balance sheet optimization: driving profitability
TRANSCRIPT
11
BALANCE SHEET OPTIMIZATION:
DRIVING PROFITABILITY
22
33
44
55
5
Improved ALCO
Process (NII)
Higher Profitability
(NIM)
Maximizing Shareholder Value
>
>
BENEFITS OF A STRONG ALCO PROCESS
66
Risk management practices with strategy formation to improve/protect margin- not one-size fits all
Improve understanding of your Bank’s balance sheet to make better decisions
How to manage your Bank’s balance sheet through FHLB Products & other ALCO strategies
KEY HOW-TO… TAKEAWAYS FROM TODAY’S PRESENTATION
The importance of learning through case studies by a third party
Why is ALCO/Balance Management important to overall profitability
77
Balance Sheet Optimization : Profit Improvement Workshop for CEOs and CFOs
Part I
• Why Balance Sheet and NIM Management is Important for Community Banking?
• Benefits of a Strong ALCO Process: The Evolution of ALCO from the 1970’s to Today
• Review different Asset Liability Management Packets and Facilitation Techniques (Best and Worst Practices)
• Process Improvement: Position Assessment and Strategy Formation
Break
Part II
• Capital Management: Credit Cycle and Interest Rates (Case Study)
• Liquidity Assessment: Liability Management & Deposit Pricing (Strategy/Case study to improve margin/manage liquidity)
• Interest Rates: Best Practices (Strategy/Case Study to improve/protect earnings in different rate environments)
Break
Part III
• Investment: Relative Value Analysis and Sector/Yield Improvement Ideas (Case Studies)
• Review Various Balance Sheet Strategies: It’s not always about rate (Loan pricing and Case study)
• Conclusion/Questions
Lunch
88
POLLING
QUESTIONS
CASE STUDIES
99
WASHINGTON—The Federal Reserve moved to cut interest rates by a quarter-percentage point—the first reduction since 2008—in a pre-emptive strike to cushion the economy from a global slowdown and continuing trade tensions.
Stock markets sold off and the dollar strengthened Wednesday afternoon after Fed Chairman Jerome Powell disappointed investors in his post-decision news conference when he didn’t more explicitly ratify expectations of additional stimulus in the months ahead.
1010
1111
1
1.5
2
2.5
3
3.5
4
2018 2019 2020 2021 2022 Long Term
Imp
lied
Fe
d F
un
ds
Targ
et
Ra
te
Projection Year End
DEC 2018 FOMC MEDIAN DEC 2019 FOMC MEDIAN DEC 2018 FOMC DOTS DEC 2019 FOMC DOTS Fed Funds Futures
-125bps -150bps
-125bps-50bps
11
Fed Funds Futures
Source: Bloomberg
FED DOT PLOT & IMPLIED FED FUNDS TARGET RATE
1212
FEDERAL FUNDS RATE – IMPLIED PROBABILITY
1313
IF FED FUNDS IS 1.50-1.75 TODAY, WHERE DO YOU THINK RATES WILL BE IN 2 YEARS?
A. HigherB. LowerC. Unchanged
0
1414
March 2019
March 2020
TREASURY RATES
1515
M&A Strategy Is Working to Maintain ROA Despite Rate Challenges
– The First Bancshares, Inc.
A Good Quarter, but Further NIM Pressure Remains a Headwind
– Capstar Financial Holdings, Inc.
Strong Fees Offset NIM Contraction for a Beat as Dividend Increased: 1st Look
– Bank of Hawaii Corp.
NIM Slip Drives 3Q19 EPS Miss, First Look
– Southside Bancshares, Inc.
NII Pressure Outweighs New Expense Cuts; Trimming Estimates
– Associated Banc-Corp
NII Pressure Tough to Outrun; Lowering Estimates
– PacWest Bancorp
15
EQUITY RESEARCH HEADLINES
1616
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1984 1989 1994 1999 2004 2009 2014 2019
Assets > $250 Billion
Assets $10 Billion - $250 Billion
Assets $1 Billion - $10 Billion
Assets $100 Million - $1 Billion
Assets < $100 Million
16
Source: FDIC
QUARTERLY EARNING ASSET YIELDS
1717
0.0
2.0
4.0
6.0
8.0
10.0
12.0
1984 1989 1994 1999 2004 2009 2014 2019
Assets > $250 Billion
Assets $10 Billion - $250 Billion
Assets $1 Billion - $10 Billion
Assets $100 Million - $1 Billion
Assets < $100 Million
17
Source: FDIC
QUARTERLY COST OF FUNDS
1818
NIM/Growth Headwinds Continue to See Offsets
– United Bankshares, Inc.
Weaker NIM Helped by Lower LLP and Higher Loan Sale Fees
– BankUnited, Inc.
3Q19 1st Look: Added Wholesale Leverage to BS, NIM Guide Moves Lower
– Webster Financial Corp.
NIM Pressure Unavoidable, Expenses and Fee Income Support Higher EPS
– 1st Source Corporation
Lower NIM and Larger LLP Offset Strong Fee Revenues
– First Guaranty Bancshares
3Q19 results Mostly Good, but Trimming estimates on Margin Pressure
– Cathay General Bancorp
18
EQUITY RESEARCH HEADLINES
1919
Interest Income (Earning Asset Yields)
Interest Expense (Cost of Funds)
Net Interest Income (NII) Balance Sheet Management:Primary Focus
Other Income
Operating Expense
Taxes
Net Income ROE vs. ROA Focus
19
Net Income Before Taxes
BASIC INCOME STATEMENT
202020
Non-Interest Income
Net Interest Income (NII)
Net Interest Income (NII) +
NET INTEREST INCOME DEPENDENCY
2121
A. >95%B. 85%-95%C. 75%-85%D. <75%
0
WHAT IS THE AVERAGE NII DEPENDENCY
RATIO FOR COMMUNITY BANKS?
2222
Source: S&P Global Market Intelligence, Data for all banks Nationally <$15B as of 12/31/19
22
0.71
0.87
0.95
0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
NII Dependency
10th Percentile Median 90th Percentile
NII DEPENDENCY AMONG ALL BANKS NATIONALLY
2323
The more net interest income dependent your institution, the more
NIM will drive earnings
23
2424
3Q19 Growth Overpowers Margin Pressure; Fine-Tuning Estimates Higher
– First Republic Bank
EPS Miss on Credit Costs, Lower Margin and Weaker Growth
– East West Bancorp
Strong Loan and Deposit Growth Offsets Core NIM Compression
– F.N.B Corporation
EPS Beat Driven by Mortgage Revenue but Core Margin Drops
– Great Southern Bancorp, Inc.
Good Growth and Mortgage Help Neutralize Margin Pressures
– Umpqua Bank
Mortgage & Lower Provision Offset NIM Compression/Weaker Growth
– Eagle Bancorp, Inc.
24
EQUITY RESEARCH HEADLINES
2525
Source: S&P Global Market Intelligence, Data for all banks Nationally <$15B as of 12/31/19
25
NET INTEREST MARGIN AMONG ALL BANKS NATIONALLY
The more net interest income dependent your institution, the more NIM will drive earnings
2.92
3.86
4.64
2.50
2.75
3.00
3.25
3.50
3.75
4.00
4.25
4.50
4.75
5.00
Net Interest Margin
10th Percentile Median 90th Percentile
2626
WHAT IS YOUR INSTITUTION’S
NET INTEREST INCOME DEPENDENCY?
NET INTEREST MARGIN?
26
2727
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
2828
28
Improved ALCO
Process (NII)
Higher Profitability
(NIM)
Maximizing
Shareholder Value
>
>
BENEFITS OF A STRONG ALCO PROCESS
2929
1st IRR Model Created 1977
1970’s 1980’s
1st CMO Created 1983
1990’sS&L Banking Crisis 1986-
1995
Pre CrisisDot-Com Bubble & Collapse
1997-2000
Post CrisisSubprime Mortgage Crisis
2007-2009
Current & Future
29
3030
THE EVOLUTION OF ALCO
Rate Sensitive Assets ToRate Sensitive Liabilities
(GAP Analysis)
1st IRR Model Created 1977
1970’s
3131
Rate Sensitive Assets ToRate Sensitive Liabilities
(GAP Analysis)
Earning At Risk
1980’s
1st CMO Created 1983 Year 1 Net Interest Income, 6%
Year 2 Net Interest Income, 9%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
-400 -300 -200 -100 BASE +100 +200 +300 +400
THE EVOLUTION OF ALCO
Investments
3232
Rate Sensitive Assets ToRate Sensitive Liabilities
(GAP Analysis)
Earning At Risk
Interest Income StressTesting Economic Value
Of Equity
1990’sS&L Banking Crisis 1986-
1995
Year 1 Net Interest Income, 6%
Year 2 Net Interest Income, 9%
Economic Value of Equity, 4%
-30%
-20%
-10%
0%
10%
20%
30%
-400 -300 -200 -100 BASE +100 +200 +300 +400
THE EVOLUTION OF ALCO
Market Value Shocks
Investments
3333
On BalanceSheet Liquidity
Amount in
'000s
Short-term Liquid Assets
Fed Funds Sold 25,000
Cash & due from banks 25,000
Loans Held for Sale -
Total US Govt and Agency Bonds (market value) 250,000
Pledged US Gov't, GSE, Agency MBS / CMO Securities (220,000)
Total Liquid US Gov't, GSE, Agency MBS / CMO Securities 30,000
AFS Municipal Securities, Corporates, Muni, ABS 120,000
Pledged Muni's, Corporates, Muni, ABS
Total Liquid Municipal Securities, Corporates & Bank CD's 120,000
Total Short-term Liquid Funds 200,000
Asset Liquidity Ratio (Guideline > 10%) 16.67%
Short-term Uses of Funds
20% of CD's maturing in 90 days 50,000 20.0% 10,000
Other volatile liablities (5% of DDA, Now, MMDA, Sav.) 900,000 5.0% 45,000
Total Short-term Uses of Funds and Potential Deposit Decay 55,000
Net Short-term Liquid Funds and Potential Uses of Funds 145,000
POTENTIAL SOURCES AND USES OF FUNDS
Capacity
Outstanding
(negative)
Available
Operational
Available
Strategic
Available
Contingency
Additional Sources of Funds
Unsecured Federal Funds Purchased 10,000 - 10,000
FHLB Borrowings - capacity restricted by collateral (incl. LOC) 150,000 (90,000) 60,000
Additional FHLB Borrowings from CRE collateral (not in place) 350,000 - 175,000
Brokered CD's (5% of assets) 60,000 - 60,000
Reciprocol CDARS/ICS (5% of assets) 60,000 - 60,000
National Market Deposits (10% of assets) 120,000 - 120,000
FRB Borrowings from other loans (not in Place) 200,000 - 100,000
Loan P&I Payments next 90 days 60,000 - 60,000
Total Additional Sources of Funds 70,000 240,000 335,000
Potential Uses of Funds
Unused Loan Commitments @ 30% 250,000 75,000
Holding Company Dividends next 3 months -
Fixed Asset Purchases next 3 months -
Total Additional Uses of Funds - 75,000 -
Net Potential Sources/Uses of Funds 70,000 165,000 335,000
Operational Strategic* Contingency**
Amount in '000s 215,000 380,000 715,000
% of Assets 17.9% 31.7% 59.6%
Guideline > 10% > 15% > 20%
LIQUIDITY POSITION SUMMARY
THE EVOLUTION OF ALCO
Total Liquidity
Off BalanceSheet Liquidity
1990’sS&L Banking Crisis 1986-
1995
Liquidity Assessment
3434
2,000
4,000
6,000
8,000
10,000
12,000
THE EVOLUTION OF ALCO
Less Focus On GAP Analysis
Earning At Risk
Interest Income StressTesting Economic Value
Of Equity
Industry Default Loan &Deposit Assumptions
Pre-Crisis
Investments
Market Value Shocks
Cash Flow Shocks
Dot-Com Bubble & Collapse1997-2000
3535
BASE Scenario #1 Scenario #2 Scenario #3
On-Balance Sheet Liquidity 200,000 200,000 185,000 170,000
Off-Balance Sheet Liquidity 585,000 521,250 409,500 198,750
Cash Outflows $ (130,000) (162,500) (195,000) (227,500)
Cash Outflows % of Assets -11% -14% -16% -19%
Net New Loans (75,000) (93,750) (112,500) (131,250) Multiple of Base Case Assumption 1.00 1.25 1.50 1.75
Additional Deposit Run-Off (55,000) (68,750) (82,500) (96,250)
Percentage of Total Deposits 5.5% 6.9% 8.3% 9.6%
Multiple of Base Case Assumption 1.00 1.25 1.50 1.75
Stressed Liquidity Position 655,000 558,750 399,500 141,250
Change from Base - (96,250) (255,500) (513,750)
% of Assets (Guideline > 5%) 54.6% 46.6% 33.3% 11.8%
Conditions: - - Haircut on InvSec Haircut on InvSec
- - No FFP Lines No FFP Lines
- - - No Brokered CDs
- - - No CDARS/ICS
- - Lower Nat'l Mkt Lower Nat'l Mkt
- - Lower FHLB/FRB Lower FHLB/FRB
Loan Fundings Loan Fundings Loan Fundings Loan Fundings
Deposit Run-Off Deposit Run-Off Deposit Run-Off Deposit Run-Off
PCA CAPITAL CATEGORY
Designation Abbreviation
Total
Risk-
Based
Ratio
Tier 1
Risk-
Based
Ratio
Tier 1
Leverage
Ratio
Tangible
Equity
Ratio
Bank Internal Limits (BI) ≥ 12.0% ≥ 10.0% ≥ 8.0% NA
Well Capitalized (WCB) ≥ 10.0% ≥ 8.0% ≥5.0% NA
Adequately Capitalized (ACB) ≥ 8.0% ≥ 6.0% ≥4.0% NA
Undercapitalized (UB) < 8.0% < 6.0% < 4.0% NA
Significantly Undercapitalized (SUB) < 6.0% < 4.0% < 3.0% NA
Critically Undercapitalized (CUB) NA NA NA ≤ 2.0%
Liquidity Stress Testing
Capital Adequacy Assessment
THE EVOLUTION OF ALCOPre-Crisis
Capital Adequacy Assessment
Liquidity Assessment
Liquidity Stress Testing
Dot-Com Bubble & Collapse1997-2000
3636
Less Focus On GAP Analysis
Earning At Risk
Bank Specific Loan &Deposit Assumptions
Post CrisisSubprime Mortgage Crisis
2007-2009
THE EVOLUTION OF ALCO
3737
EVE fluctuates in a wide range when using default assumptions. Is this the bank’s true risk profile?
