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By Kas Stewart, SVP and AAP The Bankers Bank offers a full suite of International Services! Customers traveling abroad? The Bankers Bank offers banknotes in more than one hundred currencies. Need to collect an international cheque? The Bankers Bank can collect drafts in more than seventy different currencies. Single Sign On with imaging (requires a dedicated scanner) can provide next day availability for Canadian cheques. Need to send an international wire? International wires services are now available using a Single Sign On through iWeb. It includes Payee Intelligence, immediate availability of the exchange rate, Swift Code validator and GPI tracking. Call The Bankers Bank and ask for Joanie, Carla or Gaila for details.

By Troy Appling, President & CEO In his book Community Banking from Crisis to Prosperity , Tim Koch, the former President of the Graduate School of Banking at Colorado, stated “Community banking is about the importance of relationships.” I could not agree more. That statement is also true about The Bankers Bank. It may sound corny, but a central message I preach is that we do not have customers, we have friends who do business with us. I absolutely believe that. Banking in general is a commodity. We all just move money. There are other places where you could obtain correspondent banking services. We believe what sets TBB apart is not only the quality of services, but how we make you feel. We truly value our relationship with every one of our customers. We can provide you with better services when we know you and your business needs. While the headlines talk about Silicon Valley Bank, liquidity, regulatory pressures and inflation, we are focused on the direct needs of our community of banks. Thank you for the opportunity to be your banker. I look forward to the next time we get to see each other. Sincerely, Troy Appling, President & CEO

It wasn’t the coldest tourney we’ve held. Nor was it the wettest. But it was the first one to be delayed. There were dark skies and lots of lightning, just as players were arriving. As Okies do, most were out in front of the clubhouse watching the clouds. However, the delay was a good time to wander through the pro shop, have another cup of coffee and catch up with colleagues. Once play began, everyone enjoyed themselves. Lunch was laid back with lots of smack talk and laughter. Thank you again to all our sponsors, volunteers and players. A great time was had by all! A Flight 1st: Terry Shelby, Robert Garton, Barry Schwarz, Tony Mikles 2nd: Shanon Butler, Justin Hewes, Jason Shephard, Trevor Powers 3rd: Matt Lagere, Tyler Konarik, Chandy Cornelius, Brandon Appling B Flight 1st: Rusty McGuire, Ryan Newby, Joshua Haven, Bray Haven 2nd: Mark Poole, Tommy Talley, Ryan Alexander, Heath Hartley 3rd: Deke Alexander, John Gosser, Steve Jones, Lynn Krauss C Flight 1st: Tanner Holder, Tara Holder, Jeff Nippert, JW Heflin 2nd: Barry Anderson, Bryce Anderson, Jordan Gomez, Josh Atkinson 3rd: Don Tyson, Blake Clift, Kem Crowell, Carlie Weaver Longest Drive: Matt Jackson & Nolan Couch Longest Putt: Mac Brunker & Brandon Appling Closest-to-the-Pin: Zane Anderson & Sayer Brenner Mark your calendars to join us on June 10, 2024 for our 35th Annual Golf Classic.

