) while unemployment remains low Fueled by over abundant quantitative easing Causing unbelievably high national and personal debt WHICH IS UNSUSTAINABLE So, what will be the causal effect to trigger the trip wire? Likely it will be the cost of the debt and the ability to repay the debt! But it appears that PEOPLE JUST DON’T CARE!

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Internal Use Only How much debt can the U.S. handle? Since the debt ceiling was raised, U.S. debt has gone from $31.7 trillion to $33.1 trillion . . .

4/9/23

9/27/23

The Debt to GDP ratio has ticked up in the recent quarter and looks poised to remain at historical levels

Data as of 9/27/2023

Source: CRFB; FRED

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The Administration, House and Senate have NO FISCAL DISCIPLINE!!!

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A growing supply of treasuries will be needed to fund the debt and this will be matched with a falling demand which will result in higher yields and lower prices . . .

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Regulatory Environment

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What are some hot button regulatory concerns? . . .

• Lack of effective risk identification • Capital adequacy for this stage in the life cycle  Low Tangible Equity • Weak Liquidity  Deposit Runoff  Uninsured Deposit Levels  Mark ‐ to ‐ Market Risk  Inability to sell underwater securities timely and at positive valuations

• Deteriorating Asset Quality • Increasing Interest Rate Risk • Need for enhanced Corporate Governance • Unrealistic modeling and assumptions for banking industry • CRA – Expectations of 10% Needs to Improve • Mission of FHLBs • Sunsetting of Federal Reserve BTFP

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So what do the Regulators see as the risks to the financial services sector . . .

2018 and beyond 2023

Credit Risk

Operational

Capital

Strategic

Management

Sensitivity

Earnings

Legal & Regulatory

Liquidity

CRA Fair Lending

BSA

Reputation

Climate Risk

Cyber

Compliance

Valuatio n

Corp Governance

Risk Management

Economy

Pandemic

The chart above illustrates the CAMELS+ components and the overall regulatory focus on each component. Over time, each of these components shift based upon the overall projected banking environment.

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Risk

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CSBS 2023 Industry Report: External Risks . . .

Home

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CSBS 2023 Industry Report: Internal Risks . . .

Home

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Banks must start emphasizing forward looking indicators over lagging indicators . . .

Credit Predictive Indicators / Exceptions

Credit Indicators

Covenant Exception Trends

Charge off trends

Performance Based Lagging Indicators Helps to assess current asset quality and overall

Policy Exception trends

Delinquency Trends

Forward Looking Indicators

Term/Condition Exceptions

ACA Trends

Helps to assess risks that drive the performance ratios

Non accrual Trends

Pricing Exceptions

financial condition

Concentration Trends

TDR Trends

Home

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And minimize use of credit elements that lead to problems . . .

Credit Predictive Indicators / Risk Appetite

Credit Predictive Indicators / Risk Appetite

New Products and services

Leveraged Lending

Out of territory lending

CRE Pipeline for renewal

Forward Looking Indicators

Extended Amortizations

Cash out refi’s

Helps to assess risks that drive the performance ratios

Originate to sell

Non recourse

Concentration Trends

Originated or Purchased

Home

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© 2023 – FinPro, Inc.

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Internal Use Only

To identify and prioritize the risk profile banks, need to utilize a scoring model like FinPro’s to identify and score bank risk . . .

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© 2023 –FinPro, Inc.

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The risk model looks at all risk relative to market thresholds and comparative data . . .

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Continued . . .

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And concentrations must be evaluated . . .

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Are regulators going to require Risk assessed Capital?

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And ultimately benchmarking capital on a risk assessed basis?

Comparison Analytics As of June 30, 2023

Tier 1 Leverage

Tier 1 Risk Based Capital

Total Risk Based Capital

Sample Bank Starting Point

8.88%

9.87%

10.75%

Peer Median

9.77% 9.94% 9.99% 10.33%

13.46% 12.80% 12.73% 14.27%

13.93% 13.18% 13.31% 14.08%

$1B ‐ $5B Bank Median $1B ‐ $5B HP Bank Median Mid Atlantic Bank Median

Median of Above

9.97%

13.13%

13.62%

FinPro Regulatory Threshold High Risk FinPro Regulatory Threshold Moderate Risk

8.00% 9.00%

10.00% 11.25%

11.00% 13.00%

Resulting Goal Ratio

9.44%

11.80%

12.97%

This Bank will need to increase its capital to cover its risk profile. When the Bank fixes its risk profile, its capital requirement will decrease accordingly!