THE EVOLUTION OF ALCO
Less Focus On GAP Analysis
Earning At Risk
Bank Specific Loan &Deposit Assumptions
Post CrisisSubprime Mortgage Crisis
2007-2009
3838
Original Default Assumptions
Assumptions Developed from Decay Study
Deposit durations are longer for every category
THE EVOLUTION OF ALCO
Less Focus On GAP Analysis
Earning At Risk
Bank Specific Loan &Deposit Assumptions
Post CrisisSubprime Mortgage Crisis
2007-2009
3939
EVE is more stable and representative of the bank’s true risk profile.
EVE with Original Default
Assumptions
EVE with Assumptions Developed from Decay
Study
THE EVOLUTION OF ALCO
Less Focus On GAP Analysis
Earning At Risk
Bank Specific Loan &Deposit Assumptions
Post CrisisSubprime Mortgage Crisis
2007-2009
4040
THE EVOLUTION OF ALCOPost Crisis
Subprime Mortgage Crisis 2007-2009
Investments
Market Value Shocks
Cash Flow Shocks
Independent Municipal Credit Analysis
4141
THE EVOLUTION OF ALCOPost Crisis
Subprime Mortgage Crisis 2007-2009
Liquidity Assessment
Liquidity Stress Testing
Contingency Funding Plans
4242
Available Liquidity SourcesRisk of Reduction in Availability
Low Moderate High
FHLB * *
Repo/Secured Funds Lines * *
Federal Discount Window * *
Unsecured Fed Funds Lines * *
National Market Deposits * *
Brokered Deposits * *
Reciprocal Deposits * *
?
Year 1 Year 2 Year 3 Year 4 Year 5
Non Performing/Classified Assets 6,921 5,201 3,601 3,001 2,501
Equity 17,491 19,417 21,275 22,483 23,691
Goodwill 1,645 1,645 1,645 1,645 1,645
Tier 1 Capital 15,846 17,772 19,630 20,838 22,046
Tier 2 Capital 2,092 1,976 1,976 1,976 1,976
Total Capital 17,938 19,748 21,606 22,814 24,023
Total Average Assets 239,408 237,013 237,013 237,013 237,013
Risk Weighted Assets 167,090 158,090 158,090 158,090 158,090
Non Performing Assets/T1+ALLL 37.9% 25.8% 16.3% 12.9% 10.2%
Dividends to Tier 1 Capital 0.0% 0.0% 2.5% 7.2% 6.8%
Tier 1 Leverage Ratio 6.62% 7.50% 8.28% 8.79% 9.30%
Common Capital Ratio (CET1) 9.48% 11.24% 12.42% 13.18% 13.95%
Tier 1 Capital Ratio 9.48% 11.24% 12.42% 13.18% 13.95%
Total Capital Ratio 10.74% 12.49% 13.67% 14.43% 15.20%
THE EVOLUTION OF ALCOPost Crisis
Subprime Mortgage Crisis 2007-2009
Capital Adequacy Assessment
Liquidity Assessment
Liquidity Stress Testing
Contingency Funding Plans
Capital Plan
4343
GAP Analysis Dropped
Earning At Risk
Bank Specific Loan &Deposit Assumptions
Stress Test Loan &Deposit Assumptions
Surge Balances
Credit Deterioration fromRising Interest Rates
Current & Future
Year 1 Net Interest Income, 6% in +400 bps
STRESSED Year 1 Net Interest Income, -6%
-30%
-20%
-10%
0%
10%
20%
30%
-400 -300 -200 -100 BASE +100 +200 +300 +400
Earnings at RiskBASE & STRESSED
THE EVOLUTION OF ALCO
4444
Loan Sector 2009Y 2010Y 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y
Construction & Land 0.00% 0.00% 0.08% 0.15% 4.59% 4.48% 0.00% 0.00% 0.00% 0.27%
Farm Land 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -1.79%
Agriculture Production 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1-4 Family Closed-end 1st 0.01% 0.25% 0.10% 0.19% 0.02% 0.01% 0.09% 0.00% 0.01% 0.05%
1-4 Family Closed-end 2nd 0.00% 0.00% 0.00% 4.71% 0.00% 0.00% 0.00% 0.00% 0.00% -0.05%
1-4 Family Revolving HE-Line 0.84% 0.00% 0.18% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Multifamily 0.00% 0.00% 0.00% 0.41% -0.03% 0.00% 0.00% 0.00% 0.00% 0.00%
CRE Owner Occupied 0.00% 0.71% 1.39% 0.00% -0.02% 0.04% 0.00% 0.00% 0.06% -0.03%
CRE Non-owner Occupied 0.00% 0.00% 0.00% 0.00% 3.66% 0.00% 0.00% 0.00% 0.00% 0.00%
Commercial & Industrial 0.00% -0.32% 0.06% -0.03% 0.47% 0.06% 0.16% -0.09% -0.07% -0.06%
Consumer 0.41% 0.46% 0.37% -0.59% -0.13% 0.27% 1.16% -0.11% 0.41% 0.95%
Leases 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Loans -1.69% 0.00% 0.00% 2.99% 2.94% 1.30% 0.00% 0.68% 0.00% 0.00%
Total Loans 0.03% 0.27% 0.41% 0.11% 0.94% 0.65% 0.07% 0.00% 0.02% 0.07%
Loss Rate as a % of Loan Category
Current
2016Q1 Mild Recession Major Recession2016Q1 Non-Current Loans/Loans
1.25
Allowance for Loan Loss 10,000 11,250 33,750
Additional Reserves 1,250 23,750 4.8 X vs. last financial crisis
Real Estate Owned 1,000
Non-Current Loans 5,000 15,000 45,000 3.3 X vs. last financial crisis
8
10,000 9,188 (5,438)
Common Equity Tier 1 (CET1) 50,000 59,188 44,563
Tier 1 Capital 50,000 59,188 44,563
Total Risk Based Capital 55,000 64,188 49,563
Average Adjusted Assets 500,000 498,750 476,250
Risk Weighted Assets 400,000 398,750 376,250
Non-Current Loans / Total RB Capital 9% 23% 91% 2.6 X vs. last financial crisis
Common Equity Tier 1 12.50% 14.84% 11.84%
Tier 1 Leverage 10.00% 11.87% 9.36%
Tier 1 Risk-Based Capital 12.50% 14.84% 11.84%
Total Risk-Based Capital 13.75% 16.10% 13.17%Sub Chapter-S Status No
0% /YR increase in NCLs
75%ALLL/NCL Coverage
Ratio + Custom NCL
0% /YR increase in NCLs
75%ALLL/NCL Coverage
Ratio + Custom NCL
RE
GU
LA
TO
RY
RA
TIO
SA
SS
ET
S
Quarters of Retained Earnings
Net of Additional Reserves
AS
SE
T Q
UA
LIT
YIN
CO
ME
CA
PIT
AL
Current
2016Q1 Mild Recession Major Recession2016Q1 Non-Current Loans/Loans
1.25
Allowance for Loan Loss 10,000 11,250 33,750
Additional Reserves 1,250 23,750 4.8 X vs. last financial crisis
Real Estate Owned 1,000
Non-Current Loans 5,000 15,000 45,000 3.3 X vs. last financial crisis
8
10,000 9,188 (5,438)
Common Equity Tier 1 (CET1) 50,000 59,188 44,563
Tier 1 Capital 50,000 59,188 44,563
Total Risk Based Capital 55,000 64,188 49,563
Average Adjusted Assets 500,000 498,750 476,250
Risk Weighted Assets 400,000 398,750 376,250
Non-Current Loans / Total RB Capital 9% 23% 91% 2.6 X vs. last financial crisis
Common Equity Tier 1 12.50% 14.84% 11.84%
Tier 1 Leverage 10.00% 11.87% 9.36%
Tier 1 Risk-Based Capital 12.50% 14.84% 11.84%
Total Risk-Based Capital 13.75% 16.10% 13.17%Sub Chapter-S Status No
0% /YR increase in NCLs
75%ALLL/NCL Coverage
Ratio + Custom NCL
0% /YR increase in NCLs
75%ALLL/NCL Coverage
Ratio + Custom NCL
RE
GU
LA
TO
RY
RA
TIO
SA
SS
ET
S
Quarters of Retained Earnings
Net of Additional Reserves
AS
SE
T Q
UA
LIT
YIN
CO
ME
CA
PIT
AL
Current
2016Q1 Mild Recession Major Recession2016Q1 Non-Current Loans/Loans
1.25
Allowance for Loan Loss 10,000 11,250 33,750
Additional Reserves 1,250 23,750 4.8 X vs. last financial crisis
Real Estate Owned 1,000
Non-Current Loans 5,000 15,000 45,000 3.3 X vs. last financial crisis
8
10,000 9,188 (5,438)
Common Equity Tier 1 (CET1) 50,000 59,188 44,563
Tier 1 Capital 50,000 59,188 44,563
Total Risk Based Capital 55,000 64,188 49,563
Average Adjusted Assets 500,000 498,750 476,250
Risk Weighted Assets 400,000 398,750 376,250
Non-Current Loans / Total RB Capital 9% 23% 91% 2.6 X vs. last financial crisis
Common Equity Tier 1 12.50% 14.84% 11.84%
Tier 1 Leverage 10.00% 11.87% 9.36%
Tier 1 Risk-Based Capital 12.50% 14.84% 11.84%
Total Risk-Based Capital 13.75% 16.10% 13.17%Sub Chapter-S Status No
0% /YR increase in NCLs
75%ALLL/NCL Coverage
Ratio + Custom NCL
0% /YR increase in NCLs
75%ALLL/NCL Coverage
Ratio + Custom NCL
RE
GU
LA
TO
RY
RA
TIO
SA
SS
ET
SQuarters of Retained Earnings
Net of Additional Reserves
AS
SE
T Q
UA
LIT
YIN
CO
ME
CA
PIT
AL
Compare deterioration to a historically stressful period
Measure impact on retained earnings &
capital
QuantifyCapital
Adequacy
THE EVOLUTION OF ALCOCurrent & Future
Capital Adequacy Assessment
Asset Quality Trends
Capital Stress Testing
Capital Plan
4545
Rate Sensitive Assets ToRate Sensitive Liabilities
(GAP Analysis)
Earning At Risk
Rate Sensitive Assets ToRate Sensitive Liabilities
(GAP Analysis)
Earning At Risk
Interest Income StressTesting Economic Value
Of Equity
Less Focus On GAP Analysis
Earning At Risk
Interest Income StressTesting Economic Value
Of Equity
Industry Default Loan &Deposit Assumptions
Less Focus On GAP Analysis
Earning At Risk
Interest Income StressTesting Economic Value
Of Equity
Bank Specific Loan &Deposit Assumptions
GAP Analysis Dropped
Earning At Risk
Interest Income StressTesting Economic Value
Of Equity
Bank Specific Loan &Deposit Assumptions
Bank Specific Loan &Deposit Assumptions
Credit Deterioration fromRising Interest Rates
Rate Sensitive Assets ToRate Sensitive Liabilities
(GAP Analysis)
1st IRR Model Created 1977
1970’s 1980’s
1st CMO Created 1983
1990’sS&L Banking Crisis 1986-
1995
Pre CrisisDot-Com Bubble & Collapse
1997-2000
Post CrisisSubprime Mortgage Crisis
2007-2009
Current & Future
45
Capital Adequacy Assessment Capital Adequacy Assessment Capital Adequacy Assessment
Asset Quality Trends
Capital Stress Testing
Capital Plan
Investments Investments Investments Investments Investments
Market Value Shocks Market Value Shocks Market Value Shocks Market Value Shocks
Cash Flow Shocks Cash Flow Shocks Cash Flow Shocks
Independent Municipal Credit Analysis
Independent Municipal Credit Analysis
Liquidity Assessment Liquidity Assessment Liquidity Assessment Liquidity Assessment
Liquidity Stress Testing Liquidity Stress Testing Liquidity Stress Testing
Contingency Funding Plans Contingency Funding Plans
Interest Rate Risk
Investments
Liquidity
Capital
4646
A. Regulatory Appeasement
B. Profit Improvement
C. Setting Deposit Rates
D. Meet Audit Requirements
0
WHAT IS THE PRIMARY OBJECTIVE OF YOUR ALCO MEETING?