Office phone systems can be a security and legal liability. Most office administrators don’t realize the extent of the risk and the ease of infiltration. Phone communication used to be a service fully separate from other facets of a company’s environment. The most concerned we’d be about telephone security was what we watched in spy movies with bugs or wiretapping. Now telephony and data have merged into a unified communication system with voice flowing through ethernet connections. Many phone systems will integrate with CRM applications to provide a seamless experience in conversation and data access. With all this convergence, it’s time that every company pay close attention to the telephony with the same enthusiasm that is given to computers, firewalls, cloud, and mobile devices. So, what kind of risks are there and how do you go about narrowing or closing those vulnerability gaps? The best way to get started is to consider the following: 1) The phone provider should fully understand telephony security and cybersecurity – Many telecom companies were started in the mid and late 1900s with some knowledge about phone systems and how to configure these systems. A lot have grown to embrace and make the shift into VoIP. However, some of these providers did not learn about cybersecurity. Though VoIP data is often passing over the same cabling as secure business data, the telecom provider might not have configured the VoIP system with the same level of security that has been applied to the network data. Before you sign up with a phone provider, check into their compliance and accreditation; for instance, they should be affirmed with SOC 2, HIPAA, and PCI compliance. 2) Keep your phone system firmware up to date – When we check networks for vulnerabilities, many times we find that phone system related vulnerabilities exist only because the telecom provider has not regularly updated the firmware. For computers, auditors and examiners expect us to install updates almost immediately upon release. Sadly, this is not an expectation of the phone system, which leaves known security holes vulnerable to attacks by the most novice of hackers. 3) Secure the voice traffic – The traditional phone system used POTS (Plain Old Telephone System) lines. These analog lines use audio signals which can be intercepted and listened to live. Similarly, with VoIP if the voice traffic is not encrypted, a hacker can capture the packets on the network and play them back as audio. This is still extremely simple and requires no privileged access to the network. The solution is to encrypt the voice traffic while in transit and at rest. But be careful – some systems will say that they encrypt, but they might only encrypt the original handshake and not the actual voice traffic. This is an example of Voice Over Misconfigured Internet Telephones – VOMIT. 4) Segment VoIP traffic – One of the many reasons to segment voice traffic from data traffic is security. With an increase in VoIP traffic hijacking, segmentation allows traffic to be better filtered of bad packets. Additionally, many bank examiners and auditors are asking about VoIP segmentation, which means it should be considered an important security measure to apply. 5) Check with your telecom provider about some common vulnerabilities – In our scanning of network vulnerabilities, we have found the following three to be the most common and concerning with regards to the phone systems. /WEB-INF/ Information Disclosure Vulnerability (HTTP) CVSS Score: 10 Comment: This is a major vulnerability, especially if a network has not been segmented, because it means a system is vulnerable to information leakage. As it pertains to phone systems, an attacker could potentially view sensitive information including but not limited to call logs, usernames, and phone numbers. Diffie-Hellman Ephemeral Key Exchange DoS Vulnerability (SSL/TLS, D(HE)ater) CVSS Score: 7.5 The remote SSL/TLS server is supporting Diffie-Hellman ephemeral (DHE) Key Exchange algorithms and thus could be prone to a denial of service (DoS) vulnerability. Comment: While there is no risk of data being compromised, a DoS attack can render a branch, website, or even whole company unable to perform necessary job functions. SSL/TLS: Deprecated SSLv2 and SSLv3 Protocol Detection CVSS Score: 5.9 Comment: These deprecated protocols have multiple security flaws and nearly all technology has moved away from using them. Keeping hardware and software/firmware up to date eliminates this type of vulnerability. So, talk with your provider and make sure that system you have is secure. If you find yourself in need of a better solution, Forward In Technology, Inc. has the staff, services, and products to give you the best features and security in a unified communications solution with SOC 2, PCI, and HIPAA compliance.

I would like to start with my gratitude to our shareholders and customers. It is your continued faith in our institution that has allowed us to thrive. We were able to show that gratitude to our past board members at our annual shareholder meeting in March where we had nearly all living board alumni in attendance. Their leadership, and your support, have shown literal dividends for The Bankers Bank. Perhaps it is our conservative nature, but it feels as though we bankers are always observing headwinds in our industry. Today that headwind is liquidity, and as you know it is manifesting at several large regional institutions on the coasts. The failure of those institutions has actually shown the strength of our community bank customers. Strong relationships, wise financial decisions and a more sustainable deposit base demonstrate why institutions like yours are so important. Some of the many lessons we have learned (or relearned) from this banking trauma include: 1. A bank run in the digital age can manifest faster than imagined, resulting in bank closures mid-day. 2. Uninsured deposits ratios are an important predictor of customer confidence in uncertain times. 3. Active management of assets and liabilities are fundamental to a healthy balance sheet. 4. Social media/digital communications can stir depositor panic. You should be proud of your team here at The Bankers Bank. We have great customer relationships and balance sheet management. While we can always use more deposits, we have many methods to fund our commitments, like our very popular money market account. As always, please let us know what we can do to help your bank flourish! Sincerely, Troy Appling, President & CEO

