Five Year Plan1

8/14/2019 Five Year Plan1

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Five Year Plan (Service Industry)Model Inputs and Investor Scenario

General Notes and Assumptions

Year One Model Inputs

1. Year One Revenue Expectancy

Annual revenue per financial product $300,000 $600,000 $750,000 $0

Total year one product (noninterest) revenue $1,650,000

2. Credit Loss Provision Factor 3%

3. Annual Tax Rate 30%


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Five Year Plan (Service Industry)Profit and Loss Projections

Year-by-Year Profit and Loss Assumptions

Year 1 Year 2 Year 3 Year 4 Year 5Annual cumulative price (revenue) increase 2.00% 4.00% 6.00% 8.00%Annual cumulative inflation (expense) increase 2.00% 4.00% 6.00% 8.00%Interest rate on ending cash balance 0.50% 0.50% 0.50% 0.50% 0.50%

Year 1 Year 2 Year 3 Year 4 Year 5

Interest Income

Loans, including fees $0 $0 $0 $0 $0

Interest on federal funds sold 0 0 0 0 0Interest and dividends on investment securities 0 0 0 0 0Taxable 0 0 0 0 0Nontaxable 0 0 0 0 0Other (from ) 0 0 0 0 0Total Interest Income $0 $0 $0 $0 $0

Interest ExpenseInterest on deposits $1,500,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000Interest on other borrowings 0 0 0 0 0Other 0 0 0 0 0

Total Interest Expense $1,500,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000

Net Interest Income Before Provision for Credit Losses ($1,500,000) ($1,500,000) ($1,500,000) ($1,500,000) ($1,500,000

Provision for credit losses 0 0 0 0 0Net Interest Income ($1,500,000) ($1,500,000) ($1,500,000) ($1,500,000) ($1,500,000

Noninterest IncomeService charges $40,000 $40,800 $42,432 $44,978 $48,576Product revenue (not fee-related) 1,650,000 1,683,000 1,716,000 1,749,000 1,782,000Loan placement fees 60,000 60,300 60,602 60,905 61,209Gain on sale of securities 0 0 0 0 0

Gain on sale of other real estate owned 0 0 0 0 0Gain on sale of fixed assets 0 0 0 0 0Other 0 0 0 0 0Total Noninterest Income $1,750,000 $1,784,100 $1,819,034 $1,854,882 $1,891,785

Noninterest Expense

Salaries and employee benefits $600,000 $612,000 $636,480 $674,669 $728,642Occupancy fees 65,000 66,300 68,952 73,089 78,936Equipment 25,000 25,500 26,520 28,111 30,360Data processing 80,000 81,600 84,864 89,956 97,152Professional fees 50,000 51,000 53,040 56,222 60,720Director fees 40,000 40,800 42,432 44,978 48,576Amortization 0 0 0 0 0Litigation 50,000 51,000 53,040 56,222 60,720Other 5 000 5 100 5 304 5 622 6 072


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Five Year Plan (Service Industry)Balance Sheet Projections

Assets Initial Balance Year 1 Year 2 Year 3 Year 4 Year 5

Cash and due from banks $500,000 $34,500 ($419,940) ($876,059) ($1,347,850) ($1,851,426)Federal funds sold and securities purchased 0 0 0 0 0 0Cash and Cash Equivalents $500,000 $34,500 ($419,940) ($876,059) ($1,347,850) ($1,851,426)

Securities available for sale $200,000 $200,000 $200,000 $200,000 $200,000 $200,000Securities held to maturity 50,000 50,000 50,000 50,000 50,000 50,000Total Investment Securities $250,000 $250,000 $250,000 $250,000 $250,000 $250,000

Loans and leases $500,000 $500,000 $500,000 $500,000 $500,000 $500,000Unearned fees 0 0 0 0 0 0Allowance for credit losses 0 0 0 0 0 0

Total Loans $500,000 $500,000 $500,000 $500,000 $500,000 $500,000

Accrued interest receivable $0 $0 $0 $0 $0 $0Premises and equipment 0 0 0 0 0 0Other real estate owned 0 0 0 0 0 0Intangible assets 0 0 0 0 0 0Cash surrender value of life insurance 0 0 0 0 0 0Net amortized assets 0 0 0 0 0 0Deferred income taxes 0 0 0 0 0 0Other assets 50,000 50,000 50,000 50,000 50,000 50,000Total Assets $1,300,000 $834,500 $380,060 ($76,059) ($547,850) ($1,051,426)