4747
From a Best Practice Standpoint the main focus should be to
drive profitability, the secondary focus should be satisfying
auditors and regulators.
B. Profit ImprovementA. Regulatory Appeasement
C. Setting Deposit Rates D. Meet Audit Requirements
47
ANSWER:
4848
WHAT ARE COMMON
APPROACHES
TO THE ALCO PROCESS?
48
4949
APPROACHES TO ALCO
505050
Fed Chairman
2018-Current
Jerome Powell
Fed Chairman
2014-2018
Janet Yellen
Fed Chairman
2006-2014
Ben Bernanke
Fed Chairman
1987-2006
Alan
Greenspan
Fed Chairman
1979-1987
Paul Volcker
Father of
Economics
Adam Smith
1976 Nobel Prize
Lecture on Inflation
and Unemployment
Milton
Friedman
Popularized
Laffer Curve
Arthur Laffer
Keynesian
economics
John M.
Keynes
Rules of
Production and
Exchange
Karl Marx
ECONOMISTS VS. FED RESERVE
5151
APPROACHES TO ALCO
Economist
Approach
5252
APPROACHES TO ALCO
5353
Loan Committee
Board Meeting
ProspectingDeposit Pricing
Meeting
ALCO
Proposals
Water Cooler
Phone
Customer Match Requests
Customer Match Requests
Water Cooler
5454
APPROACHES TO ALCO
Pricing
Approach
5555
APPROACHES TO ALCO
56
…Page 2 of 1466
5757
1 Ream = 500 Sheets 1500 Sheets = 3 Reams
57
HOW MUCH PAPER IS 1466 PAGES?
5858
APPROACHES TO ALCO
Interest Rate Risk
Approach
5959
APPROACHES TO ALCO
Broker
Approach
606060
6161
WHICH AREA IN YOUR ALCO MEETINGS DO YOU OVERWEIGHT?
A. Economy
B. Product Pricing
C. Interest Rate Risk
D. Investments
0
6262
WHAT SHOULD AN ALCO
PROCESS AND PACKET LOOK
LIKE?
62
636363
Position Assessment
6464
BREAK
6565
WHAT SHOULD AN ALCO
PROCESS AND PACKET LOOK
LIKE?
65
666666
Position Assessment
6767
Capital Liquidity
Interest Rate Sensitivity
Investments
ALCO BEST PRACTICES
6868
Asset Liability Management
Balance Sheet Management
68
WHAT’S THE DIFFERENCE?
Interest Rate Risk Management
6969
Loans
Deposits
Investments
Capital
Liquidity
Funding
Strategies
OBJECTIVES AND STRATEGIES
7070
A. Above AverageB. AverageC. Below Average
0
HOW WOULD YOU RATE YOUR ALCO PROCESS WHEN IT
COMES TO DRIVING PROFITABILITY AND STRATEGIES?
7171
Balance Sheet MixCashInvestmentsLoans
Loan Mix1-4 FamilyCommercialConsumerFixedFloatLoan Marketplace
Liquidity PositionFHLB Borrowing CapacityCore Deposit StabilityPledging Requirements
Tax PositionNet Operating LossAMT
Interest Rate Risk PositionAsset/Liability Sensitivity
Bank 1
10%30%60%
80%10%10%90%10%Flat
HighStableHigh
YesNo
Liability
Bank 2
5%50%45%
20%40%40%20%80%Flat
ModerateStableNone
NoNo
Asset
Bank 3
0%20%80%
35%45%20%50%50%
Strong Growth
NoneVolatileNone
NoYes
Neutral71
HOW ARE BANKS DIFFERENT?
7272
Source: S&P Global Market Intelligence, Data for all banks Nationally <$15B as of 12/31/19
72
2.92
3.86
4.64
2.50
2.75
3.00
3.25
3.50
3.75
4.00
4.25
4.50
4.75
5.00
Net Interest Margin
10th Percentile Median
90th Percentile
0.71
0.87
0.95
0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
NII Dependency
10th Percentile Median
90th Percentile
The more net interest income dependent your institution, the more NIM will drive earnings
NII DEPENDENCY AND NIM AMONG ALL BANKS NATIONALLY
7373
Earning Asset
Size
Net Interest Income Change in thousands of dollars
(due to Yield change in basis points)
(in $000) 5 10 15 20 25 30
50,000 25 50 75 100 125 150
100,000 50 100 150 200 250 300
250,000 125 250 375 500 625 750
500,000 250 500 750 1,000 1,250 1,500
750,000 375 750 1,125 1,500 1,875 2,250
1,000,000 500 1,000 1,500 2,000 2,500 3,000
ONE YEAR NIM DOLLAR IMPACT
7474
74
▪ Study the Past
▪ Monitor the Present
▪ Prepare for the Future
ALCO BEST PRACTICES
7575
75
▪ Where were we?‒ Trend Analysis
‒ Historical Ratios
‒ Peer Comparison
‒ Balance Sheet Mix
‒ Rate Movements
‒ Spread Changes
▪ Reflect‒ What did we do right?
‒ What did we do wrong?
‒ Were our strategies effective?
‒ How did environment change?
STUDY THE PAST
7676
76
▪ Where are we?‒ Position Assessment
‒ Net Interest Margin Dissection
‒ Competition Analysis
‒ Word-Problem Approach
‒ Re-focus on Objectives
▪ Reflect‒ Loan Demand vs. Deposit Growth
‒ Rate Climate
‒ Current Profitability (or not!)
‒ Resources: Loan/Deposit Officers
MONITOR THE PRESENT
7777
77
▪ Where could we go?‒ Accountability
‒ Review Minutes: Action Items, Strategies
‒ Tactical Forecasting‒ Loans vs. Deposit Projection
‒ Liquidity Flows
‒ Stress Testing‒ Capital: Credit Deterioration
‒ Interest Rate Risk: Higher/Different Betas
‒ Liquidity: Reduced Access to Funding
‒ Securities: Cash Flow Volatility, Duration
‒ Strategic Forecasting
PREPARE FOR THE FUTURE
7878
Capital Liquidity
Interest Rate Sensitivity
Investments
• Formation• Adequacy• Planning• Stress Testing• Contingency Plan
BALANCE SHEET MANAGEMENT - CAPITAL
7979
Loan Sector 2007Y 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019YConstruction & Land 129% 107% 106% 85% 54% 67% 94% 84% 84% 122% 133% 205% 200%
Mortgages
1st Lien 255% 328% 364% 334% 313% 337% 333% 327% 314% 286% 284% 260% 224%
2nd Lien 24% 27% 56% 29% 29% 29% 29% 34% 36% 27% 26% 23% 24%
Home Equity 34% 43% 9% 37% 39% 43% 42% 48% 48% 46% 53% 49% 45%
Multifamily 32% 45% 53% 58% 56% 62% 58% 36% 30% 38% 48% 50% 65%
Commercial Real Estate
Owner Occupied 0% 139% 153% 124% 129% 113% 110% 121% 115% 110% 112% 111% 108%
Non-owner Occupied 288% 195% 152% 119% 84% 88% 70% 74% 48% 44% 46% 80% 84%
Commercial & Industrial 83% 80% 93% 72% 71% 78% 69% 56% 60% 57% 57% 84% 80%
Farm Land 13% 12% 14% 16% 17% 14% 14% 14% 13% 10% 21% 21% 20%
Agriculture Production 1% 1% 1% 1% 0% 0% 1% 0% 1% 0% 1% 1% 2%
Consumer 44% 38% 36% 29% 27% 27% 23% 23% 23% 21% 19% 17% 12%
Total Loans 903% 1016% 1037% 903% 820% 859% 844% 817% 772% 762% 798% 901% 864%
Loan Concentration Expressed as a % of Capital
79
STUDY THE PAST
8080
Loan Sector 2007Y 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019YConstruction & Land 0.00% 0.00% 0.00% 0.01% 0.11% 0.00% 0.00% 0.19% 0.60% -0.02% 0.00% 0.00% 0.00%
Mortgages
1st Lien 0.00% -0.01% 0.05% 0.16% 0.21% 0.04% 0.15% 0.05% 0.18% 0.26% 0.14% 0.13% -0.02%
2nd Lien 0.00% 0.34% 0.25% 2.57% 1.80% -0.59% 0.53% 0.00% 2.95% 0.29% 2.31% -1.57% 0.00%
Home Equity 0.00% 0.00% 0.00% 1.42% 0.37% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.79%
Multifamily 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Commercial Real Estate
Owner Occupied 0.00% 0.00% -0.04% 0.12% 0.20% 0.01% 0.00% 0.53% 0.00% 0.30% 0.00% 0.00% 0.22%
Non-owner Occupied 0.00% 0.33% 0.09% 0.76% 0.17% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Commercial & Industrial 0.29% 0.73% 0.52% 1.37% 0.07% 0.13% 6.93% -0.04% 0.04% 0.37% 1.60% 0.10% 0.45%
Farm Land 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Agriculture Production 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Consumer 1.53% 1.32% 0.98% 0.89% 0.81% 0.54% 3.10% 0.36% 0.73% -0.05% 1.23% 0.16% -0.27%
Total Loans 0.18% 0.22% 0.11% 0.46% 0.24% 0.02% 0.75% 0.12% 0.29% 0.18% 0.28% 0.01% 0.10%
Loss Rate Expressed as a % of Loan Category
80
STUDY THE PAST
8181
TAYLOR ADVISORS EBRIEF – OCTOBER 2016
8282
0
2
4
6
8
10
12
14
16
-3.50
-3.00
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
Charge Off Rate on Loans Recession
NATIONAL CHARGE-OFF RATES: 1985-PRESENT
Source: FDIC, NCUA, FOMC
8383
0
2
4
6
8
10
12
14
16
-3.50
-3.00
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
Charge Off Rate on Loans Recession Federal Funds Target Rate 2 per. Mov. Avg. (Charge Off Rate on Loans)
Source: FDIC, NCUA, FOMC
FED’S REACTION TO CHARGE-OFF RATES:
1985-PRESENT
8484
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
Max Min Median
Source: 12/31/19 Call Report data from all Banks Under $15 Billion in Assets.
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
High 13.85 16.45 20.90 693.37
Median 12.70 15.06 18.25 26.90
Low 2.99 13.85 16.45 20.90
MONITOR THE PRESENT RISK BASED CAPITAL RATIO
8585
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier-1 Leverage Ratio (%) 26.21
MBS (% of Portfolio) 100,878 39% Total Risk-Based Capital Ratio (%) 69.97
CMO (% of Portfolio) 0 0% NPA/Total RBC (%) 0.20
Agencies (% of Portfolio) 156,073 61% ALL/Total RBC (%) 0.44
Other Securities (% of Portfolio) 0 0% NCO/Total RBC (%) 0.00
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
MONITOR THE PRESENT SNAPSHOT – SAMPLE INSTITUTION
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier-1 Leverage Ratio (%) 26.21
MBS (% of Portfolio) 100,878 39% Total Risk-Based Capital Ratio (%) 69.97
CMO (% of Portfolio) 0 0% NPA/Total RBC (%) 0.20
Agencies (% of Portfolio) 156,073 61% ALL/Total RBC (%) 0.44
Other Securities (% of Portfolio) 0 0% NCO/Total RBC (%) 0.00
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank AverageStrategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier-1 Leverage Ratio (%) 26.21
MBS (% of Portfolio) 100,878 39% Total Risk-Based Capital Ratio (%) 69.97
CMO (% of Portfolio) 0 0% NPA/Total RBC (%) 0.20
Agencies (% of Portfolio) 156,073 61% ALL/Total RBC (%) 0.44
Other Securities (% of Portfolio) 0 0% NCO/Total RBC (%) 0.00
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
8686
▪ How would your institution react if…‒ Loan concentrations in high risk sectors exceed guidelines
‒ Asset quality deteriorates to historically stressful levels
‒ Charge-offs increase
‒ Dividends become restricted
‒ Retained earnings fall (or become negative!)