The Annual Shareholder meeting was held at the Quail Creek Golf and Country Club on Friday, March 24th, where we announced the newly elected members of Bankers Bancorp Board of Directors, Chris Rector and John Robin. Get to know them below! Chris Rector CLO, Regional President Firstar Bank | Tulsa, OK Chris Rector is the Chief Lending Officer and Regional President for Firstar Bank based in Sallisaw, Oklahoma. He also sits on Firstar’s board and has been a shareholder since 2020. Rector has 23 years of lending experience. He holds a Bachelor’s Degree in Business Management from Oral Roberts University and is a graduate of both ABA’s National Commercial Lending School and OBA’s Consumer and Commercial Lending School. Outside of serving the local banking community, Rector is involved with the Teachers Retirement System of Oklahoma; he is a Chair for the Investment Committee and was nominated by Governor Kevin Stitt to serve as a Trustee. He is also an owner/partner of a small plumbing company and proud father to two daughters, Raegan and Morgan. John Robin EVP, Head of Lending Sooner State Bank | Tuttle, OK John Robin is the Executive Vice President and Head of Lending at Sooner State Bank in Tuttle, Oklahoma. Robin is a graduate of the University of Oklahoma and the Graduate School of Banking, Colorado. In addition, he has attended numerous schools through the Oklahoma Bankers Association and has over 30 years of banking experience. He is very involved with various civic and professional groups and has held many leadership rolls including both President and Treasurer of the Northwest Oklahoma City Rotary, Chairman of the OBA’s Commercial Lending School, Instructor of Junior Achievement in Oklahoma City, Board Member of the Edmond Soccer Club and Metropolitan Area Development Corporation, Member of both OBA’s Government Relations and Fraud Council, and Instructor for several OBA schools.

Malinda Rickel and I just returned from the annual NACHA conference. We have not attended for the last couple of years, so this one felt like it was bigger and better than any other. While the focus was certainly on Faster Payments, there were a variety of sessions to keep us busy! And you will be delighted to learn the ACH network is still alive and well and growing. In 2022, there were 30 billion ACH transactions totaling $76.7 trillion. Possibilities for ACH in the future include a new processing window that will align with close of business in Pacific time; Additional ACH distributions on weekends and Holidays that will include settlement and funds availability, and increased dollar limits on transactions. No time frames for any of those enhancements, just a peek into the future. One of the announcements you may have seen recently is the Federal Reserve’s move to a Seven Day Accounting structure that will be effective June 12, 2023. Banks who have subscribed to the Federal Reserve Account Management Information service (AMI) may want to do some testing, but that is not necessary for others. This change is in preparation for the launch of FedNow in July of 2023. This change will not significantly impact you until you begin participating in FedNow. If you need more information on this process, there is a Resource Center on the frbservices.org website. The Bankers Bank is continuing to prepare for the FedNow launch and we find there is still confusion about how this service will work and what steps your bank needs to take to participate, either at launch or later. One of the most important pieces of the puzzle is how your bank will receive/send transactions. Many core providers are developing a solution for their users. If you have interest in FedNow and have not discussed this with your core, you should start there. If you would like to discuss the product and the role that The Bankers Bank has in this project, please call.