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A new and deeper liquidity analysis is necessary in light of the bank failures this spring . . .

• Add time sequenced liquidity • Shift from cash to fed master account availability • Shift borrowing capacity in front of on ‐ balance sheet liquidity • Brokered and listing are acceptable funding sources for IRR and Liquidity • Large deposits ($250k and up, large deposits, uninsured deposits) must be analyzed • Banks must rethink and redo their contingency funding plans

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Internal Use Only We need to replace the antiquated liquidity measurement with new time sequenced measures . . .

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Declining deposits and the rising cost of funds is the number one earnings issue. FinPro is seeing the following funding strategies . . .

• CD specials – especially short ‐ term CDs as the rate forecasts a declining rate environment • Utilizing CDARs and ICS to assist with uninsured deposit levels • New non maturity special accounts • Compensating deposit balances for small business loans • New market expansion (some with branches) • Adding business development staff to augment digital delivery • Geographic pricing and differentiation • Customer profitability analysis to achieve relationship pricing • Increased utilization of wholesale funding (brokered, listing, borrowings) • Utilizing investment cashflow to re ‐ invest into loans or cover deposit outflows • Utilize marginal cost of funds analysis +100 bps +100 bps +100 bps Total

Marginal Cost of Funds Analysis

Rate Environment

Balance

Rate Interest Expense

Beta Value Run Off

Option 1: Reprice Entire Portfolio Flat 100,000,000

3.00%

100%

3,000,000

0%

100,000,000

4.00%

4,000,000

100%

0%

Option 2: Don't Reprice and Replace with Higher Cost Money Flat 100,000,000 3.00% 3,000,000

25%

0%

75,000,000 25,000,000 100,000,000

3.00% 6.00% 3.75%

2,250,000 1,500,000 3,750,000

0% 0%

20% 20%

Savings $ Savings %

250,000

6.3%

7.00% @ 25% run off 33.3% @ 6% rate

Break ‐ Even Rate Break ‐ Even Run Off

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Regulators have pre ‐ determined CRE to be the next huge problem. As such, we need to mitigate the problem now to hold value . . .

Qt 1: 2022

Qt 1: 2023

Change

EBITDA Cap Rate

$

2,000,000

$

2,000,000

4.00%

7.00%

3.00%

Value

$

50,000,000

$ 28,571,429

$

(21,428,571)

Loan to Value Loan Amount

70.00%

122.50%

$

35,000,000

$ 35,000,000

Underwater

$

(6,428,571)

According to Morgan Stanley, there is $1.5 trillion of CRE debt coming due in the next 3 years. They estimate that much of this won’t roll over and that that could cause prices to fall by 40%. That would be even worse than the financial crisis. And to add insult to injury, 67% of these loans are held by regional banks.

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Internal Use Only There are numerous collateral types to utilize for Portfolio Stratification . . .

Management is encouraged to stratify the portfolio by: • Property Type • Geographic Market • Tenant Concentrations • Tenant Industries • Developer Concentrations • Risk Ratings • Other  Loan structure (fixed or variable)

And the property types are numerous: • Multi ‐ family (5 and more units) • Mixed Use Residential • Investor 1 ‐ 4 Family Residential • Strip Retail • Retail (1 to 3 Units) • Mixed Use Commercial • Self ‐ Storage Center • Industrial

• Warehouse • Golf Course • Gas Station and Auto • Hotel • Restaurant • Medical • Office • Senior Citizen Housing • Other Commercial • Construction

 Loan purpose (construction, short term or perm)  LTV  DSC  Policy exceptions  Affiliated loans

 Vintage  Balance

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© 2023 –FinPro, Inc.

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Formerly booming areas like San Francisco and Austin Texas are struggling with high office vacancy rates, while smaller metro areas such as Wilmington, NC and Savannah, GA are seeing less impact. . .

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© 2023 –FinPro, Inc.

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Risk Management ultimately determines residual risk in banks . . .

Board and Sr. Mgmt Oversight

Policies, Procedures, and Limits

Risk Monitoring and MIS

Internal Controls

Lines of authority and responsibility for risk management and policy adherence

Must identify, measure, monitor, and control significant risks

Establish Risk Appetite

Must address all material risks

Must establish accountability and lines of authority

Key assumptions must be reasonable and documented

Must have independence and objectivity

Skills, Knowledge and experience

Reports to the Board and Senior Mgmt must be accurate, timely, and comprehensive

Must address new products/services and modifications to existing

Ensure mgmt. is capable

Must be adequately tested and reviewed

Home

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Corporate Governance

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Corporate Governance: The dirty dozen . . .

