The Bank of Moulton

Strategy ► Community Cosumer Bank:  Local Deposits  Local Loans servicing consumer and small business lending ► Service all customers while concentrating on loans to Retail clients with deposits from both commercial and retail clients, and increase Branching  Trust, Fin’l Services ► Use Jumbo CDs to strategically to finance specific needs  Financial Slack ► Rely on core deposits to finance bank, make loans and hold investment portfolio ► Concentrate on being profitable, NOT BIG!

Strategy Levers and Performance ► Move out of Jumbo CDs, use for strategic needs   1.4 Assets$4.90 billion   1.4 CDs$950 million   1.4 MM Svgs$1.7 billion   2.4 Assets$3.96 billionLess CDs:   2.4 CDs$87.1 millionSold RE Portfolio   2.4 MM Svgs$1.92 billion& Synd Loans   3.4 Assets$5.11 billion   3.4 CDs$719.5 millionLns $3.5b  $2.2b   3.4 MM Svgs$2.16 billionSecs. $1b  $2.5b

Strategy Levers and Performance ► Move out of Jumbo CDs ► Shift focus to High, Medium and Consumer Loans  Effec Int Rates vs. Spd + COF indicates High, Med  Target  25%  in Desired; 25%  in Undesired;  Reduce R/E Holdings to lower fund’g, but Svc!  Reduce Synd as not Local Business loans  1.4  3.4 R/E -78%, Prime -22%, Synd -89%  1.4  3.4 H -18%, M -6%, Cons. -2%, CC -13%  Watch PLL vs. Charge-Offs

Strategy Levers and Performance ► Move out of Jumbo CDs ► Loans to Desired Customers (H, Med and Cons.) ► Concentrate on being profitable  ROE slows into ROA as Lev dropping. ► ROE in the 20-25% range ► Lev dropping due to Earnings; Cap Adeq at 1.40  ROA Inc’g ► ROA in 1-2% range  Adjmt. To RE and Futures shows Hedging, but also timing errors

Peak, Sold Fut. When Int. Rts.  C/A = 5.5% C/A = 7%

Peak Trough

Sold R/E Loss on Futures

Plans for the Future ► Concentrate on Spread & Burden   Stay away from expensive funds and reconsider Invmts.   Consumer Loans and Svcs. (40 Branches  50 by 5.4) ► ► Watch Temporary Employee Expense! ► ► Work on CC Procssg.   Focus on Provision for Loan Losses (Loan Policy) (Lately PLL/Lns < ChgOff/Lns!) ► Continue to attract Consumer Loans, but don’t lose all Comm’l customers (Loans and Core Dep.) ► Continue to consider rate diff. in fund’g and invmt. ► Repurchase more Equity/Cap Nts. to manage Capital Adequacy and Leverage: Cap Adeq 1.15, C/A=6.7%.