Public Trading for U.S. Banks

November 17 , 2020 OTC Markets Group

Our Mission: To create better informed $18 trillion+ total market capitalization and more efficient financial markets $319 billion dollar volume – YTD 2020 OTC Markets Group Inc. (OTCQX: OTCM) operates the 11,371 securities OTCQX® Best Market, the OTCQB® Venture Market, and the connecting over 50 Pink® Open Market for 10,000 U.S. and global securities. recognized global exchanges

*As of September 30, 2020 Through OTC Link® ATS, we connect a diverse network of

broker-dealers that provide liquidity and execution services. We

enable investors to easily trade through the broker of their

choice and empower companies to improve the quality of

information available for investors.

OTC Link ATS is an SEC registered Alternative Trading System,

operated by OTC Link LLC, member FINRA/SIPC and SEC

regulated ATS. Public Markets

US Exchanges OTC Markets Our Markets

We organize 11,000 securities into three markets

The Best Market The Venture Market The Open Market

§ Early-stage and developing § Allows broker-dealers to § Established, investor- U.S. and international electronically trade all types of focused U.S. and global companies companies companies § Current public reporting and an § Companies not providing § High financial standards, annual verification and adequate information to best practice corporate management certification investors governance and compliance with U.S. securities laws § Must meet $0.01 bid test and § No minimum financial may not be in bankruptcy standards § Current public reporting § Meet thresholds for beneficial § Investors should research and § Penny , shells and shareholders and freely exercise caution companies in bankruptcy tradable Public Float cannot qualify for OTCQX FOR BANKS

The U.S. public market designed to meet the unique needs and profile of regional and community banks

• The first U.S. public market with rules, requirements and services tailored specifically for banks

• For well managed and strongly capitalized financial institutions looking for greater visibility and more capital market support

• An opportunity for banks to join a trusted market to build confidence with shareholders and reach more investors

• A bank index that provides better benchmarking and representation of publicly-traded banks OTCQX for Banks

• 100 Banks currently trade on OTCQX o Asset sizes range from $100mm - $5B • 2020 OTCQX Best 50 (out of 500 companies) - banks comprised 20% • 50 new Banks added to OTCQX since 2018 • 25 banks have gone public on OTCQX since 2014 o The cost is $250-500k less than on Nasdaq • 12 banks voluntarily joined OTCQX from Nasdaq/NYSE since 2014 o 9 deregistered from the SEC, saving over $250k per year, many have increased dividends as a result Benefits of a Public Market

Visibility Confidence & Trust Telling Your Growth Story It’s important to keep the public informed of what is occurring in your business – good and bad

Transparency and communication builds a sense of confidence and leads to investment

Valuation & Access to Capital Liquidity Price history & peer comparison Liquidity is a function of supply and demand, price transparency, trading • Public valuation vs. private valuation history, market venue, market • Raising Capital participants and freely tradable • Established Public Market shares • Acquisition Currency Challenges Facing Community Banks

• Incompatible public marketplace options • Growth - How to maintain market share and stay competitive? • Organic • M&A • Lack of information availability and distribution • Stockholder Trends • Shift from local to broad-based • Aging population and demographic changes • Increase use of technology (online / mobile) Understanding Your Shareholder Base

Who are your shareholders? • Customers, potential customers, employees, other community stakeholders • How are they trading? Are the holding physical stock certificates? How long have they held those shares? Are they looking to sell? • How much is held by insiders?

Identifying previous buyers and sellers

Retail or Institutional? • Retail – looking at dividends and yield • Institutional – focused on performance and growth (M&A opportunities, long-term) • Activists?

Today’s investors vs. baby boomers • Where are your investors based? • What’s the average age of your investors?

Focus on cultivating shareholders that support the bank’s strategic goals How To Provide Market Support for Your Stock

• Increase available liquidity à reduce volatility in share price • Liquidity is a function of supply and demand, price transparency, trading history, market venue, market participants and freely tradable shares (public float) • Liquidity is the ability of a shareholder to buy or sell the stock at a fair price at any given point

• Distribute timely financial disclosure and material information

• Understand who’s trading your bank’s stock • Get to know your market makers and local brokers, those that help you identify previous buyers and sellers

• Consider stock repurchasing and dividend reinvestment plans

• Increase awareness and visibility in the investment community Case Study: SVB&T Corporation (OTCQX:SVBT)

• Bank went public on OTCQX in June 2018 • $350mm in assets when initiating OTCQX Process, today $400mm in assets • Beginning price was $67, current price is $80; market cap increase +$7.2mm

“In our quest to accomplish the Board’s directive to build a new generation of shareholders, SVB&T Corporation made the decision to publicly trade on the convenient and transparent OTCQX Market in mid-2018. Moving from a clunky, internal buy-sell process to the OTCQX Market is like night and day. The quantum leap to OTCQX has definitely laid the foundation for all other tactical activities that Management must undertake." - Jamie Shinabarger, President and CEO OTCQX vs. NASDAQ

Cost Savings

• Allow bank reporting (non-SEC Reporting) if under 1,200 shareholders of record

• Estimated 5-year Savings on Nasdaq fees + SEC reporting expenses > $1.5M Visibility and Liquidity

• Virtual Investor Conferences • CEO Interviews • Market Opens • Community Spotlights • Press Releases • OTCQX Bank Index • Access to the OTC Market Center in City Blue Sky Status for Our Premium Market

Our markets have Blue Sky exemption in 37 states, through formal rule changes, no-action letters, administrative orders or trading exemptions

OTC Markets continues to work directly with state regulators to obtain recognition for the OTCQX market based upon the high-quality easily accessible, free, online public disclosure of information these companies provide to the public through our website, www.otcmarkets.com Mechanics of Trading

How additional market makers get involved in a bank stock

$440mm in assets $928mm in assets Corporate Sponsor

• A Corporate Sponsor is a FINRA Member broker-dealer firm that specializes in trading and advising bank stocks

• Each Corporate Sponsor has applied and been approved by OTC Markets Group to serve in this capacity

• Corporate Sponsor provide guidance on the trading of a bank’s stock, as well as help facilitate relationships with institutional investors, investment bankers and other key market participants

• Each bank is required to appoint a Corporate Sponsor before joining OTCQX Banks How to Go Public / Join OTCQX

• Consult Corporate Broker (i.e. Janney, D.A. Davidson, Raymond James, Piper Sandler, etc.)

• Submit OTCQX Application

• Corporate Broker files form 15c-211 with FINRA to establish a trading symbol (if the bank does not already have one

• Select Transfer Agent

• Apply for DTC Eligibility

• 15c-211 clears FINRA

• Bank commences trading on OTCQX Qualifications Contact

Laura Hamilton Vice President OTC Markets Group 212.896.4482 [email protected]