1. Board Composition: tenure vs age 2. Nominating committee: director “key attributes” (skills, diversification, business development, etc.) 3. New Director program (fiduciary responsibilities, board portal, strategic plan, public company, etc.) 4. Succession Planning (Board and Mgmt) 5. Technology (tablets, portals, etc.) 6. Strategic vs. Tactical (consent, action, discussion) 7. Management Reports: READ (recommendation/executive summary/analysis/data) 8. Director Reviews: CAR (content/avoid/requests) 9. Committees: structure, timing, report out, rotation 10. Loan Committee: insider, policy exception, large relationship, pipeline, concentrations 11. CEO performance evaluation (vs. Strategic Plan) 12. Training

Documentation is critical Credible Challenge is critical

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Corporate Governance is getting more and more of a focus . . .

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And training and education is now a necessity . . .

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FinPro offers a webinar series to Financial Institutions to provide direct Board and “C” suite training. All State Departments of Banking can participate for free (4 already do) . . .

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So what are banks to do?

Preserve

Identify and Mitigate Risks

Perform a comprehensive risk assessment and conduct self scoring

Ensure Compliance with Regulation

Bolster compliance, you cannot afford a mistake in this area. The penalties are too harsh

In addition to loan, deposit, liquidity, capital and IRR stress testing, conduct scenario tests in planning

Stress Test Extensively

Review and Tighten Governance like Policies

Conduct a heightened review of policies

Compile more detailed training grids and execute

Educate and Train

Fortress Balance Sheet

Now is not the time to take unnecessary risk

Market Multiple Locking

Effective execution during this phase will not only help you from a regulatory standpoint but it will also build value

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Bank Performance

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Internal Use Only From a banking perspective, problem Institutions both by number and total assets remain manageable . . .

This is amazing considering COVID and the Economic uncertainty.

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Loan growth, against the majority of opinion, remains healthy . . .

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Source: Call Report Data

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Industry deposit growth rates have turned positive in all regions. However, they remain low . . .

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Source: Call Report Data

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As usual in rising rate periods, time deposits continue to grow industry wide, as non ‐ interest bearing deposits decline . . .

Noninterest Bearing Deposits / Total Deposits

Time Deposits / Total Deposits

40.00

30.00

Industry

Industry

35.00

25.00

Mid ‐ Atlantic

Mid ‐ Atlantic

30.00

20.00

25.00

Mid ‐ West

Mid ‐ West

20.00

15.00

North ‐ East

North ‐ East

15.00

10.00

South ‐ East

South ‐ East

10.00

5.00

South ‐ West

South ‐ West

5.00

0.00

0.00

West

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Noninterest Bearing Deposits / Total Deposits

Time Deposits / Total Deposits

Change QoQ

Change YoY

Change QoQ

Change YoY

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 18.74 17.75 17.48 17.62 18.65 21.08 23.24 25.16 17.75 17.15 17.48 17.15 19.64 23.59 25.12 25.79 19.31 18.17 17.93 18.41 19.10 21.39 23.68 25.59 18.71 17.75 16.86 17.51 19.17 24.04 26.07 28.55 20.41 19.50 19.31 19.01 20.31 23.06 24.95 26.65 18.15 17.15 16.63 16.31 16.75 19.29 21.06 22.57 9.44 8.97 9.35 9.09 10.86 14.38 16.50 18.64

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 25.76 25.77 25.90 26.27 25.86 24.54 24.15 23.52 22.30 22.23 22.44 22.56 22.22 21.11 21.05 20.04 24.02 23.91 23.94 23.97 24.10 23.00 22.41 21.85 20.63 20.29 21.03 20.12 20.10 19.44 18.37 17.98 27.40 27.73 28.10 28.47 27.63 26.47 25.79 25.32 31.81 32.33 32.64 32.99 32.45 30.92 30.02 29.43 34.09 32.93 33.31 33.15 32.28 31.02 30.50 29.78

Industry

1.92 0.67 1.91 1.70 1.51 2.14

7.54 8.65 7.18 7.64 6.27 9.56

Industry

‐ 0.63 ‐ 1.01 ‐ 0.56 ‐ 0.39 ‐ 0.47 ‐ 0.59 ‐ 0.73

‐ 2.75 ‐ 2.53 ‐ 2.13 ‐ 2.14 ‐ 3.15 ‐ 3.56 ‐ 3.38

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

2.48 11.05

West

West

Notice the weakness of the Northeast (as seen in yellow line).