Liabilities and Shareholders' Equity Initial Balance Year 1 Year 2 Year 3 Year 4 Year 5DepositsNoninterest-bearing $500,000 $500,000 $500,000 $500,000 $500,000 $500,000Interest-bearing 500,000 500,000 500,000 500,000 500,000 500,000Total Deposits $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000

Federal funds purchased and securities sold $0 $0 $0 $0 $0 $0Other borrowings 0 0 0 0 0 0Accrued interest payable 0 0 0 0 0 0Accounts payable 0 0 0 0 0 0Other liabilities 0 0 0 0 0 0Total Liabilities $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000

Common stock $100,000 $100,000 $100,000 $100,000 $100,000 $100,000Preferred stock 0 0 0 0 0 0Additional paid-in capital 200,000 200,000 200,000 200,000 200,000 200,000Retained earnings 0 (465,500) (919,940) (1,376,059) (1,847,850) (2,351,426)Unearned employee stock option shares 0 0 0 0 0 0Accumulated other comprehensive income 0 0 0 0 0 0Total Equity $300,000 ($165,500) ($619,940) ($1,076,059) ($1,547,850) ($2,051,426)

Total Liabilities and Equity $1,300,000 $834,500 $380,060 ($76,059) ($547,850) ($1,051,426)


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Five Year Plan (Service Industry)Cash Flow

Operating Activities Year 1 Year 2 Year 3 Year 4 Year 5 Total

Net income($465,500) ($454,440) ($456,119) ($471,791) ($503,576) ($2,351,426)

Provision for credit losses $0 $0 $0 $0 $0 $0Depreciation and amortization 0 0 0 0 0 0Gain on sale of securities 0 0 0 0 0 0Increase in accrued interest payable 0 0 0 0 0 0Increase in unearned fees 0 0 0 0 0 0Increase in income taxes payable 0 0 0 0 0 0

Increase in accounts payable and accrued liabilities 0 0 0 0 0 0Write-down of other real estate owned 0 0 0 0 0 0

Gain on sale of other real estate owned 0 0 0 0 0 0Gain on sale of assets 0 0 0 0 0 0

Increase in surrender value of life insurance 0 0 0 0 0 0Total Operating Activities ($465,500) ($454,440) ($456,119) ($471,791) ($503,576) ($2,351,426)

Investing Activities Year 1 Year 2 Year 3 Year 4 Year 5 Total

Purchase of available-for-sale securities $0 $0 $0 $0 $0 $0Redemption of other stock 0 0 0 0 0 0

Maturities and calls of available-for-sale securities 0 0 0 0 0 0

Maturities and calls of held-to-maturity securities 0 0 0 0 0 0Proceeds from sales of available-for-sale securities 0 0 0 0 0 0

Net increase in loans 0 0 0 0 0 0Proceeds from sales of other real estate owned 0 0 0 0 0 0

Capital expenditures for other real estate owned 0 0 0 0 0 0

Capital expenditures for premises and equipment 0 0 0 0 0 0

Proceeds from sales of premises and equipment 0 0 0 0 0 0Total Investing Activities $0 $0 $0 $0 $0 $0

Financing Activities Year 1 Year 2 Year 3 Year 4 Year 5 Total

Increase in demand and savings account $0 $0 $0 $0 $0 $0Increase in certificates of deposit 0 0 0 0 0 0Increase in federal funds purchased 0 0 0 0 0 0Increase in repurchase agreements 0 0 0 0 0 0Employee stock options exercised 0 0 0 0 0 0Repurchase of common stock 0 0 0 0 0 0Payment of dividends 0 0 0 0 0 0Total Financing Activities $0 $0 $0 $0 $0 $0

Cumulative Cash Flows ($465,500) ($454,440) ($456,119) ($471,791) ($503,576) ($2,351,426)

Beginning Cash Balance $500,000 $34,500 ($419,940) ($876,059) ($1,347,850)Ending Cash Balance $34,500 ($419,940) ($876,059) ($1,347,850) ($1,851,426)

Adjustments to reconcile net earnings to cashprovided by operating activities

Documents

Five Year Plan1