PSA - 1st Source Bank - Renewal of Banking Services

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Cc: Tina Dougherty <doughertyt@lstsource.cam> Subject: BE: 2-Year Banking Services Proposal Draft John, I hope you had a nice vacation. My family and I are going to Tokyo this spring break. I used to work there and we haven't been back for 10 years, so we're really looking forward to it. The PDIF paragraph represents the Indiana Board of Depositories' potential requirement of financial institutions in Indiana to post collateral for public funds on deposit. They perform a credit analysis of approved depositories in Indiana on a quarterly basis. They notify all approved depositories every quarter whether or not they are required to post collateral for their deposits. If the Board stated that we are required to pledge collateral for 100% of all public funds on deposit, we will need to work closely with our public fund relationships to manage the balances. We have contingencies in place under this scenario to ensure that operations and liquidity are not significantly disrupted; however, we do want to be prepared should something occur in the future to protect our customers and the bank. With all that said, we do not view the PDIF collateral requirement scenario as probable. The Bank's financial standing is strong and we have not had any issues with the Board's quarterly assessments. I'm just trying to ensure that we are being as transparent as possible with the statement. to discuss further, I'd be more than happy to connect with you. Also, I will get a signed hard -copy of our proposal to you. Thank you again, Brett From: Brett Bauer [mailto:bauerb lstsource.com] Sent: Friday, March 17, 2017 12:53 PM To: John Murphy <'mur h sauthbendin. av> Cc: Tina Daugherty <dou hert t lstsource.com> Subject: 2-Year Banking Services Proposal Draft John, I can't believe 2 years have passed so quickly, but it's that time again for a new proposal to renew banking services. Tina and I called earlier and left a message, but 1 wanted to get a draft of our proposal to you (attached) for your review. if you agree with the details, please left me know and I will sign it and have a hardcopy delivered to you as soon as possible for your final review and consideration. We really appreciate all of your business and we hope that you will consider our proposal for another 2 years of continued banking services. Thank you again. Sincerely, Brett Bauer Senior Vice President Funds Management