Source: Call Report Data, FinPro calculations

40

© 2023 –FinPro, Inc.

40

Internal Use Only

As deposits decline, wholesale funding usage increases . . .

Again, the Northeast leads the negative trend.

41

Source: Call Report Data

© 2023 –FinPro, Inc.

41

Internal Use Only

Loans as a percentage of deposits and total assets continue to grow . . .

42

Source: Call Report Data

© 2023 –FinPro, Inc.

42

Internal Use Only

Industry cost of funds and cost of interest ‐ bearing continue to rise rapidly . . .

Cost of Interest Bearing Liab

Cost of Funds

2.50

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 0.27 0.24 0.26 0.36 0.62 0.95 1.30 1.62 0.30 0.27 0.30 0.45 0.75 1.15 1.51 1.79 0.29 0.26 0.27 0.39 0.63 0.94 1.28 1.58 0.26 0.24 0.24 0.36 0.65 1.12 1.53 1.77 0.26 0.23 0.24 0.32 0.59 0.93 1.30 1.63 0.22 0.21 0.23 0.33 0.56 0.90 1.29 1.58 0.16 0.15 0.17 0.27 0.53 0.85 1.27 1.60 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Industry

Industry

2.00

Mid ‐ Atlantic

Mid ‐ Atlantic

Mid ‐ West

1.50

Mid ‐ West

North ‐ East

North ‐ East

1.00

South ‐ East

South ‐ East

0.50

South ‐ West

South ‐ West

0.00

West

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Change QoQ

Change YoY

Cost of Interest Bearing Liab

Change QoQ

Change YoY

Cost of Funds

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 0.37 0.33 0.36 0.51 0.85 1.30 1.76 2.12 0.40 0.37 0.40 0.59 0.97 1.49 1.86 2.24 0.39 0.35 0.37 0.51 0.83 1.24 1.66 2.03 0.34 0.30 0.31 0.48 0.86 1.40 1.89 2.20 0.36 0.33 0.35 0.47 0.82 1.32 1.80 2.23 0.34 0.31 0.35 0.50 0.87 1.35 1.89 2.26 0.27 0.25 0.28 0.42 0.85 1.33 1.90 2.32

Industry

0.32 0.28 0.30 0.24 0.33 0.29 0.34

1.26 1.34 1.20 1.41 1.31 1.25 1.33

Industry

0.36 0.38 0.37 0.31 0.44 0.37 0.42

1.61 1.65 1.52 1.72 1.76 1.76 1.90

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

West

43

Source: Call Report Data

© 2023 –FinPro, Inc.

43

Internal Use Only

The cost of wholesale funding is rising dramatically . . .

Cost of Borrowings

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 1.20 1.11 1.19 1.77 2.45 3.00 3.82 4.09 1.41 1.28 1.28 2.04 2.64 3.33 3.93 4.17 1.15 1.07 1.20 1.73 2.33 2.80 3.69 3.99 1.47 1.23 1.09 1.73 2.84 3.75 4.15 4.23 1.23 1.19 1.18 1.76 2.47 3.20 3.82 4.15 1.12 1.10 1.23 1.81 2.68 3.11 4.08 4.39 0.95 0.80 1.03 1.53 2.26 2.88 4.07 4.00 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Industry

Mid ‐ Atlantic

Mid ‐ West

North ‐ East

South ‐ East

South ‐ West

West

Change QoQ

Change YoY

Cost of Borrowings

Industry

0.27 0.24 0.31 0.08 0.33 0.32 ‐ 0.07

2.32 2.13 2.26 2.50 2.39 2.58 2.47

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

44

Source: Call Report Data

© 2023 –FinPro, Inc.

44

Internal Use Only

Yields continue to expand upwards on both investments (interest bearing cash and investments combined) as well as loans . . .

Yield on Loans

Yield on Investments

7.00

3.50

Industry

Industry

6.00

3.00

Mid ‐ Atlantic

Mid ‐ Atlantic

5.00

2.50

Mid ‐ West

Mid ‐ West

4.00

2.00

North ‐ East

North ‐ East

3.00

1.50

South ‐ East

2.00

South ‐ East

1.00

0.50

1.00

South ‐ West

South ‐ West

0.00

0.00

West

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Change QoQ

Change YoY

Change QoQ

Change YoY

Yield on Investments 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Yield on Loans