‒ Capital levels decline, leading to regulatory criticism
86
▪ What tools do you have at your institution?‒ Quantify and discuss capital adequacy
‒ Growth Stress Testing
‒ Credit Stress Testing
‒ Comparison versus a historically stressful period (and higher)
‒ Measuring the impact of credit loss on capital
‒ Scenario Analysis – mild and major recession
PREPARE FOR THE FUTURE CAPITAL STRESS TEST
8787
87
8888
LENDER RISK ACCOUNTSRisk Management / Unintended Consequences to Regulatory Capital
8989
MORTGAGE PROGRAM PARTICIPATION (MPF & MPP)
9090
1. Allows your institution to manage risk and capital while enhancing non-interest income
2. FHLB holds liquidity, interest rate, and prepayment risk for all loans purchased from member institutions
3. Provides Multiple Sources of non-interest income
• Gain on sale on a flow basis• Option to retain servicing for recurring income• Lender Risk Account (LRA) provides opportunity for additional
income based on performance of sold loans over time
4. Terms generally more advantageous than Fannie Mae or Freddie Mac
5. Satisfy customer demands for products that may not fit your interest rate risk profile
MORTGAGE PURCHASE PROGRAM (MPF & MPP) BENEFITS:
9191
0.689
0.693
0.546
HIGH PERFORMING MPP INSTITUTIONS
Source: FFIEC UBPR
9292
Some examiners have required banks to risk-weight
the LRA at 1,250%
LESS meaningful for banks with small commercial & consumer loan portfolios.
Typically have higher risk-based capital ratios
MORE meaningful for banks with large commercial & consumer loan portfolios.
Typically have lower risk-based capital ratios
Source: S&P Global Market Intelligence
RISK-BASED CAPITAL IMPLICATIONS
9393
Capital Liquidity
Interest Rate Sensitivity
Investments
• On Balance Sheet• Off Balance Sheet• Stressed Liquidity• Contingency Funding• Profit Center
BALANCE SHEET MANAGEMENT - LIQUIDITY
9494
2016Y 2017Y 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Loans to Deposits 55.4 55.9 57.7 60.1 58.9 60.2 63.0
Liquidity Ratio 41.1 42.0 40.7 40.4 39.3 38.9 36.6
Liquid Assets to Total Assets 36.6 37.4 36.3 36.0 35.0 34.3 32.3
Pledged Securities to Securities 25.8 23.2 25.7 23.6 28.6 28.4 32.1
Core Deposits to Total Deposits 99.2 98.7 98.1 98.2 98.9 98.9 98.8
Non-maturity Deposits to Total Deposits 88.9 89.7 89.7 90.5 91.1 91.2 91.7
Volatile Liabilities to Total Assets 1.4 1.7 2.5 2.4 1.9 1.8 2.0
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2016Y 2017Y 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Hu
nd
red
s
Liquidity Ratio Liquid Assets to Total Assets
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2016Y 2017Y 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3H
un
dre
ds
Loans to Deposits
Non-maturity Deposits to Total Deposits
STUDY THE PAST
9595
95
▪ On Balance Sheet Liquidity
‒ Cash & Fed Funds Sold
‒ Unencumbered Securities
‒ Pledging Needs
▪ Off Balance Sheet Liquidity
‒ FHLB Borrowings
‒ Brokered Deposits
‒ National Market CDs
▪ Total Liquidity
‒ Operational
‒ Strategic
‒ Contingency
How does your institution monitor its liquidity position?
MONITOR THE PRESENT
9696
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
Min Max Median
4.50%
4.25%
5.00%
4.75%
Average Earning Asset Yield 5.02 4.92 4.60 4.14
Source: 12/31/19 Call Report data from all Banks Under $15 Billion in Assets.
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
High 14.55 21.53 33.00 488.09
Median 11.16 17.93 26.14 45.29
Low 0.00 14.56 21.53 33.00
MONITOR THE PRESENT LIQUIDITY RATIO DISTRIBUTION
4.00%
9797
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
MONITOR THE PRESENT SNAPSHOT – SAMPLE INSTITUTION
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
9898
98
▪ How would your institution react if…‒ FHLB Capacity was significantly reduced
‒ Brokered CD lines were shut off
‒ Deposit run-off exceeded historical norms
‒ The institution became subject to deposit rate caps
▪ What tools do you have at your institution?‒ Quantify and monitor liquidity position
‒ Contingency Funding Plan: How would you cure a
shortfall?
‒ Early Warning Indicators
‒ Prevent liquidity crisis before being subject to
restrictions
PREPARE FOR THE FUTURE LIQUIDITY STRESS TEST
9999
Marginal Cost of Funds / FHLB Supplementing Retail Deposits
FUNDING THE BALANCE SHEET
100100
LIABILITY MIX TREND ANALYSIS
Source: S&P Global Market Intelligence
101101
New MMDA Tier
Balance Rate
Tier 1 $0-$1,000 No Rate
Tier 2 $1,001 -$249,999
2.25%
Tier 3 $250,000 + 0.75%
Created New Money Market Product to Grow Deposits
Source: S&P Global Market Intelligence
102102
LIABILITY MIX TREND ANALYSIS
Source: S&P Global Market Intelligence
103103
.61 .60
.74
.68
.98
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
2018Q2 2018Q3 2018Q4 2019Q1 2019Q2
Cost of Funds with Conversion
SAMPLE BANK COF BY QUARTER
Source: S&P Global Market Intelligence
104104
MARGINAL COST OF FUNDS RESULTS
105105
106106
.61 .60
.74
.68
.98
.83
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
2018Q2 2018Q3 2018Q4 2019Q1 2019Q2
Cost of Funds with Conversion Cost of Funds w FHLB
SAMPLE BANK COF BY QUARTERCost of Total Liabilities 0.83
Ranking 3
Cost of Int Bearing Dep 0.862
Cost of Non Jumbo 1.02
Retail CDs/Liabilities 6%
Brokered CDs/Liabilities 0%
Internet CDs/Liabilities 0%
Cost of Jumbo CDs NA
Jumbo CDs/Liabilities 0%
Cost of Svgs Deps [Incl MMDAs] 0.17
Savings/Liabilities 18%
MMDAs/Liabilities 10%
Cost of NOW 1.21
NOW/Liabilities 54%
Cost of DDAs NA
DDAs/Liabilities 8%
Cost of Borrowings 2.33
Fed Funds & Repos/Liabilities 2%
Other Borrowed Funds/Liabilities 0%
Total Liabilities 100%
Wholesale Funding Balances
FHLB Borrowings 3,000
Brokered Deposits -
Internet Deposits -
Reciprocal Deposits -
Repurchase Agreements -
Source: S&P Global Market Intelligence ✓
107107
FHLB Advances (overnight, term, or putable) can:
• Eliminate conversion risk – FHLB Advances are 100% new money
• Accommodates seasonal funding fluctuations with flexible terms
• Provides just in-time stable liquidity while deposit strategies are evaluated
KEY TAKEAWAYS
108108
FHLB Letter of Credit / Unpledge the Investment Portfolio
Improving The Liquidity Ratio
109109
2018Q3 2018Q4 2019Q1 2019Q2
Loans to Deposits 93.2 93.7 91.6 91.6
Liquidity Ratio 15.9 16.0 18.2 18.8
Liquid Assets to Total Assets 13.8 13.8 15.8 16.3
Pledged Securities to Securities 56.7 51.6 55.3 51.1
KEY LIQUIDITY RATIOS
Source: S&P Global Market Intelligence
0%
5%
10%
15%
20%
25%
30%
2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Hu
nd
red
s
Liquidity Ratio Liquid Assets to Total Assets
110110
111111
✓
OPTIONS FOR COLLATERALIZING PUBLIC FUNDS
112112
0%
5%
10%
15%
20%
25%
30%
2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Hu
nd
red
s
Liquidity Ratio Liquid Assets to Total Assets
2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Loans to Deposits 93.2 93.7 91.6 91.6 92.8
Liquidity Ratio 15.9 16.0 18.2 18.8 24.1
Liquid Assets to Total Assets 13.8 13.8 15.8 16.3 21.6
Pledged Securities to Securities 56.7 51.6 55.3 51.1 15.4
KEY LIQUIDITY RATIOS
Source: S&P Global Market Intelligence
2018Q3 2018Q4 2019Q1 2019Q2
Loans to Deposits 93.2 93.7 91.6 91.6
Liquidity Ratio 15.9 16.0 18.2 18.8
Liquid Assets to Total Assets 13.8 13.8 15.8 16.3
Pledged Securities to Securities 56.7 51.6 55.3 51.1
0%
5%
10%
15%
20%
25%
30%
2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Hu
nd
red
s
Liquidity Ratio Liquid Assets to Total Assets
113113
• Free Up the Bank’s Investment Portfolio
• Improve On-Balance Sheet Liquidity
• Sell low yielding investments and make more real estate loans
• Earning Asset Yield improvement can exceed 200bps in most cases!
FHLB LETTER OF CREDIT BENEFITS
114114
Capital Liquidity
Interest Rate Sensitivity
Investments
• Static/Dynamic Modeling• Non-Parallel Shock/Ramp• Impact on Asset Quality• Assumption Development• Assumption Stress Testing• What-If Simulations
BALANCE SHEET MANAGEMENT – INTEREST RATE RISK
115115
115
Policy
Guideline
Current Results
4Q2018
W/in Guideline
(Y/N) 3Q2018 2Q2018 1Q2018
Interest Rate Risk
Net Interest Income at Risk (1 Yr): NII Max. Change
Shocked up 400 bpts -25% 5.24% Y 6.60% 3.95% 5.90%
Shocked up 300 bpts -20% 4.72% Y 5.60% 3.75% 5.23%
Shocked up 200 bpts -12% 3.71% Y 4.51% 3.04% 4.02%
Shocked up 100 bpts -6% 2.09% Y 2.83% 1.72% 2.16%
Shocked down 100 bpts -6% -2.92% Y -4.12% -2.71% -2.93%
Shocked down 200 bpts -12% -7.69% Y -10.68% -7.87% -8.52%
Shocked down 300 bpts -20% -11.10% Y -15.57% -11.34% -12.14%
Shocked down 400 bpts -25% -13.07% Y -17.69% -13.34% -14.07%
Net Interest Income at Risk (2 Yr): NII Max. Change
Shocked up 400 bpts -30% 13.85% Y 11.73% 13.09% 15.62%
Shocked up 300 bpts -25% 12.19% Y 10.23% 11.69% 13.56%
Shocked up 200 bpts -20% 9.16% Y 8.33% 8.95% 10.15%
Shocked up 100 bpts -10% 4.92% Y 5.26% 4.89% 5.41%
Shocked down 100 bpts -10% -6.23% Y -7.94% -6.68% -6.25%
Shocked down 200 bpts -20% -14.72% Y -19.86% -17.38% -17.68%
Shocked down 300 bpts -25% -21.15% Y -30.25% -25.72% -26.15%
Shocked down 400 bpts -30% -25.26% Y -34.14% -29.56% -29.94%
Economic Value of Equity: EVE Max. Change
Shocked up 400 bpts -35% 3.58% Y 0.71% 6.37% 8.95%
Shocked up 300 bpts -30% 4.94% Y 2.67% 7.19% 9.23%
Shocked up 200 bpts -20% 4.36% Y 3.52% 6.40% 7.87%
Shocked up 100 bpts -10% 2.71% Y 3.06% 3.99% 4.73%
Shocked down 100 bpts -10% -3.61% Y -5.29% -5.00% -5.91%
Shocked down 200 bpts -20% -9.03% Y -12.71% -11.71% -13.53%
Shocked down 300 bpts -30% -15.35% Y -20.42% -20.32% -22.65%
Shocked down 400 bpts -35% -17.25% Y -23.15% -21.83% -23.99%
STUDY THE PAST
116116
.26 .26.29
.34.40 .42
.46
.56
.65
.76
.83.89
.83
.69
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4
Kentucky Commercial Banks Indiana Commercial Banks Michigan Commercial Banks
Pennsylvania Commercial Banks West Virginia Commercial Banks Ohio Commercial Banks
STUDY THE PAST PEER COF TREND ANALYSIS
117117
0.001.002.003.004.005.006.007.00
20
19
Q2
20
18
Q3
20
17
Q4
20
17
Q1
20
16
Q2
20
15
Q3
20
14
Q4
20
14
Q1
20
13
Q2
20
12
Q3
20
11
Q4
20
11
Q1
20
10
Q2
20
09
Q3
20
08
Q4
20
08
Q1
20
07
Q2
20
06
Q3
20
05
Q4
20
05
Q1
20
04
Q2
20
03
Q3
20
02
Q4
20
02
Q1
20
01
Q2
20
00
Q3
19
99
Q4
19
99
Q1
19
98
Q2
19
97
Q3
19
96
Q4
19
96
Q1
19
95
Q2
19
94
Q3
19
93
Q4
Fed Funds Target Rate (%)
Source: S&P Global Market Intelligence
CORRELATION BETWEEN FED RATE
INCREASES AND DEPOSIT BETAS
118118
01234567
Fed Funds Target Rate (%)
Source: S&P Global Market Intelligence
CORRELATION BETWEEN FED RATE
DECREASES AND DEPOSIT BETAS
119119
PREPARE FOR THE FUTURE
120120
DEVELOPING BANK SPECIFIC ASSUMPTIONS: LOAN FLOORS
121121
Original Default Assumptions
Assumptions with Loan Floors
DEVELOPING BANK SPECIFIC ASSUMPTIONS: LOAN FLOORS
122122
Implementing loan floor assumptions improves the accuracy
of the model, showing less exposure to declining net interest income in rates down scenarios.
