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February 15, 2024

With the completion of the calendar year 2023, I would like to share a few thoughts on the progress of our Bank.

After the second and third calendar quarters of 2023, I told you that Integrity was operating at an approximately break-even net income level. This continued into the fourth calendar quarter of 2023 in which Integrity had a net income of approximately $1,000. I also told you that Integrity would be seeking to recruit several senior banking executives in 2024. This would substantially increase the Bank’s compensation expense in the short term with the expectation to materially increase our efficiency, profitability, and growth over time. We are continuing our recruiting efforts for these senior banking executives but do not have anything to report to you at this time.

Bank liquidity has recently been one of the primary topics of conversation among bankers, regulators, and bank clients. Throughout 2023, we highlighted for our shareholders, clients, and prospects our Fortress Balance Sheet and our liquidity, both on an absolute basis and on a comparative basis with other local banks. Continuing this trend, on December 31, 2023, Integrity surpassed all other local banks for the primary ratios that many bank analysts use to measure bank liquidity.

Many bank analysts and investors use a ratio of cash and securities to uninsured deposits (“Uninsured Deposits Ratio”) as an important measure of a bank’s liquidity and ability to successfully deal with extraordinary deposit withdrawals. Integrity’s Uninsured Deposit Ratio on December 31, 2023, was a remarkable 139.5% - compelling evidence of our Fortress Balance Sheet.

As you know, for now, we are not growing our standalone transactional loans or soliciting highly interest rate sensitive deposits. The business model for Integrity has been, and continues to be, to employ a relationship banking strategy for loans and deposits. To do otherwise is to utilize costly purchased deposits for funding price sensitive lending. In other words, we try to make loans to clients and prospects with liquidity that are or will become core depositors at Integrity.

Real estate loans to prospects with limited liquidity to cover unexpected difficulties are often merely “bets” of shareholder money on our local economy. These are “bets” that we avoid making with our shareholders’ money. Our shareholders are far more qualified to invest directly into local real estate rather than indirectly through any local bank, even a local bank as conservative and knowledgeable about local real estate as Integrity. Our Bank makes loans, not real estate investments.

Getting to the nub of the matter, in uncertain interest rate and economic environments, patience and the capability to be patient are virtues available to Integrity but not necessarily to many other banks. Integrity should not and will not create safety and soundness issues for itself from growth through higher risk real estate loans funded by brokered deposits, high-rate money market accounts and CDs, etc.

Integrity has a Fortress Balance Sheet and intends to maintain it. As I like to say, Integrity may not be Too Big to Fail but Integrity is Too Strong to Fail.


Michael S. Ives
President and CEO
Integrity Bank for Business

The above letter from the CEO of Integrity Bank for Business (the “Bank”) may contain “forward looking statements” regarding future events and future results of the Bank. Forward-looking statements can be identified by words such as “anticipates,” “estimates,” “intends,” “plans,” “believes,” “projects,” “will,” “expects,” “may,” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance, but are based only on the Bank’s current beliefs, expectations, and assumptions regarding the future of its business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and outside of the Bank’s control. The Bank’s actual results and financial condition may differ materially from those indicated in forward-looking statements, and therefore you should not rely on forward-looking statements. Any forward-looking statement made by the Bank is based only on information available to the Bank as of the date on which it is made, and the Bank has no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise.

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