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 4.89 4.64 4.72 4.93 5.18 5.32 5.62 5.89 4.31 4.16 4.20 4.45 4.77 4.88 5.07 5.26 4.77 4.55 4.60 4.81 5.05 5.19 5.49 5.75 4.04 3.89 3.91 4.12 4.37 4.49 4.65 4.85 5.11 4.91 4.96 5.14 5.38 5.56 5.87 6.14 5.41 5.17 5.26 5.51 5.80 5.93 6.25 6.55 5.09 4.78 4.90 5.13 5.42 5.55 5.88 6.03

Industry

1.03 1.09 1.39 1.92 2.28 2.41 2.55 2.61 0.92 1.03 1.40 2.01 2.57 2.72 2.88 2.95 1.10 1.14 1.40 1.84 2.13 2.20 2.34 2.41 1.12 1.29 1.59 2.09 2.46 2.56 2.81 2.78 0.99 1.06 1.39 1.97 2.39 2.53 2.75 2.79 0.96 1.02 1.35 1.94 2.34 2.50 2.66 2.80 0.83 0.90 1.31 1.98 2.55 2.87 3.10 3.26

0.06 0.07 0.07 ‐ 0.03 0.04 0.14 0.16

0.69 0.95 0.57 0.68 0.82 0.87 1.28

Industry

0.27 0.20 0.26 0.20 0.27 0.31 0.15

0.96 0.81 0.94 0.73 1.00 1.04 0.90

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

West

Note the weakness in the Northeast!

45

Source: Call Report Data

© 2023 –FinPro, Inc.

45

Internal Use Only

Yield on Assets is also climbing . . .

Yield on Earning Assets

6.00

Industry

5.00

Mid ‐ Atlantic

4.00

Mid ‐ West

3.00

North ‐ East

2.00

South ‐ East

1.00

South ‐ West

0.00

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Yield on Earning Assets

Change QoQ

Change YoY

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 3.41 3.26 3.45 3.82 4.19 4.37 4.65 4.87 3.24 3.18 3.33 3.69 4.07 4.33 4.55 4.74 3.37 3.20 3.39 3.74 4.06 4.22 4.51 4.71 3.25 3.20 3.33 3.60 3.88 4.03 4.23 4.41 3.57 3.43 3.60 4.02 4.37 4.59 4.88 5.09 3.55 3.42 3.63 4.08 4.50 4.73 5.02 5.27 3.36 3.21 3.51 3.93 4.39 4.59 4.90 5.07

Industry

0.22 0.19 0.21 0.18 0.21 0.25 0.17

1.05 1.05 0.97 0.81 1.07 1.19 1.14

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

46

Source: Call Report Data

© 2023 –FinPro, Inc.

46

Internal Use Only

As expected, margin has contracted for banks over the most recent quarters . . .

Net Interest Margin

4.50

Industry

4.00

3.50

Mid ‐ Atlantic

3.00

Mid ‐ West

2.50

2.00

North ‐ East

1.50

South ‐ East

1.00

South ‐ West

0.50

0.00

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Change QoQ

Change YoY

Net Interest Margin 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Industry

3.12 3.00 3.19 3.44 3.56 3.40 3.36 3.33 2.95 2.87 3.03 3.27 3.38 3.20 3.13 3.03 3.06 2.92 3.09 3.33 3.40 3.27 3.25 3.21 2.98 2.96 3.10 3.27 3.28 2.99 2.79 2.73 3.27 3.15 3.33 3.65 3.78 3.62 3.56 3.51 3.33 3.22 3.38 3.71 3.89 3.78 3.79 3.75 3.19 3.04 3.34 3.62 3.81 3.69 3.58 3.56

‐ 0.03 ‐ 0.10 ‐ 0.04 ‐ 0.06 ‐ 0.05 ‐ 0.04 ‐ 0.02

‐ 0.11 ‐ 0.24 ‐ 0.12 ‐ 0.54 ‐ 0.14 0.04 ‐ 0.06

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

47

Source: Call Report Data

© 2023 –FinPro, Inc.

47

Internal Use Only

Return on Average Equity declined in the most recent quarters, but is still healthy . . .

ROAE

18.00

Industry

16.00

14.00

Mid ‐ Atlantic

12.00

Mid ‐ West

10.00

8.00

North ‐ East

6.00

South ‐ East

4.00

South ‐ West

2.00

0.00

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Change QoQ

Change YoY

ROAE

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 8.57 8.83 11.06 13.29 12.88 11.58 11.13 10.93 8.04 7.49 8.71 10.53 10.51 8.59 8.13 7.69 7.98 8.63 10.92 13.36 12.42 11.52 11.12 11.08 8.20 5.56 6.01 8.43 10.48 6.49 5.80 5.04 8.78 9.08 11.70 13.73 13.29 12.33 11.76 11.58 10.07 10.46 13.44 15.93 15.52 14.82 13.99 13.56 9.93 9.63 11.27 13.11 13.26 11.44 10.31 10.54

Industry

‐ 0.20 ‐ 0.44 ‐ 0.04 ‐ 0.76 ‐ 0.18 ‐ 0.43 0.23

‐ 2.36 ‐ 2.84 ‐ 2.28 ‐ 3.39 ‐ 2.15 ‐ 2.37 ‐ 2.57

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

48

Source: Call Report Data

© 2023 –FinPro, Inc.