DEVELOPING BANK SPECIFIC ASSUMPTIONS: LOAN FLOORS
123123
123
Source: Stifel Analytics Interest Rate Risk Model
PREPARE FOR THE FUTURE INTEREST RATE RISK STRESS TEST
124124
124
0.00
0.50
1.00
1.50
2.00
2.50
3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 30 Yr
Current Yield Curve New Curve
0.00
0.50
1.00
1.50
2.00
2.50
3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 30 Yr
Current Yield Curve New Curve
New Curve represents lows from 2010-2013New Curve represents market expectations
Slight Steepening Aggressive Steepening
PREPARE FOR THE FUTURE NONPARALLEL SHIFTS
125125
FHLB Putable Advance / Risk/Reward Trade-Off
Getting Paid for Interest Rate Risk
126126
.91.96
.99
1.06
1.20
1.41
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2
SAMPLE BANK COF BY QUARTER
Source: S&P Global Market Intelligence
127127
CD AND FHLB MATURITY/REPRICING
Short-term FHLB Advances:
$14MM @ 1.7%
Brokered Deposit Maturities:
$2.1MM 11/12/19 @ 2.3%
Source: S&P Global Market Intelligence
128128
Recommended client request
pricing on 10 year NP 1 year
129129
130130
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1 Yr or less 1-3yr 3 yrs +
FHLB Maturity/Repricing
9/30/2019 6/30/2019
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
3 Mos or less 3 Mos - 12Mos
1 Yr - 3 Yrs 3 Yrs+
CD Maturity/Repricing
9/30/2019 6/30/2019
CD AND FHLB MATURITY/REPRICING
Source: S&P Global Market Intelligence
131131
.91.96
.99
1.06
1.20
1.41
1.59 1.57
0.50
0.70
0.90
1.10
1.30
1.50
1.70
2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4
SAMPLE BANK COF BY QUARTER
Source: S&P Global Market Intelligence
132132
BREAK
133133
Capital Liquidity
Interest Rate Sensitivity
Investments
POSITION ASSESSMENT
134134
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
Max Min Median
Source: 12/31/19 Call Report data from all Banks Nationally <$15B
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
High 7.92 15.55 26.13 93.37
Median 3.56 11.65 20.17 35.32
Low 0.00 7.93 15.56 26.15
INVESTMENTS AS A PERCENT OF ASSETS DISTRIBUTION
135135
Low, or below peer portfolio yields
OR…
Identify and monitor “risks” in the investment portfolio
MAJOR INVESTMENT MANAGEMENT
CHALLENGES FACING BANKS
136136
ECONOMIC RISKS ASSOCIATED WITH FIXED
INCOME INVESTING
136
Interest Rate Risk
Credit Risk
Yesterday
Today
Call Risk
Prepayment Risk
Reinvestment Risk
137137
Call Option
PrepaymentRisk
Reinvestment Risk
Call Risk
137
OPTIONALITY RISK
138138
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
200,000,000
Agencies MBSs CMOs Munis Other
Total 69,674,070 182,001,523 81,324,316 122,419,203 46,049,064
Total Securities ($000s)
138
TOTAL SECURITY ALLOCATIONS
Source: S&P Global Market Intelligence, Data for all banks Nationally <$15B as of 12/31/19
139139
1.5
1.7
1.9
2.1
2.3
2.5
2.7
2.9
3.1
3.3
3.5
10th Percentile Median 90th Percentile
2.01
2.57
3.39
2.19
2.64
3.24
<$1B $1B - $15B
139
Source: S&P Global Market Intelligence.
INVESTMENT YIELD STATISTICS – GRAPHICAL
PERSPECTIVE
140140
WHAT IS YOUR INSTITUTION’S
PORTFOLIO YIELD?
INVESTMENT MIX?
140
141141
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
142142
A. Liquidity
B. Interest Rate Risk management
C. Earnings
D. Pledging
0
WHAT IS THE PRIMARY OBJECTIVE OF YOUR INVESTMENT PORTFOLIO?
143143
Strategy
• Independent expert advice on portfolio
strategies with regular review
• Whole-Bank perspective approach to portfolio
positioning
Investment Mix
• Diversification among investment sectors,
risk/reward & relative value analysis
• Expanded range of bank-permissible investment
products
Security Selection
• Market knowledge and expertise helps optimal
security selection
• Monitor policy compliance with security purchases
Trade Execution
• Poor trade execution can impact investment returns
• Fiduciary vs. Broker
INVESTMENT MANAGEMENT BEST PRACTICES
144144
CASE STUDY 1: INVESTMENT MANAGEMENT FROM A WHOLE BANK PERSPECTIVE
145145
2016Y 2017Y 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Cash & due from depository institutions 42,294 35,891 48,156 50,769 50,256 42,290 52,621
Federal funds sold and Repos - - - - - - -
Total securities 132,247 148,929 134,529 133,149 139,459 141,948 127,889
Net loans and leases 184,506 194,879 204,013 220,428 218,439 215,602 232,788
Bank premises and fixed assets 7,843 8,067 8,280 8,696 9,122 9,316 9,356
Intangibles - - - - - - -
All other assets 16,900 13,527 13,097 10,651 10,934 10,119 9,746
Total assets 383,790 401,293 408,075 423,693 428,210 419,275 432,400
52,621 42,290 50,256 50,769 48,156 35,891 42,294
127,889 141,948 139,459 133,149 134,529 148,929 132,247
232,788 215,602 218,439 220,428 204,013 194,879 184,506
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
3Q192Q191Q194Q183Q182017Y2016Y
Repo + FFS + Cash & Due Total securities Net loans and leases
CASE STUDY 1: INVESTMENT MANAGEMENT FROM A WHOLE BANK PERSPECTIVE
146146
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric Sample Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.67 8%
Yield on Total Loans 5.83 5.45 75%
Earning Asset Yield 4.32 4.67 27%
Interest Expense to Avg. Earning Assets 0.07 0.87 0%
Net Interest Margin (FTE) 4.25 3.79 79%
Net Interest Income Dependency Ratio 0.77 0.83 23%
Metric Sample Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.43 22%
Yield on Total Loans 5.83 5.78 51%
Earning Asset Yield 4.32 4.64 31%
Interest Expense to Avg. Earning Assets 0.07 0.65 1%
Net Interest Margin (FTE) 4.25 3.97 61%
Net Interest Income Dependency Ratio 0.77 0.86 16%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 433,958 Pledged Securities (% of Portfolio) 35%
Net Loans ($000) 247,162 57% Liquidity Ratio 34%
Security Portfolio ($000) 117,890 27% FHLB Advances and Brokered CDs ($000) 0
Cash and FFS ($000) 53,471 12% Cost of Funds (% of Average Liabilities) 0.06%
Municipals (% of Portfolio) 61 0% Tier 1 Capital 51,881
MBS (% of Portfolio) 13,646 12% Tier-1 Leverage Ratio (%) 12.09
CMO (% of Portfolio) 7,221 6% Total Risk Based Capital 55,302
Agencies (% of Portfolio) 91,968 78% Total Risk-Based Capital Ratio (%) 18.24
Other Securities (% of Portfolio) 4,994 4% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Sample Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Sample Savings Bank (SSB)
Sample Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Sample Savings Bank UBPR Peer Group Avg. State Bank Average
SNAPSHOT – SAMPLE INSTITUTION
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric Sample Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.67 8%
Yield on Total Loans 5.83 5.45 75%
Earning Asset Yield 4.32 4.67 27%
Interest Expense to Avg. Earning Assets 0.07 0.87 0%
Net Interest Margin (FTE) 4.25 3.79 79%
Net Interest Income Dependency Ratio 0.77 0.83 23%
Metric Sample Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.43 22%
Yield on Total Loans 5.83 5.78 51%
Earning Asset Yield 4.32 4.64 31%
Interest Expense to Avg. Earning Assets 0.07 0.65 1%
Net Interest Margin (FTE) 4.25 3.97 61%
Net Interest Income Dependency Ratio 0.77 0.86 16%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 433,958 Pledged Securities (% of Portfolio) 35%
Net Loans ($000) 247,162 57% Liquidity Ratio 34%
Security Portfolio ($000) 117,890 27% FHLB Advances and Brokered CDs ($000) 0
Cash and FFS ($000) 53,471 12% Cost of Funds (% of Average Liabilities) 0.06%
Municipals (% of Portfolio) 61 0% Tier 1 Capital 51,881
MBS (% of Portfolio) 13,646 12% Tier-1 Leverage Ratio (%) 12.09
CMO (% of Portfolio) 7,221 6% Total Risk Based Capital 55,302
Agencies (% of Portfolio) 91,968 78% Total Risk-Based Capital Ratio (%) 18.24
Other Securities (% of Portfolio) 4,994 4% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Sample Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Sample Savings Bank (SSB)
Sample Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Sample Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric Sample Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.67 8%
Yield on Total Loans 5.83 5.45 75%
Earning Asset Yield 4.32 4.67 27%
Interest Expense to Avg. Earning Assets 0.07 0.87 0%
Net Interest Margin (FTE) 4.25 3.79 79%
Net Interest Income Dependency Ratio 0.77 0.83 23%
Metric Sample Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.43 22%
Yield on Total Loans 5.83 5.78 51%
Earning Asset Yield 4.32 4.64 31%
Interest Expense to Avg. Earning Assets 0.07 0.65 1%
Net Interest Margin (FTE) 4.25 3.97 61%
Net Interest Income Dependency Ratio 0.77 0.86 16%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 433,958 Pledged Securities (% of Portfolio) 35%
Net Loans ($000) 247,162 57% Liquidity Ratio 34%
Security Portfolio ($000) 117,890 27% FHLB Advances and Brokered CDs ($000) 0
Cash and FFS ($000) 53,471 12% Cost of Funds (% of Average Liabilities) 0.06%
Municipals (% of Portfolio) 61 0% Tier 1 Capital 51,881
MBS (% of Portfolio) 13,646 12% Tier-1 Leverage Ratio (%) 12.09
CMO (% of Portfolio) 7,221 6% Total Risk Based Capital 55,302
Agencies (% of Portfolio) 91,968 78% Total Risk-Based Capital Ratio (%) 18.24
Other Securities (% of Portfolio) 4,994 4% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Sample Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Sample Savings Bank (SSB)
Sample Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Sample Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric Sample Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.67 8%
Yield on Total Loans 5.83 5.45 75%
Earning Asset Yield 4.32 4.67 27%
Interest Expense to Avg. Earning Assets 0.07 0.87 0%
Net Interest Margin (FTE) 4.25 3.79 79%
Net Interest Income Dependency Ratio 0.77 0.83 23%
Metric Sample Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.43 22%
Yield on Total Loans 5.83 5.78 51%
Earning Asset Yield 4.32 4.64 31%
Interest Expense to Avg. Earning Assets 0.07 0.65 1%
Net Interest Margin (FTE) 4.25 3.97 61%
Net Interest Income Dependency Ratio 0.77 0.86 16%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 433,958 Pledged Securities (% of Portfolio) 35%
Net Loans ($000) 247,162 57% Liquidity Ratio 34%
Security Portfolio ($000) 117,890 27% FHLB Advances and Brokered CDs ($000) 0
Cash and FFS ($000) 53,471 12% Cost of Funds (% of Average Liabilities) 0.06%
Municipals (% of Portfolio) 61 0% Tier 1 Capital 51,881
MBS (% of Portfolio) 13,646 12% Tier-1 Leverage Ratio (%) 12.09
CMO (% of Portfolio) 7,221 6% Total Risk Based Capital 55,302
Agencies (% of Portfolio) 91,968 78% Total Risk-Based Capital Ratio (%) 18.24
Other Securities (% of Portfolio) 4,994 4% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Sample Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Sample Savings Bank (SSB)
Sample Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Sample Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric Sample Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.67 8%
Yield on Total Loans 5.83 5.45 75%
Earning Asset Yield 4.32 4.67 27%
Interest Expense to Avg. Earning Assets 0.07 0.87 0%
Net Interest Margin (FTE) 4.25 3.79 79%