Each year The Bankers Bank sends a handful of employees to the Oklahoma Bankers Association Annual Convention. The event is always chock-full of education and camaraderie, but this year was extra special for a few select staff members. Kas Stewart, Amanda Martin and Courtney McDaniel were all recognized for their hard work and success in banking and they took some fancy hardware home with them! TBB is very proud to have them on the team. We know our customers appreciate them and their dedication, friendship and knowledge. Kas Stewart SVP/Calling Officer Kas Stewart was inducted into the Oklahoma Bankers Association “50 Year Club” and honored for her years of service to the banking industry. What an accomplishment! She started her banking career with the Federal Reserve but The Bankers Bank is proud to have called her their own for 18 years. Kas is loved and respected by bankers throughout the state of Oklahoma; some might say she knows everything and everyone related to banking. She encourages the next generation to find a job they love so that they never have to work a day in their life. Kas lives in Oklahoma City, Oklahoma with her husband, Mike, and their sweet pup, Mable. She spends her days on the road as a Calling Officer, bringing her knowledge and expertise to customers from Boise City to Idabel and everywhere inbetween. Kas and Mike love cars, especially fast ones. Both have been involved in drag racing as owner, participant, pit crew or spectator since the 60’s. Their car of choice is a top fuel dragster. They also enjoy Formula 1 and Hot Rod Reunions. Amanda Martin AVP/Calling Officer Congratulations to Amanda Martin for graduating from the Oklahoma Bankers Association Emerging Leaders Academy. Amanda has been a “Road Warrior” at The Bankers Bank for three and a half years and has made her way through several OBA schools during that time including both the Operations and Intermediate Schools. Amanda has a background in marketing for financial institutions and has worked hard to understand the banking operations side of things since joining TBB. Amanda is a proud mom to nine-month-old Graham. Her husband, Cole, is also a banker and the three of them live in Oklahoma City, Oklahoma, with their two extra-large and fluffy dogs, Chloe and Kylo. Amanda serves on both her neighborhood association board and the Community Bankers Association of Oklahoma’s Horizon Bankers board. By day, Amanda loves building relationships with bankers across Oklahoma as a Calling Officer. By night, she enjoys fitness, travel near and far, hiking and family time. Courtney McDaniel Card Services Accounting Clerk Courtney McDaniel graduated from the Oklahoma Bankers Association Emerging Leaders Academy – way to go, Courtney! She is a rockstar employee at The Bankers Bank who always goes above and beyond. She dedicates time and energy to her job as well as many extra-curricular activities at the bank including social committees, volunteer groups, party planning and more. Courtney has worked at TBB for six and a half years and has spent time in both the lending department and the credit card department. With all that experience, her future with TBB is bright. Courtney lives in Yukon, Oklahoma, with her husband, Jake, their daughter, Madison, and a herd of dogs and cats! She is a board member for her local fire department (of which her husband is a volunteer fire fighter) and enjoys spending time with family and going to concerts when she is out of the office.

FedNow moves closer to implementation every day and The Bankers Bank continues to participate in testing and preparation. Here are some things we know: FedNow is a new and innovative product that could provide a competitive advantage and create a new revenue source for your financial institution. Your financial institution can participate directly with the Federal Reserve or through your existing correspondent relationship with The Bankers Bank. FedNow is a good funds model with immediate settlement and immediate funds availability. FedNow is credit only, domestic only, final, and irrevocable payment. Your financial institution has options for participation. You may receive only, send and receive, or you may choose not to participate. FedNow uses ISO20022, a global standard messaging format. This is not ACH, not wire transfer and not a card rail. FedNow is a 24/7/365 product but that does not mean you need staff available for monitoring. All payment types will be supported: A2A; P2P; B2B; C2B; B2C. Rules and Regulations are available; Regulation E; Regulation J (amended); Federal Reserve Operating Circulars 1, 5 and 8; UCC4A. Resources for training and education are available on the Federal Reserve site. What could/should you be doing to prepare? Do you have a payment strategy? Are Instant Payments a part of that strategy? The Fed has announced pricing, have you considered what you will charge? The Federal Reserve has established a value limit for their service. Have you determined the maximum value your financial institution will allow to be sent in one transaction? Are you or your customers still writing checks? Could the bill paying process be improved with FedNow? Can you identify use cases or customers who would take advantage of a new and faster payment system? How would Instant Payments affect your cash flow? Has your core provider reached out to you? Still feel like you lack some key information? Check out the FedNow Service Readiness Guide. It is very comprehensive and while it reviews much of what you already know, you will find a section dedicated to Technology Planning; Treasury Operations Planning; Liquidity Management; Information Security and even a Sample of the Activity Report the Fed will provide. OR Call The Bankers Bank!