48

Internal Use Only

ROAA and efficiency ratio show similar earnings concerns . . .

Efficiency Ratio

ROAA

90.00

1.40

Industry

Industry

80.00

1.20

70.00

Mid ‐ Atlantic

Mid ‐ Atlantic

1.00

60.00

Mid ‐ West

Mid ‐ West

0.80

50.00

40.00

North ‐ East

North ‐ East

0.60

30.00

South ‐ East

South ‐ East

0.40

20.00

0.20

South ‐ West

South ‐ West

10.00

0.00

0.00

West

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Change QoQ

Change YoY

Change QoQ

Change YoY

ROAA

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 0.91 0.88 1.00 1.15 1.11 1.05 1.01 0.97 0.88 0.83 0.92 1.01 1.01 0.88 0.81 0.78 0.84 0.85 0.99 1.13 1.04 1.01 0.98 0.95 0.82 0.59 0.63 0.73 0.90 0.61 0.55 0.46 0.92 0.88 1.04 1.18 1.14 1.08 1.05 1.04 1.04 1.03 1.16 1.32 1.32 1.31 1.26 1.19 1.03 0.95 1.04 1.16 1.23 1.08 1.02 0.99

Efficiency Ratio

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 68.53 67.97 64.52 61.85 63.55 64.16 65.32 65.89 67.03 67.90 66.17 62.71 64.73 66.48 67.17 68.39 68.65 68.04 64.61 61.98 64.46 64.80 65.37 66.36 75.22 73.36 71.05 68.93 70.11 74.95 77.44 79.35 69.36 68.21 64.58 62.54 63.32 64.20 65.24 65.03 67.21 66.96 63.33 60.19 61.06 60.81 61.54 62.07 63.30 63.25 61.10 59.04 58.44 61.27 62.95 63.12

Industry

‐ 0.04 ‐ 0.03 ‐ 0.03 ‐ 0.09 ‐ 0.01 ‐ 0.07 ‐ 0.03

‐ 0.18 ‐ 0.23 ‐ 0.18 ‐ 0.27 ‐ 0.14 ‐ 0.13 ‐ 0.17

Industry

0.57 1.22 0.99 ‐ 0.20 0.53 0.17

4.04 5.68 4.38 2.49 1.89 4.08

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

1.91 10.42

West

West

49

Source: Call Report Data

© 2023 –FinPro, Inc.

49

Internal Use Only

Noninterest Income continues its long term decline and interestingly, banks have not reduced expenses as of yet . . .

Non Interest Expense/ AA

Non Interest Income/ AA

3.00

0.70

Industry

Industry

0.60

2.50

Mid ‐ Atlantic

Mid ‐ Atlantic

0.50

2.00

Mid ‐ West

Mid ‐ West

0.40

1.50

North ‐ East

North ‐ East

0.30

1.00

South ‐ East

South ‐ East

0.20

0.50

0.10

South ‐ West

South ‐ West

0.00

0.00

West

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Non Interest Income/ AA

Change QoQ

Change YoY

Non Interest Expense/ AA Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West Industry

Change QoQ

Change YoY

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 0.51 0.46 0.46 0.43 0.41 0.40 0.43 0.42 0.46 0.41 0.41 0.38 0.37 0.35 0.38 0.38 0.48 0.43 0.42 0.41 0.38 0.37 0.39 0.39 0.52 0.43 0.43 0.40 0.36 0.38 0.40 0.38 0.59 0.55 0.57 0.51 0.46 0.49 0.51 0.53 0.54 0.50 0.50 0.48 0.47 0.46 0.48 0.48 0.45 0.43 0.38 0.34 0.32 0.31 0.34 0.35

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 2.49 2.33 2.35 2.41 2.52 2.46 2.46 2.48 2.31 2.27 2.26 2.32 2.41 2.36 2.34 2.39 2.44 2.27 2.28 2.33 2.46 2.38 2.39 2.39 2.64 2.46 2.48 2.49 2.54 2.49 2.44 2.42 2.66 2.45 2.48 2.56 2.69 2.59 2.62 2.62 2.59 2.42 2.47 2.50 2.66 2.57 2.60 2.63 2.31 2.23 2.27 2.33 2.41 2.50 2.49 2.47