Net Interest Income Dependency Ratio 0.77 0.83 23%
Metric Sample Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.43 22%
Yield on Total Loans 5.83 5.78 51%
Earning Asset Yield 4.32 4.64 31%
Interest Expense to Avg. Earning Assets 0.07 0.65 1%
Net Interest Margin (FTE) 4.25 3.97 61%
Net Interest Income Dependency Ratio 0.77 0.86 16%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 433,958 Pledged Securities (% of Portfolio) 35%
Net Loans ($000) 247,162 57% Liquidity Ratio 34%
Security Portfolio ($000) 117,890 27% FHLB Advances and Brokered CDs ($000) 0
Cash and FFS ($000) 53,471 12% Cost of Funds (% of Average Liabilities) 0.06%
Municipals (% of Portfolio) 61 0% Tier 1 Capital 51,881
MBS (% of Portfolio) 13,646 12% Tier-1 Leverage Ratio (%) 12.09
CMO (% of Portfolio) 7,221 6% Total Risk Based Capital 55,302
Agencies (% of Portfolio) 91,968 78% Total Risk-Based Capital Ratio (%) 18.24
Other Securities (% of Portfolio) 4,994 4% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Sample Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Sample Savings Bank (SSB)
Sample Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Sample Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric Sample Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.67 8%
Yield on Total Loans 5.83 5.45 75%
Earning Asset Yield 4.32 4.67 27%
Interest Expense to Avg. Earning Assets 0.07 0.87 0%
Net Interest Margin (FTE) 4.25 3.79 79%
Net Interest Income Dependency Ratio 0.77 0.83 23%
Metric Sample Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.43 22%
Yield on Total Loans 5.83 5.78 51%
Earning Asset Yield 4.32 4.64 31%
Interest Expense to Avg. Earning Assets 0.07 0.65 1%
Net Interest Margin (FTE) 4.25 3.97 61%
Net Interest Income Dependency Ratio 0.77 0.86 16%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 433,958 Pledged Securities (% of Portfolio) 35%
Net Loans ($000) 247,162 57% Liquidity Ratio 34%
Security Portfolio ($000) 117,890 27% FHLB Advances and Brokered CDs ($000) 0
Cash and FFS ($000) 53,471 12% Cost of Funds (% of Average Liabilities) 0.06%
Municipals (% of Portfolio) 61 0% Tier 1 Capital 51,881
MBS (% of Portfolio) 13,646 12% Tier-1 Leverage Ratio (%) 12.09
CMO (% of Portfolio) 7,221 6% Total Risk Based Capital 55,302
Agencies (% of Portfolio) 91,968 78% Total Risk-Based Capital Ratio (%) 18.24
Other Securities (% of Portfolio) 4,994 4% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Sample Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Sample Savings Bank (SSB)
Sample Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Sample Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric Sample Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.67 8%
Yield on Total Loans 5.83 5.45 75%
Earning Asset Yield 4.32 4.67 27%
Interest Expense to Avg. Earning Assets 0.07 0.87 0%
Net Interest Margin (FTE) 4.25 3.79 79%
Net Interest Income Dependency Ratio 0.77 0.83 23%
Metric Sample Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.43 22%
Yield on Total Loans 5.83 5.78 51%
Earning Asset Yield 4.32 4.64 31%
Interest Expense to Avg. Earning Assets 0.07 0.65 1%
Net Interest Margin (FTE) 4.25 3.97 61%
Net Interest Income Dependency Ratio 0.77 0.86 16%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 433,958 Pledged Securities (% of Portfolio) 35%
Net Loans ($000) 247,162 57% Liquidity Ratio 34%
Security Portfolio ($000) 117,890 27% FHLB Advances and Brokered CDs ($000) 0
Cash and FFS ($000) 53,471 12% Cost of Funds (% of Average Liabilities) 0.06%
Municipals (% of Portfolio) 61 0% Tier 1 Capital 51,881
MBS (% of Portfolio) 13,646 12% Tier-1 Leverage Ratio (%) 12.09
CMO (% of Portfolio) 7,221 6% Total Risk Based Capital 55,302
Agencies (% of Portfolio) 91,968 78% Total Risk-Based Capital Ratio (%) 18.24
Other Securities (% of Portfolio) 4,994 4% Municipals (% of Total RBC) 0%
Net
Interest
Margin
Dissection
Sample Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Sample Savings Bank (SSB)
Sample Savings Bank versus UBPR Peer Group
Liquidity and Funding
Investment Portfolio Capital
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Sample Savings Bank UBPR Peer Group Avg. State Bank Average
147147
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Govt. Agency MBS CMO U.S. Treasury Municipal
10
8,0
67
2,2
70
16
,45
7
4,9
41
52
9
12
3,5
29
1,9
66
13
,06
5
4,9
38
5,4
46
11
6,0
84
1,6
26
10
,46
8
4,8
95
85
11
4,7
14
5,5
67
14
,17
8
4,9
25
85
10
8,0
00
14
,99
8
13
,90
6
4,9
79
85
10
0,9
51
14
,40
9
7,5
13
4,9
79
61
91
,96
8
13
,64
6
7,2
21
4,9
94
61
2016Y 2017Y 2018Y 2019Q1 2019Q2 2019Q3 2019Q4
CASE STUDY 1: SECURITIES MIX ANALYSIS
148148
Qtr. Last Year Percent Current Qtr. Percent
2018Q4 Loans 2019Q4 Loans
3 Mos or less 48,777 21.9% 42,543 17.0%
3 Mos - 12 Mos 37,937 17.0% 64,788 25.9%
1 Yr - 3 Yrs 102,524 46.0% 69,956 28.0%
3 Yrs - 5 Yrs 27,079 12.1% 21,665 8.7%
5 Yrs - 15 Yrs 6,438 2.9% 21,817 8.7%
15+ Yrs 355 0.2% 29,442 11.8%
CASE STUDY 1: SHORTER LOAN MATURITY/REPRICING
Qtr. Last Year Percent Current Qtr. Percent
2018Q4 Securities 2019Q4 Securities
Total Debt and Mortgage Pass-Through Securities
3 Mos or less 7,990 6.5% 3,017 2.7%
3 Mos - 12 Mos 24,173 19.7% 29,564 26.7%
1 Yr - 3 Yrs 60,661 49.4% 57,230 51.7%
3 Yrs - 5 Yrs 28,240 23.0% 7,212 6.5%
5 Yrs - 15 Yrs 1,431 1.2% 10,859 9.8%
15+ Yrs 186 0.2% 2,754 2.5%
CASE STUDY 1: SHORTER INVESTMENT CASHFLOW
149149
.07 .07 .07 .08 .08 .08 .08 .08 .08 .08 .08 .07 .07 .06
0.00
0.50
1.00
1.50
2.00
2.50
0.00
0.50
1.00
1.50
2.00
2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4
Sample Bank Fed Funds Rate
CASE STUDY 1: STABLE FUNDING COSTS
Is the Bank Asset Sensitive or Liability Sensitive, and why?
Banks can add asset duration to reduce asset sensitivity
COF
FEDFUNDS
150150
▪ Asset Sensitive Balance Sheet‒ Low and Stable Cost of Funds
‒ 70% of the Loan Portfolio Reprices within 3 Years
‒ 81% of the Security Portfolio Reprices within 3 Years
▪ What Investments to own?‒ Longer Duration Portfolio is a Risk-Reduction Strategy
‒ Call and Prepayment Protection is Key
‒ Municipal Product Curve Offers Significant Spreads beyond 10 years
CASE STUDY 1: INVESTMENT MANAGEMENT FROM A WHOLE BANK PERSPECTIVE
151151
Strategy
• Independent expert advice on portfolio
strategies with regular review
• Whole-Bank perspective approach to portfolio
positioning
Investment Mix
• Diversification among investment sectors,
risk/reward & relative value analysis
• Expanded range of bank-permissible investment
products
Security Selection
• Market knowledge and expertise helps optimal
security selection
• Monitor policy compliance with security
purchases
Trade Execution
• Poor trade execution can impact investment
returns
• Fiduciary vs. Broker
INVESTMENT MANAGEMENT BEST PRACTICES
152152
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Municipal Govt. Agency Other Securities MBS CMBS
1,2
52
38
,51
3
- - --
44
,95
9
- - -
2016Y 2017Y
CASE STUDY 2: INVESTMENT MIX ANALYSIS
153153
▪ Peer group is comprised of 4606 banks with under $15bln in assets.
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
Average TEY 3.62% 2.74% 2.43% 1.98%
MunicipalAllocation %
49% 35% 26% 16%
# of banks inQuartile
1151 1152 1152 1151
Source: S&P Global Market Intelligence, 12/31/19.
CASE STUDY 2: INVESTMENT YIELD AND MUNICIPAL ALLOCATION
154154
Institution Tot. Assets Tot. Securities Securities/Assets Inv. Yield (FTE) US Tsy Agency MBSs CMOs Munis Other
Institution 1 990,721 84,220 9% 3.14 0% 0% 43% 7% 50% 0%
Institution 2 257,181 81,896 32% 3.12 0% 0% 0% 0% 100% 0%
Institution 3 568,889 183,266 32% 2.94 0% 1% 56% 0% 43% 0%
Institution 4 422,859 65,773 16% 2.92 0% 0% 23% 0% 77% 0%
Institution 5 545,482 166,386 31% 2.92 0% 0% 10% 1% 89% 0%
Institution 6 176,873 26,916 15% 2.91 0% 16% 58% 0% 26% 0%
Institution 7 368,047 68,741 19% 2.81 0% 0% 1% 0% 99% 0%
Institution 8 282,331 26,424 9% 2.76 0% 0% 33% 62% 5% 0%
Institution 9 3,156,040 929,432 29% 2.75 10% 1% 37% 14% 35% 4%
Institution 10 1,823,484 465,193 26% 2.63 0% 0% 78% 2% 12% 8%
Institution 11 761,475 70,642 9% 2.55 0% 0% 50% 40% 10% 1%
Institution 12 1,027,574 253,515 25% 2.55 0% 32% 7% 0% 60% 0%
Institution 13 246,588 148,492 60% 2.49 0% 1% 64% 11% 23% 0%
Institution 14 487,235 66,465 14% 2.49 0% 0% 48% 0% 52% 0%
Institution 15 114,980 9,963 9% 2.43 40% 12% 41% 0% 8% 0%
Institution 16 231,356 31,522 14% 2.36 0% 8% 77% 0% 15% 0%
Institution 17 377,005 60,848 16% 2.35 49% 0% 7% 9% 34% 0%
Institution 18 1,905,588 449,827 24% 2.34 0% 18% 45% 20% 15% 2%
Institution 19 405,478 44,568 11% 2.33 0% 59% 0% 20% 21% 0%
Institution 20 157,622 41,645 26% 2.31 0% 36% 19% 10% 36% 0%
Institution 21 303,646 44,221 15% 2.31 78% 20% 0% 0% 2% 0%
Institution 22 54,737 26,485 48% 2.26 0% 26% 8% 55% 7% 4%
Institution 23 432,090 69,729 16% 2.24 10% 0% 75% 0% 15% 0%
Institution 24 377,346 50,791 13% 2.20 4% 39% 23% 0% 34% 0%
Institution 25 4,367,991 291,197 7% 2.19 25% 68% 2% 0% 3% 1%
Institution 26 315,679 59,549 19% 2.17 0% 0% 92% 0% 8% 0%
Institution 27 598,650 222,090 37% 2.12 2% 50% 0% 0% 48% 0%
Institution 28 996,832 302,767 30% 2.10 21% 61% 14% 0% 4% 0%
Institution 29 298,798 5,365 2% 2.07 0% 0% 37% 33% 29% 0%
Institution 30 410,783 0 0% 0.00 - - - - - -
12/31/2018
CASE STUDY 2: INVESTMENT MIX ANALYSIS
155155
Senior Deal
Manager
Bank Portfolio
Taylor Advisors
(on behalf of clients)
Broker/ Dealer
“Flipper” Non B/D Account
Order Priority: HighPrice: 100
Order Priority: MediumPrice: 100
Order Priority: LowPrice: Near 100
Price: 100
Price: ~100.5
Price: ~101.5 - 102
Deals are almost always oversubscribed, and Dealer orders do not get filled.Also, there is very little commission for the dealer to split on new issue deals.
SOURCING NEW ISSUE INVESTMENTS
156156
1.30 1.261.12 1.14
1.23
1.43
1.75
2.74 2.79
3.463.57
3.70 3.65 3.69
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4
CASE STUDY 2: INVESTMENT YIELD TREND
157157
Strategy
• Independent expert advice on portfolio
strategies with regular review
• Whole-Bank perspective approach to portfolio
positioning
Investment Mix
• Diversification among investment sectors,
risk/reward & relative value analysis
• Expanded range of bank-permissible investment
products
Security Selection
• Market knowledge and expertise helps optimal
security selection
• Monitor policy compliance with security
purchases
Trade Execution
• Poor trade execution can impact investment
returns
• Fiduciary vs. Broker
INVESTMENT MANAGEMENT BEST PRACTICES
158158
SECURITIES / SECTORS IN THE MARKETPLACE
What should I buy this week?
Fed FundsGNMA ARM(Different CPNs)
FNMA Teaser ARM
LIBOR Floaters(CMO & AGY)
COFI Floaters(CMO & AGY)
1-10 Yr Treasury
AGY Step Ups
AGY StructuredNotes
AGY Callable
MBS (DifferentMaturities)
CMO
5-30 Yr Munis
Asset-backed Securities
Corporate Bonds
Taxable Munis
Index AmortizingNotes
Covered Bonds
GNMA ARM(Different Caps)
FNMA Fully Indexed ARM
MBS (DifferentCoupons)
MBS (New vs. Seasoned)
Index AmortizedNotes
Hey Broker Bob!Hey Banker Bill!