As we welcome 2023, I am first happy to report that 2022 was another incredible year for TBB and our subsidiaries, BPSI and FIT. At the Bank, our net income was over $3,000,000 and our ROA was 1.46% (compared to less than 1.0% by our peer group). It was one of the best years in the bank’s history. As a quasi co-op, we are excited to be able to turn these profits into dividends to our shareholders as well as use towards research and development to give our customer banks the tools to keep up with the “Too Big To Fail” banks. The credit goes to our customers and our staff. We have dedicated employees and subject matter experts who work hard to support our community banks. We know that we succeed when our customers succeed. So, what does that mean for 2023? As my old football coach would say, “We’re going back to the basics and focus on blocking and tackling.” Instead of trying to do everything, we are going to emphasize our core offerings that really impact our community banks. Those items include: 1. Managing your excess liquidity. 2. Helping your bank take care of your best customers with loans and other products. 3. Aggregating our customers to help drive better terms from vendors. 4. Being subject matter experts on issues you care about like payments, technology, etc. We will be improving our current products, like iWeb and offering new services like FedNow and SBA loan packaging. Our affiliates, Forward in Technology and Bankers Professional Services are taking the same approach as well. I encourage you to talk to us about your needs. We can’t help you unless you tell us what you need. Helping community banks is our mission. Sincerely, Troy Appling, President & CEO