Industry

0.00 0.00 0.00 ‐ 0.02 0.03 0.00 0.01

‐ 0.01 0.00 ‐ 0.02 ‐ 0.02 0.03 0.00 0.01

0.02 0.05 0.00 ‐ 0.02 0.00 0.02 ‐ 0.02

0.07 0.08 0.06 ‐ 0.07 0.06 0.13 0.14

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

West

50

Source: Call Report Data

© 2023 –FinPro, Inc.

50

Internal Use Only

And we have not seen improvement in the non interest expense less non interest income ratio . . .

(Non Interest Expense ‐ Non Interest Income)/AA

2.50

Industry

2.00

Mid ‐ Atlantic

Mid ‐ West

1.50

North ‐ East

1.00

South ‐ East

0.50

South ‐ West

0.00

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

(Non Interest Expense ‐ Non Interest Income)/AA 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Change YoY

Change QoQ

Industry

1.84 1.77 1.78 1.98 2.03 1.95 1.94 1.94 1.85 1.86 1.85 1.94 2.04 2.01 1.96 2.01 1.96 1.84 1.86 1.92 2.08 2.01 2.00 2.00 2.12 2.03 2.04 2.09 2.18 2.11 2.04 2.04 2.07 1.90 1.91 2.05 2.23 2.10 2.11 2.09 2.05 1.92 1.97 2.02 2.19 2.11 2.12 2.15 1.86 1.80 1.89 1.99 2.09 2.19 2.15 2.12

‐ 0.01 0.05 0.00 0.00 ‐ 0.03 0.02 ‐ 0.03

‐ 0.04 0.07 0.08 ‐ 0.05 0.03 0.13 0.13

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

51

Source: Call Report Data

© 2023 –FinPro, Inc.

51

Internal Use Only

Capital indicators display strength in the banking industry . . .

Tier 1 (Core) Capital / Risk ‐ Weighted Assets

Tier 1 (Core) Capital / Average Total Assets

16.00

10.00 10.20 10.40 10.60 10.80 11.00 11.20

Industry

Industry

15.50

Mid ‐ Atlantic

Mid ‐ Atlantic

15.00

Mid ‐ West

Mid ‐ West

14.50

North ‐ East

North ‐ East

14.00

9.00 9.20 9.40 9.60 9.80

South ‐ East

13.50

South ‐ East

13.00

South ‐ West

South ‐ West

12.50

West

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Tier 1 (Core) Capital / Risk ‐ Weighted Assets

Tier 1 (Core) Capital / Average Total Assets 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Change QoQ

Change YoY

Change QoQ

Change YoY

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 14.87 14.81 14.50 14.47 14.22 14.30 14.25 14.26 15.19 15.01 14.95 14.89 14.63 14.56 14.49 14.65 14.51 14.62 14.17 13.98 13.75 13.89 13.66 13.61 14.83 14.49 14.08 13.97 13.67 13.81 13.63 13.65 14.95 14.77 14.52 14.49 14.34 14.34 14.27 14.27 15.44 15.38 15.29 15.37 15.21 15.39 15.41 15.60 15.01 14.88 14.68 14.64 14.71 14.87 14.71 14.91

Industry

9.96 9.90 10.02 10.20 10.30 10.38 10.51 10.63 9.98 10.12 10.19 10.44 10.45 10.42 10.45 10.56 9.95 9.85 9.99 10.11 10.21 10.19 10.35 10.43 10.34 10.40 10.45 10.37 10.35 10.45 10.50 10.58 9.89 9.84 9.96 10.20 10.35 10.37 10.49 10.72 10.06 9.95 10.05 10.30 10.39 10.58 10.73 10.97 9.77 9.89 10.00 10.31 10.40 10.72 10.83 11.03

0.13 0.11 0.08 0.08 0.24 0.24 0.20

0.43 0.12 0.32 0.22 0.52 0.67 0.72

Industry

0.01 0.16 ‐ 0.05 0.02 0.00 0.19 0.20

‐ 0.21 ‐ 0.24 ‐ 0.37 ‐ 0.32 ‐ 0.22 0.24 0.28

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

West

52

Source: Call Report Data

© 2023 –FinPro, Inc.

52

Internal Use Only

And the growth in loans has reduced total risk based capital ratios . . .