159159
SAMPLE PORTFOLIO – DATA VS. INFORMATION
R AT E S A R E D O W N !
1 Yr Treasury Note
2 Yr Agency NC 3 Mo
3 Yr WAL Premium Agency CMO (Jumbo Collateral)
4 Yr Floating Rate SBA Pool
5 Yr Agency Step Up NC 6 Mo Bermuda
159
Matured
Called
Fast Prepayments Yield Drops
Coupon Resets Lower
Called
160160
INVESTMENT STRATEGY FORMATION
INVESTMENT STRATEGY
Rates Down PerformanceRates Up
Performance
160
Call
Prepayment
Reinvestment
OFFENSIVE SECURITIES
Hedges The Following Risks:
Interest Rate
Extension
Cash Flow Volatility
DEFENSIVE SECURITIES
Hedges The Following Risks:
161161
DIFFERENCE BETWEEN ASSET CLASS & SECTORS
A G E N C I E S M B S C M O
161
Treasuries
Bills
Notes
TIPS
Agencies
Bullet
Callable
Step-up
MBS
Amortization
Seasoning
Collateral Stips
CMO
Structure
Collateral
Cash Flow
Municipal
Maturity
Tax Provision
Credit Quality
Other
Corporate
Structured Credit
Non-Agency ABS
162162
SECTORED PORTFOLIO 1
Sector % of Port. Mkt Value G/L Bk Px Cpn TEY Mk Yld Eff Dur WAL Lots
DTC CDs 3.2% 8,945 (75) 100.0 1.59 1.59 2.24 1.2 1.2 37
Short Agency Bullet 12.6% 35,866 (140) 100.0 1.35 1.33 1.98 0.6 0.6 12
1-3 Yr Agency Bullet 10.4% 29,425 (695) 100.4 1.64 1.52 2.41 2.5 2.6 10
4-6 Yr Agency Bullet 6.4% 18,251 (502) 99.9 1.82 1.85 2.56 3.9 4.1 7
1-3 Yr Callable Agency 25.9% 73,525 (1,795) 99.9 1.53 1.55 2.50 2.4 2.6 26
4-6 Yr Callable Agency 19.8% 56,121 (1,418) 99.9 2.14 2.15 2.77 3.5 4.4 18
15 Yr MBS (New) 5.6% 15,854 (715) 102.4 2.31 1.79 2.78 4.2 4.9 7
15 Yr MBS (Seasoned) 7.7% 21,966 (828) 102.2 2.51 1.84 2.96 3.2 3.5 11
30 Yr MBS (New) 1.7% 4,843 (330) 103.4 2.74 2.17 3.34 5.6 6.6 2
30 Yr MBS (Seasoned) 6.7% 18,880 333 101.6 4.08 3.84 3.13 4.1 4.8 56
Totals 100.0% 283,676 (6,165) 100.5 1.97 1.85 2.58 2.8 3.2 186
162
163163
SECTORED PORTFOLIO 2
163
Sector % of Port. Mkt Value G/L Bk Px Cpn TEY Mk Yld Eff Dur WAL WAM Lots
Pre-Refunded BQ Munis 3.7% 5,069 150 100.2 4.59 5.60 2.25 1.2 1.2 8.4 9
5 Yr BQ Munis 5.8% 7,957 181 100.7 3.77 4.38 2.87 2.5 2.6 4.5 22
10 Yr BQ Munis 2.8% 3,882 (4) 101.0 3.70 4.36 3.55 3.6 3.7 10.1 10
15 Yr BQ Munis 3.6% 4,965 4 101.9 3.48 4.04 3.84 8.2 6.0 14.4 8
Pre-Refunded GM Munis 3.2% 4,445 195 105.1 5.00 4.52 2.54 3.2 3.6 13.1 6
5 Yr GM Munis 2.1% 2,898 (0) 106.6 3.78 3.34 3.33 5.4 6.0 6.5 11
10 Yr GM Munis 11.7% 16,097 542 102.4 4.00 4.30 3.57 6.4 6.5 10.6 22
15 Yr GM Munis 31.4% 43,063 598 105.5 4.26 4.22 3.85 7.8 7.7 14.4 58
20 Yr GM Munis 6.6% 9,063 (108) 102.4 3.78 4.31 4.44 11.1 12.9 18.6 15
5 Yr Taxable Munis 3.4% 4,671 253 100.0 5.83 5.83 3.56 2.6 2.7 6.1 9
10 Yr Taxable Munis 6.0% 8,262 320 100.2 5.90 5.78 4.15 3.1 3.2 10.0 16
15 Yr Taxable Munis 0.9% 1,233 30 103.8 5.80 4.22 3.38 3.5 3.1 13.7 2
5 Yr DUS MBS 4.2% 5,694 (77) 100.2 2.15 1.92 2.78 1.4 1.5 1.4 4
15 Yr MBS (Seasoned) 3.9% 5,323 (149) 102.5 3.04 2.19 3.07 2.9 3.2 8.7 11
30 Yr MBS (Seasoned) 2.2% 3,014 33 106.3 5.39 3.85 3.49 3.4 4.6 19.3 23
1-3 Yr Agency CMO 1.2% 1,662 (53) 101.3 2.75 1.98 3.73 2.1 1.9 16.6 2
Short Agency CMBS 1.7% 2,368 (19) 100.1 2.06 1.86 2.71 1.0 0.9 1.8 2
4-6 Yr Agency CMBS 2.1% 2,872 (131) 100.3 2.37 2.27 3.22 4.7 5.1 12.3 2
Totals 100.0% 137,191 1,666 103.0 4.06 4.06 3.54 5.5 5.7 11.9 242
Sector % of Port. Mkt Value G/L Bk Px Cpn TEY Mk Yld Eff Dur WAL WAM Lots
Pre-Refunded BQ Munis 3.7% 5,069 150 100.2 4.59 5.60 2.25 1.2 1.2 8.4 9
5 Yr BQ Munis 5.8% 7,957 181 100.7 3.77 4.38 2.87 2.5 2.6 4.5 22
10 Yr BQ Munis 2.8% 3,882 (4) 101.0 3.70 4.36 3.55 3.6 3.7 10.1 10
15 Yr BQ Munis 3.6% 4,965 4 101.9 3.48 4.04 3.84 8.2 6.0 14.4 8
Pre-Refunded GM Munis 3.2% 4,445 195 105.1 5.00 4.52 2.54 3.2 3.6 13.1 6
5 Yr GM Munis 2.1% 2,898 (0) 106.6 3.78 3.34 3.33 5.4 6.0 6.5 11
10 Yr GM Munis 11.7% 16,097 542 102.4 4.00 4.30 3.57 6.4 6.5 10.6 22
15 Yr GM Munis 31.4% 43,063 598 105.5 4.26 4.22 3.85 7.8 7.7 14.4 58
20 Yr GM Munis 6.6% 9,063 (108) 102.4 3.78 4.31 4.44 11.1 12.9 18.6 15
5 Yr Taxable Munis 3.4% 4,671 253 100.0 5.83 5.83 3.56 2.6 2.7 6.1 9
10 Yr Taxable Munis 6.0% 8,262 320 100.2 5.90 5.78 4.15 3.1 3.2 10.0 16
15 Yr Taxable Munis 0.9% 1,233 30 103.8 5.80 4.22 3.38 3.5 3.1 13.7 2
5 Yr DUS MBS 4.2% 5,694 (77) 100.2 2.15 1.92 2.78 1.4 1.5 1.4 4
15 Yr MBS (Seasoned) 3.9% 5,323 (149) 102.5 3.04 2.19 3.07 2.9 3.2 8.7 11
30 Yr MBS (Seasoned) 2.2% 3,014 33 106.3 5.39 3.85 3.49 3.4 4.6 19.3 23
1-3 Yr Agency CMO 1.2% 1,662 (53) 101.3 2.75 1.98 3.73 2.1 1.9 16.6 2
Short Agency CMBS 1.7% 2,368 (19) 100.1 2.06 1.86 2.71 1.0 0.9 1.8 2
4-6 Yr Agency CMBS 2.1% 2,872 (131) 100.3 2.37 2.27 3.22 4.7 5.1 12.3 2
Totals 100.0% 137,191 1,666 103.0 4.06 4.06 3.54 5.5 5.7 11.9 242
The Bond Accounting report is inadequate to manage your portfolio, the way securities are grouped does not provide enough information
164164
Strategy
• Independent expert advice on portfolio
strategies with regular review
• Whole-Bank perspective approach to portfolio
positioning
Investment Mix
• Diversification among investment sectors,
risk/reward & relative value analysis
• Expanded range of bank-permissible investment
products
Security Selection
• Market knowledge and expertise helps optimal
security selection
• Monitor policy compliance with security
purchases
Trade Execution
• Poor trade execution can impact investment
returns
• Fiduciary vs. Broker
INVESTMENT MANAGEMENT BEST PRACTICES
165165
120.4 Cost to Broker
121.9 Bank Paid to Broker
One Year later Bonds Called at Par (100) because of Extraordinary
Redemption Trigger!!!Investors lost ~$200,000 per $1mm
-----------------------------
1.5 Point Execution Cost
$15,000 per $1mm
0.22% lower yield to Bank
BAD TRADE EXECUTION EXAMPLE
166166
105.8 New Issue Price
105.8 Bank Price (via Advisor)
GOOD TRADE EXECUTION EXAMPLE
Bonds traded as high as 108.1 just 12 days after issue.
Investors WIN!
--------------------------
0.0 Point Execution Cost
$0 per $1mm
0.0% lower yield to Bank
Weekly New Issuance is approximately $8-10 Billion with an Average of 150 Deals
167167
Cash Drag
Reduce Interest Rate Risk
Improve or leverage Capital
Tax Mitigations Strategies
Asset Diversification
Improve and Reduce Liquidity
167
STRATEGY OBJECTIVES
168168
168
▪ How would you describe your investment process?
‒ Committee, Approach
▪ How do you measure the performance of the portfolio?
‒ UBPR - Benchmark, peer institution
▪ How many basis points do you think you could improve portfolio
yield from a proactive investment strategy?
Portfolio Size
(in $000) 10 25 50 100
25,000 25 63 125 250
50,000 50 125 250 500
100,000 100 250 500 1,000
Investment Income Change ($000s)
(due to Yield change in basis points)
ASSESSING YOUR INSTITUTION’S INVESTMENT PROCESS
169169
Loans
Deposits
Investments
Capital
169
Liquidity
Funding
Strategies
OBJECTIVES AND STRATEGIES
170170
BAD STRATEGIES
171171
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus UBPR Peer Group
171
Source: S&P Global Market Intelligence.