Much has been written about the staggering level of unrealized losses in community bank securities portfolios triggered by the rapid rise in interest rates in 2022. Tangible capital ratios fell to low single digits or even negative due to these losses being recorded in the banks’ capital accounts as “other comprehensive income” (bypassing the income statement). At the end of the third quarter 2022, the average loss, as a percentage of the investment portfolio book value, was 13.6% for all US community banks (assets less than $1.5 billion) and 10.6% and 12.4% for Oklahoma and Texas banks, respectively, based on banks’ call report filings. Oklahoma banks have about 25% of their assets in the securities portfolio (same as the US bank average) while Texas banks have about 29% of their assets in bonds. The first glaring issue caused by the losses relates to capital adequacy concerns. The losses are excluded from the calculation of Tier 1 regulatory capital, but there could be peripheral issues or examiner concerns relating to liquidity risk, interest rate/market risk, or even the management component of the CAMELS rating. A number of bankers have expressed concern about examiners requiring approval of dividends or distributions due to the low equity ratios. These banks’ concerns are not unfounded. Banks with large unrealized losses should re-assess their enterprise risk management assessments, their capital plans, their liquidity and funding strategies, and their balance sheet cash flows. They should share these with their boards and their primary regulators to demonstrate a thorough understanding of these issues and how they intend to manage these risks over the next two to three years. The losses in the bond portfolio will persist until interest rates decline heading into 2024. Interest rates could decline by 200 to 300 basis points before unrealized losses on legacy holdings have been erased. This, in essence, means you have used or consumed that much of your capital to support your bank’s market and liquidity risk, resulting in less remaining capital for credit risk in the loan portfolio. This compels bankers to be very good at identifying, quantifying, reporting, and managing credit risk in loans. At this time, we just don’t have the capital capacity to take big loan losses! With interest rates having risen by 4 percent and a slowing economy, this is a real risk. The greatest concern I have in 2023, relating to the high level of portfolio losses, is liquidity risk. Even without regard to these bond losses, liquidity risk has increased significantly for banks due largely to retail, public and corporate depositors moving funds into money market funds outside of banks as they seek higher returns. Additionally, strong loan demand in the first half of 2022, and throughout the year, has put further pressure on liquidity. Managing liquidity risk must be based on thorough cash flow analysis of the entire balance sheet including building a foundation of rock-solid cash flow from the securities portfolio. It has been reported that the levels of FHLB advances and Fed Funds purchased are at multi year highs. Quantitative tightening by the Federal Reserve has slowly drained liquidity from the banking system affecting the biggest banks first but eventually impacting community banks. Banks having large investment portfolios should in theory have an easier time meeting their liquidity needs. If, however, those banks have the majority of their bonds in long duration instruments they now have sizeable losses in virtually all of their holdings. Remember, to be liquid you must have cash on hand, have the ability to access cash or convert an asset to cash without excessive cost or loss. It can’t be prohibitively expensive. As of this writing, the Fed Funds target rate is 200 basis points higher than at any point in the past 15 years. The average yield on Fed funds was 82 basis points (upper bound). And for 10 of those 15 years, the range for the Federal Reserve’s Fed Funds target rate was 0 to 25 basis points. For the same 15-year period (2008 through 2023), the average yield on the 10-year US Treasury note was below 2.50%. During the same 15-year period, the yield spreads for some Treasury alternatives (MBS, CMO’s and corporates) were exceptionally narrow and began to widen in 2022, putting further pressure on prices. Why do I offer this perspective? It is important to recognize that very few, if any, of our securities holdings today have gains. Almost every bond I own, I own at a loss. Nonetheless, I suggest you run a filter in your bond accounting or portfolio analytic platform to sort all your securities holdings overall and by sector by loss – smallest to biggest loss. I would identify which securities, if any, I could sell without realizing an inordinate loss that could disrupt my earnings and Tier 1 capital growth. I would confirm my borrowing facilities with counterparties – fed funds lines, FHLB advances, brokered CD lines and other sources. It has been widely discussed that the FHLB’s regulator, the Federal Housing Finance Agency, will not allow the eleven FHLB’s to lend to banks with negative tangible capital (the unrealized bond losses exceed equity). I’m afraid that liquidity and funding challenges will be more serious than many banks realize. Please remember that the first and most important goal of a securities portfolio is to be a tool to help manage liquidity risk. The second goal is to assist in managing interest rate risk, and thirdly earnings. Yield is third! Never forget that. Determine how much latitude you have for taking bond losses or using wholesale borrowings based on your 2023 budget and business plan without creating excessive earnings disruption. And when it comes to understanding risk in your portfolio please don’t forget about optionality, measured by negative convexity. Many fixed income analysts focus primarily on duration risk. Duration IS an important (maybe the most important) tool to manage market risk in a bond portfolio. But securities with embedded options (MBS, CMO’s) and explicit options (callable agencies) can trigger an increase in duration and acceleration in the level of losses as rates rise. This is measured in part by a metric referred to as “stressed duration.” Please understand this concept and use convexity! So, to reiterate: • Take liquidity risk seriously • Review your liquidity, funding policies and strategies, and update as necessary • Update your investment portfolio strategy • Update your ERM report for integrated assessment of all financial and operating risks • Update your capital plan • Communicate with your board and primary examiner(s) • Test your borrowing facilities • Communicate to your customer personnel, contact your deposit pricing and customer retention goals and latitude on rates paid for each market you serve • Stratify your bond holdings by size of loss by sector • If you decide to sell bonds always get a minimum of two and preferably three bids • Ensure bond swaps proposed by brokers benefit the bank more than the broker Lastly, three thoughts to remember: Patience, Discipline and Simplicity. Today’s economic uncertainty and market volatility demand that we reduce risk not exacerbate it – that we sharpen our focus on our bank’s liquidity. A bank’s bond portfolio is not to be managed like a hedge fund. The theme you hear today in business media is “Risk Off.” Remain Tactical and strategic when evaluating proposed swaps increasing duration. There will be a time for extending duration and adding optionality or credit risk to your portfolio. While that time may be nearing, for most institutions, I don’t believe today is that time. This is a time for risk off and preserving liquidity. I wish everyone God’s peace and richest blessings throughout 2023.

We are fresh off the TBB Road Shows and I was so glad to see so many friends. We hosted almost 200 people in five cities and discussed new iWeb features, faster payments, cyber security, cryptocurrency, and capital lending alternatives. Importantly we learned what we do well and what we can improve upon. If we missed you, please let us know what we can do better and what services you would like to see from your correspondent bank. For 2022, the good news is that things are shaping up for another excellent year. TBB continues to provide exceptional products and services with efficiency. The bad news is we are looking at a lot of the same things you are like margin compression, increased costs and competition, inflation, and a possible recession. First, we can use your help. If you have a loan you need to participate, or have capital needs, come see us first. We will never be your competition! Second, we need to invest more in our products, services and people. As a result, we will continue to evaluate our pricing, but do not worry. As a quasi-cooperative we will always look to balance a sustainable business model with tremendous customer value. Most of our customers are also our shareholders so we will always make your bottom line a priority. Thank you for all that you do with us! Sincerely, Troy Appling, President & CEO