Risk Based Capital / Risk ‐ Weighted Assets

Tangible Equity / Tangible Assets

17.00

12.00

Industry

Industry

16.50

10.00

Mid ‐ Atlantic

Mid ‐ Atlantic

16.00

8.00

Mid ‐ West

Mid ‐ West

15.50

6.00

North ‐ East

North ‐ East

15.00

4.00

South ‐ East

14.50

South ‐ East

2.00

14.00

South ‐ West

South ‐ West

0.00

13.50

West

West

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Risk Based Capital / Risk ‐ Weighted Assets

Tangible Equity / Tangible Assets

Change QoQ

Change YoY

Change QoQ

Change YoY

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 9.88 9.02 8.63 8.37 8.61 8.86 8.86 8.72 9.87 9.47 9.34 9.16 9.22 9.30 9.31 9.22 9.90 8.97 8.46 8.12 8.36 8.65 8.56 8.30 10.20 9.73 9.27 8.91 9.18 9.25 9.13 9.03 9.81 8.89 8.37 8.33 8.57 8.76 8.88 8.77 9.91 8.97 8.66 8.53 8.81 9.03 9.10 9.09 9.64 9.10 8.90 9.00 9.48 9.51 9.69 9.83

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 15.95 15.93 15.62 15.54 15.31 15.42 15.36 15.33 16.17 16.13 16.05 15.98 15.78 15.67 15.56 15.70 15.61 15.65 15.34 15.09 14.78 14.98 14.72 14.80 15.89 15.61 14.97 14.83 14.73 14.90 14.73 14.77 15.98 15.84 15.63 15.44 15.36 15.45 15.37 15.36 16.60 16.59 16.36 16.38 16.34 16.41 16.54 16.62 15.92 16.13 15.87 15.89 15.74 15.95 15.99 16.13

Industry

‐ 0.14 ‐ 0.09 ‐ 0.26 ‐ 0.10 ‐ 0.11 ‐ 0.01 0.14

0.35 0.06 0.18 0.13 0.44 0.57 0.82

Industry

‐ 0.03 0.14 0.08 0.04 0.00 0.08 0.14

‐ 0.21 ‐ 0.29 ‐ 0.29 ‐ 0.06 ‐ 0.08 0.24 0.24

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

West

53

Source: Call Report Data

© 2023 –FinPro, Inc.

53

Internal Use Only

Regardless of Regulatory concern, so far Asset quality is holding . . .

Total Delinquencies / Total Loans

Nonaccrual/Total Loans

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 0.27 0.24 0.21 0.19 0.18 0.18 0.18 0.20 0.44 0.42 0.38 0.35 0.32 0.33 0.32 0.33 0.22 0.20 0.17 0.16 0.15 0.15 0.15 0.16 0.34 0.33 0.28 0.25 0.23 0.23 0.23 0.24 0.30 0.27 0.24 0.24 0.22 0.22 0.21 0.24 0.26 0.22 0.19 0.17 0.16 0.17 0.17 0.19 0.22 0.20 0.18 0.16 0.13 0.15 0.16 0.18 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 0.72 0.75 0.64 0.61 0.64 0.65 0.64 0.70 0.85 0.85 0.74 0.68 0.77 0.72 0.72 0.78 0.67 0.71 0.63 0.59 0.62 0.65 0.63 0.68 0.52 0.53 0.44 0.43 0.46 0.42 0.47 0.48 0.84 0.87 0.76 0.69 0.75 0.71 0.69 0.73 0.83 0.84 0.70 0.70 0.73 0.77 0.76 0.86 0.50 0.48 0.42 0.38 0.40 0.41 0.42 0.46 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3

Industry

Industry

Mid ‐ Atlantic

Mid ‐ Atlantic

Mid ‐ West

Mid ‐ West

North ‐ East

North ‐ East

South ‐ East

South ‐ East

South ‐ West

South ‐ West

West

West

Total Delinquencies / Total Loans

Change QoQ

Change YoY

Nonaccrual/Total Loans

Change QoQ

Change YoY

Industry

0.06 0.06 0.05 0.01 0.04 0.10 0.04

0.09 0.10 0.09 0.05 0.04 0.16 0.08

Industry

0.02 0.01 0.01 0.01 0.03 0.02 0.02

0.01 ‐ 0.02 0.00 ‐ 0.01 0.00 0.02 0.02

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

Mid ‐ Atlantic Mid ‐ West North ‐ East South ‐ East South ‐ West

West

West

54

Source: Call Report Data

© 2023 –FinPro, Inc.

54