The Bank of Moulton
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Transcript of The Bank of Moulton
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The Bank of MoultonThe Bank of Moulton
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StrategyStrategy
► Community Cosumer Bank:Community Cosumer Bank: Local DepositsLocal Deposits Local Loans servicing consumer and small business Local Loans servicing consumer and small business
lendinglending► Service all customers while concentrating on loans to Service all customers while concentrating on loans to
Retail clients with deposits from both commercial and Retail clients with deposits from both commercial and retail clients, and increase Branchingretail clients, and increase Branching
Trust, Fin’l ServicesTrust, Fin’l Services► Use Jumbo CDs to strategically to finance specific needs Use Jumbo CDs to strategically to finance specific needs
Financial SlackFinancial Slack► Rely on core deposits to finance bank, make loans and Rely on core deposits to finance bank, make loans and
hold investment portfoliohold investment portfolio
►Concentrate on being profitable, NOT BIG!Concentrate on being profitable, NOT BIG!
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Strategy Levers and Strategy Levers and PerformancePerformance
► Move out of Jumbo CDs, use for strategic Move out of Jumbo CDs, use for strategic needsneeds 1.4 Assets $4.90 billion 1.4 CDs $950 million 1.4 MM Svgs $1.7 billion
2.4 Assets $3.96 billion Less CDs: 2.4 CDs $87.1 million Sold RE Portfolio 2.4 MM Svgs $1.92 billion & Synd Loans
3.4 Assets $5.11 billion 3.4 CDs $719.5 million Lns $3.5b $2.2b 3.4 MM Svgs $2.16 billion Secs. $1b
$2.5b
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Strategy Levers and Strategy Levers and PerformancePerformance
► Move out of Jumbo CDsMove out of Jumbo CDs
► Shift focus to High, Medium and Consumer Shift focus to High, Medium and Consumer LoansLoans Effec Int Rates vs. Spd + COF indicates High, Effec Int Rates vs. Spd + COF indicates High,
Med Med 70-30 Target 70-30 Target 25% 25% in Desired; 25% in Desired; 25% in Undesired; in Undesired; Reduce R/E Holdings to lower fund’g, but Svc!Reduce R/E Holdings to lower fund’g, but Svc! Reduce Synd as not Local Business loansReduce Synd as not Local Business loans 1.4 1.4 3.4 R/E -78%, Prime -22%, Synd -89%3.4 R/E -78%, Prime -22%, Synd -89% 1.4 1.4 3.4 H -18%, M -6%, Cons. -2%, CC -13% 3.4 H -18%, M -6%, Cons. -2%, CC -13% Watch PLL vs. Charge-OffsWatch PLL vs. Charge-Offs
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Effective Loan Rate - (COF+4%)
-3.00%
-2.50%
-2.00%
-1.50%
-1.00%
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.1 2.3 3.1 3.3
Quarter
Diff
eren
ce
P
H
M
S
R
C
CC
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25.0%
35.0%
45.0%
55.0%
65.0%
75.0%
1.4
2.1
2.2
2.3
2.4
3.1
3.2
3.3
3.4
Desired Loans
UndesiredLoans
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PLL% vs. Chg-Off%
0.60%
0.70%
0.80%
0.90%
1.00%
1.10%
1.20%
1.30%
1.40%
1.4 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4
PLL %
Chg-Off %
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Strategy Levers and Strategy Levers and PerformancePerformance
► Move out of Jumbo CDsMove out of Jumbo CDs
► Loans to Desired Customers (H, Med and Loans to Desired Customers (H, Med and Cons.)Cons.)
► Concentrate on being profitableConcentrate on being profitable ROE slows into ROA as Lev dropping.ROE slows into ROA as Lev dropping.
► ROE in the 20-25% rangeROE in the 20-25% range► Lev dropping due to Earnings; Cap Adeq at 1.40Lev dropping due to Earnings; Cap Adeq at 1.40
ROA Inc’gROA Inc’g► ROA in 1-2% rangeROA in 1-2% range
Adjmt. To RE and Futures shows Hedging, Adjmt. To RE and Futures shows Hedging, but also timing errorsbut also timing errors
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0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%
1.4 2.2 2.4 3.2 3.4
0.000%
0.500%
1.000%
1.500%
2.000%
2.500%
ROE
ROAPeak, SoldFut. WhenInt. Rts.
C/A =5.5%
C/A = 7%
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-40
-30
-20
-10
0
10
20
30
40
50
2.2 2.3 2.4 3.1 3.2 3.3 3.4
Dol
lars
& #
Cnt
s in
100
's
Adjtmt to R/E
# Short Fut
A/T Futures
Peak
Trough
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Components of ROA
-4.000%
-2.000%
0.000%
2.000%
4.000%
6.000%
ROA
Spread
Burden
Other Things
Sold R/E
Loss on Futures
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Components of Spread
-6.000%
-4.000%
-2.000%
0.000%
2.000%
4.000%
6.000%
8.000%
10.000%
1.4 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4
0.000%
0.500%
1.000%
1.500%
2.000%
2.500%
3.000%
3.500%
4.000%
4.500%
5.000%
Loans Securities Deposits Spread
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Components of Burden
-6.000%
-4.000%
-2.000%
0.000%
2.000%
4.000%
Burden S/C & Fees Non-Interest Expense
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Components of Non-Interest Expense
-4.000%
-3.000%
-2.000%
-1.000%
0.000%
1.4 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4
Salaries Occup Exp Bus Dev Other Exp
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Components of Other Expense
-4.000%
-3.000%
-2.000%
-1.000%
0.000%
1.4 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4 Other Exp
Temp Emp
CC Prcsg
All Rest
Fin'l Svcs.
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Profitability of Fee Services
-0.10%
0.00%
0.10%
0.20%
0.30%
1.4 2.1 2.2 2.3 2.4 3.1 3.2 3.3
CC Prcsg
All Rest
Fin'l Svcs.
Trust
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Plans for the FuturePlans for the Future
► Concentrate on Spread & BurdenConcentrate 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 Continue to attract Consumer Loans, but don’t lose all Comm’l customers (Loans and Core Dep.)lose all Comm’l customers (Loans and Core Dep.)
► Continue to consider rate diff. in fund’g and invmt.Continue to consider rate diff. in fund’g and invmt.► Repurchase more Equity/Cap Nts. to manage Repurchase more Equity/Cap Nts. to manage
Capital Adequacy and Leverage: Cap Adeq 1.15, Capital Adequacy and Leverage: Cap Adeq 1.15, C/A=6.7%.C/A=6.7%.