BAD STRATEGIES
172172
‒ Liquidity Ratio: 53% ($700mm in assets)
‒ ~$60 million in Fed Funds Sold
‒ Projected 12 Month Investment Portfolio Cash Flow: ~$58
million
‒ FHLB Borrowing Capacity: Very High
172
MISCONCEPTION – LIQUIDITY RISK
173173
173
stacked
MISCONCEPTION – CREDIT QUALITY
174174
174
Sector % of Port. Mkt Value G/L Bk Px Cpn TEY Mk Yld G-Spr OAS Conv Eff Dur WAL WAM Lots
DTC CDs 3.2% 8,945 (75) 100.0 1.59 1.59 2.24 12 11 0.0 1.2 1.2 1.2 37
Short Agency Bullet 12.6% 35,866 (140) 100.0 1.35 1.33 1.98 6 0 0.0 0.6 0.6 0.6 12
1-3 Yr Agency Bullet 10.4% 29,425 (695) 100.4 1.64 1.52 2.41 6 6 0.0 2.5 2.6 2.6 10
4-6 Yr Agency Bullet 6.4% 18,251 (502) 99.9 1.82 1.85 2.56 7 6 0.1 3.9 4.1 4.1 7
1-3 Yr Callable Agency 25.9% 73,525 (1,795) 99.9 1.53 1.55 2.50 14 14 (0.1) 2.4 2.6 2.6 26
4-6 Yr Callable Agency 19.8% 56,121 (1,418) 99.9 2.14 2.15 2.77 26 21 (0.6) 3.5 4.4 4.6 18
15 Yr MBS (New) 5.6% 15,854 (715) 102.4 2.31 1.79 2.78 22 14 (0.1) 4.2 4.9 13.4 7
15 Yr MBS (Seasoned) 7.7% 21,966 (828) 102.2 2.51 1.84 2.96 52 42 (0.0) 3.2 3.5 9.6 11
30 Yr MBS (New) 1.7% 4,843 (330) 103.4 2.74 2.17 3.34 68 51 (0.5) 5.6 6.6 28.2 2
30 Yr MBS (Seasoned) 6.7% 18,880 333 101.6 4.08 3.84 3.13 58 45 (0.2) 4.1 4.8 21.1 56
Totals 100.0% 283,676 (6,165) 100.5 1.97 1.85 2.58 21 17 (0.2) 2.8 3.2 5.6 186
Source: Sample portfolio as of 3/31/2018
• Balance Sheet Risk Profile: Asset Sensitive
• Investment Portfolio amplifies asset sensitivity• Short duration • 45% in callable agencies• Little in call-protected assets
• The institution is not monetizing its favorable funding mix – foregone income and capital
INVESTMENT MIX ANALYSIS
175175
Source: UBPR
above/below peer
above/below peer
-61
bps
-54
bps
+97
bps
+86
bps
Institution A
Institution B
UBPR – INVESTMENT YIELDS
176176
BAD STRATEGIES
177177
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
3M 6M 1Y 2Y 3Y 5Y 7Y 10Y 15Y 20Y 25Y 30Y
Tsy Yields (Nov 2018) Tsy Yields (Dec 2016)
December 2016
November 2018
TREASURY RATES (DECEMBER 2016 – NOVEMBER 2018)
Source: Bloomberg
178178
Condensed Sector Analysis – Comparison as of 3/31/2018
Sector % MV MV Gain/Loss TEY Eff Dur WAL
Agency/Govt./CD 78.3% 222,134 (4,625) 1.69 2.5 2.8
MBS 21.7% 61,543 (1,540) 2.46 3.9 4.5
CMO - - - - - -
Agency CMBS - - - - - -
Tax-Free Muni - - - - - -
Taxable Muni - - - - - -
Total 100.0% 283,676 (6,165) 1.85 2.8 3.2
Sector % MV MV Gain/Loss TEY Eff Dur WAL
Agency/Govt. 13.3% 29,796 (192) 1.70 1.3 1.8
MBS 23.3% 52,231 (747) 2.73 3.9 5.0
CMO 3.3% 7,330 (75) 2.44 2.3 3.0
Agency CMBS 10.1% 22,742 (404) 2.00 2.8 3.0
Tax-Free Muni 43.1% 96,676 1,117 4.29 6.1 5.3
Taxable Muni 6.8% 15,346 742 5.10 2.9 3.2
Total 100.0% 224,122 440 3.32 4.3 4.3
Taylor Advisors Client Portfolio
North Carolina Bank Portfolio
179179
Investment Article - November 2018 Release
TAYLOR ADVISORS EBRIEF – NOVEMBER 2018
180180
+150bps
0.0
2.0
4.0
6.0
2009Y 2010Y 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Q3
Yie
ld
Mortgage Weighted Portfolio Diversified Call Protected Portfolio Florida Commerical Banks
Prepayments
High & Stable
Florida Commercial Banks +200bps
RISK MISCONCEPTIONS
Source: S&P Global Market Intelligence
181181
181
GOOD STRATEGIES
182182
182
TAYLOR ADVISORS EBRIEF – MARCH 2018
183183
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
SNAPSHOT – SAMPLE INSTITUTION
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
Strategize Prosperity
700 N. Hurstbourne ParkwayLouisville, KY 40222
Performance Rankings www.tayloradvisor.com
Metric
Under Performer
Savings Bank
UBPR Peer
Group Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.60 8%
Yield on Total Loans 4.08 4.71 11%
Earning Asset Yield 3.24 4.18 6%
Interest Expense to Avg. Earning Assets 0.99 1.03 48%
Net Interest Margin (FTE) 2.25 3.17 9%
Net Interest Income Dependency Ratio 0.92 0.84 77%
Metric
Under Performer
Savings Bank
State Bank
Average
Percentile
Rank
Yield on Investments (FTE) 2.06 2.50 9%
Yield on Total Loans 4.08 5.24 2%
Earning Asset Yield 3.24 4.46 6%
Interest Expense to Avg. Earning Assets 0.99 0.85 58%
Net Interest Margin (FTE) 2.25 3.58 2%
Net Interest Income Dependency Ratio 0.92 0.86 65%
Earning Asset Mix and Balance Sheet Positions
Asset Size ($000) 871,367 Pledged Securities (% of Portfolio) 0%
Net Loans ($000) 514,879 59% Liquidity Ratio 50%
Security Portfolio ($000) 256,800 29% FHLB Advances and Brokered CDs ($000) 10,343
Cash and FFS ($000) 63,564 7% Cost of Funds (% of Average Liabilities) 1.29%
Municipals (% of Portfolio) 0 0% Tier 1 Capital 232,737
MBS (% of Portfolio) 100,878 39% Tier-1 Leverage Ratio (%) 26.21
CMO (% of Portfolio) 0 0% Total Risk Based Capital 233,772
Agencies (% of Portfolio) 156,073 61% Total Risk-Based Capital Ratio (%) 69.97
Other Securities (% of Portfolio) 0 0% Municipals (% of Total RBC) 0%
Liquidity and Funding
Investment Portfolio Capital
Net
Interest
Margin
Dissection
Under Performer Savings Bank versus State Banks
Net
Interest
Margin
Dissection
Earning Asset Mix
Performance and Balance Sheet Snapshot - 2019Q4
Under Performer Savings Bank (UPSB)
Under Performer Savings Bank versus UBPR Peer Group
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Yield on Investments (FTE) Earning Asset Yield Net Interest Margin (FTE)
Performance Rankings
Under Performer Savings Bank UBPR Peer Group Avg. State Bank Average
184184
Prime Swap -100 -75 -50 -25 0 50 75 100 125 150 175 200 300
Current Prime/ Floating Rate 4.75% 3.75% 4.00% 4.25% 4.500% 4.75% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50% 6.75% 7.75%
Current Prime Swap Rates
1YEAR 4.08% 3.08% 3.33% 3.58% 3.83% 4.08% 4.58% 4.83% 5.08% 5.33% 5.58% 5.83% 6.08% 7.08%
2YEAR 3.90% 2.90% 3.15% 3.40% 3.65% 3.90% 4.40% 4.65% 4.90% 5.15% 5.40% 5.65% 5.90% 6.90%
3YEAR 3.85% 2.85% 3.10% 3.35% 3.60% 3.85% 4.35% 4.60% 4.85% 5.10% 5.35% 5.60% 5.85% 6.85%
4YEAR 3.85% 2.85% 3.10% 3.35% 3.60% 3.85% 4.35% 4.60% 4.85% 5.10% 5.35% 5.60% 5.85% 6.85%
5YEAR 3.84% 2.84% 3.09% 3.34% 3.59% 3.84% 4.34% 4.59% 4.84% 5.09% 5.34% 5.59% 5.84% 6.84%
7YEAR 3.86% 2.86% 3.11% 3.36% 3.61% 3.86% 4.36% 4.61% 4.86% 5.11% 5.36% 5.61% 5.86% 6.86%
10YEAR 3.93% 2.93% 3.18% 3.43% 3.68% 3.93% 4.43% 4.68% 4.93% 5.18% 5.43% 5.68% 5.93% 6.93%
BALLOON / RESET AMORTIZATION AVG LIFE RATE
3.00 3.00 1.60 3.97%
3.00 10.00 2.65 3.87%
3.00 15.00 2.80 3.86%
3.00 20.00 2.85 3.86%
3.00 25.00 2.90 3.86%
3.00 30.00 2.95 3.85%
5.00 5.00 2.65 3.87%
5.00 10.00 3.95 3.85%
5.00 15.00 4.40 3.85%
5.00 20.00 4.60 3.84%
5.00 25.00 4.70 3.84%
5.00 30.00 4.80 3.84%
7.00 7.00 3.70 3.85%
7.00 10.00 4.85 3.84%
7.00 15.00 5.70 3.85%
7.00 20.00 6.15 3.85%
7.00 25.00 6.40 3.85%
7.00 30.00 6.55 3.86%
10.00 10.00 5.40 3.84%
10.00 15.00 7.25 3.87%
10.00 20.00 8.15 3.89%
10.00 25.00 8.70 3.90%
10.00 30.00 9.05 3.91%
15.00 15.00 8.30 3.89%
15.00 25.00 12.60 3.99%
Loan Credit Spectrum & Implied Fixed Loan Rates Based on Current Swap Curve
2/28/2020
Taylor AdvisorsCommercial Loan Pricing Matrix
4.00%
4.50%
5.00%
5.50%
6.00%
Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19
CML Loan PX Matrix
5 yr Prime Swap Rate
184
LOAN PRICING CONSIDERATIONS
185185
✓Credit Quality✓ FICO
✓ Collateral Type/Liquidity
✓ LTV
✓ Cash Flow
✓ Recourse vs Non-recourse
✓ Terms✓ Repricing Frequency
✓ Repricing Rate Index
✓ Duration
✓ Caps/Floors
✓ Prepayment
Penalties
✓Relationship ✓ Deposits/Operating
Accounts
✓ Other Services
✓ Inertia185
FACTORS IMPACTING LOAN PRICING
186186
TAYLOR ADVISORS EBRIEF – OCTOBER 2019
187187
TAYLOR ADVISORS EBRIEF – AUGUST 2018 & AUGUST 2019
AUGUST 2018 AUGUST 2019
12 MONTHS
LATER…
188188
✓ Deposit Pricing Strategies for a declining rate cycle
✓ Long-term organic growth focus
✓ Market-specific deposit pricing and product strategies
✓ Deposit rate benchmarking vs. wholesale funding indices
✓ Product mix and fee income considerations
✓ Marginal cost of funds analysis and relationship-based
pricing approach
188
DEPOSIT PRICING CONSIDERATIONS
189189
Term Fixed
Rate
Federal
Home Loan
Bank
Brokered
Deposits
FDIC National
Average
FDIC Rate
CapSample Bank CD Specials
Bank vs. FDIC
Rate Cap
CD Specials
vs. FDIC Rate
Cap
1 MONTH 1.84 1.60 0.10 0.85 - - - -
2 MONTH 1.84 1.60 0.15 0.90 - - - -
3 MONTH 1.84 1.60 0.19 0.94 0.03 - (0.91) -
4 MONTH 1.82 1.60 0.24 0.99 - - - -
5 MONTH 1.81 1.60 0.28 1.03 - - - -
6 MONTH 1.79 1.60 0.33 1.08 0.10 - (0.98) -
1 YEAR 1.62 1.70 0.48 1.23 0.15 - (1.08) -
2 YEAR 1.64 1.70 0.62 1.37 0.25 - (1.12) -
3 YEAR 1.62 1.75 0.74 1.49 0.35 - (1.14) -
4 YEAR 1.63 1.78 0.81 1.56 0.45 - (1.11) -
5 YEAR 1.65 1.80 0.94 1.69 0.65 - (1.04) -
6 YEAR 1.82 - - - - - - -
7 YEAR 1.87 - - - - - - -
8 YEAR 1.98 - - - - - - -
9 YEAR 2.03 - - - - - - -
10 YEAR 2.07 - - - - - - -
189
Benchmarking Deposits
Term
Fixed Rate
Federal
Home Loan
Bank
Brokered
Deposits
FDIC National
Average
FDIC Rate
CapSample Bank CD Specials
1 MONTH 2.73 2.35 0.11 0.86 - -
2 MONTH 2.73 2.35 0.16 0.91 - -
3 MONTH 2.75 2.35 0.20 0.95 0.10 -
4 MONTH 2.77 2.37 0.25 1.00 - -
5 MONTH 2.78 2.38 0.28 1.03 - -
6 MONTH 2.8 2.40 0.34 1.09 0.25 -
1 YEAR 2.83 2.60 0.61 1.36 0.50 1.50
2 YEAR 2.94 2.90 0.82 1.57 1.50 -
3 YEAR 2.97 3.10 0.96 1.71 1.75 -
4 YEAR 3.03 3.25 1.06 1.81 2.00 -
5 YEAR 3.11 3.40 1.25 2.00 2.25 -
6 YEAR 3.23 - - - - -
7 YEAR 3.35 - - - - -
8 YEAR 3.44 - - - - -
9 YEAR 3.54 - - - - -
10 YEAR 3.6 - - - - -
8/13/20182/24/2020
BENCHARKING DEPOSITS
190190
Economy and Rates
Strategies
ALCO BEST PRACTICES
191191
Loans
Deposits
Investments
Capital
191
Liquidity
Funding
Strategies
OBJECTIVES AND STRATEGIES
192192
Earning Asset
Size
Net Interest Income Change in thousands of dollars
(due to portfolio yield change in basis points)
(in $000) 1 5 10 15 20 25
100,000 10 50 100 150 200 250
200,000 20 100 200 300 400 500
300,000 30 150 300 450 600 750
400,000 40 200 400 600 800 1,000
500,000 50 250 500 750 1,000 1,250
600,000 60 300 600 900 1,200 1,500
EARNING ASSET DOLLAR IMPACT
193193
193
194194
Attendees will be added to our eBriefs, be on the lookout for our publications
If you are interested in a Free Sector Analysis for your institution, please contact us
We will be sending the Performance Snapshot for March at the beginning of April
FOLLOW UP ITEMS
195195
QUESTIONS OR COMMENTS?
195
196196
T
Todd Taylor, CPA, CFA
E-mail: [email protected]
Website: www.TaylorAdvisor.com
Phone: 502 412-2524
Omar Hinojosa, CFA
E-mail: [email protected]
Website: www.TaylorAdvisor.com
Phone: 502 814-5656
Thank You!