Presented by: Steve Genereau Director of Bank Sales
Agenda • Challenges Facing Banks Today • The Solution: 180 Days to a Stronger Balance Sheet • About Intrasweep • Summary
Challenges Facing Banks Today • Growing deposits • Funding loan growth • “92% of bankers surveyed said they anticipate using core deposits to fund their bank’s growth in 2008, although in the current market, their ability to do so may be severely hampered by steep competition and higher rates” – Grant Thornton, The 15th Bank Executive Survey 2008 • 81% of bankers say finding adequate funding sources will be important to their banks’ success next year.
Challenges Facing Banks Today • Competing effectively • 76% of bankers surveyed rank competition from community banks as their highest concern; credit unions being second highest Online Banks Higher Rates Technology Credit Unions Lower levels of customer loyalty Safety/Security Concerns
Challenges Facing Banks Today • Attracting and retaining customer relationships • 91% of bankers surveyed plan to increase their cross-sell efforts to help solidify customer relationships and leverage profitable business • After the recent number of bank failures, many community banks are launching media/marketing campaigns promoting the safety and security of their institution in these uncertain times.
Challenges Facing Banks Today • Attracting and retaining customer relationships • Implementation of non-traditional cross-sell services, like free coin machines in branches, longer hours, and better employee training provide more traffic and face-to-face time with tellers, therefore increasing opportunity for cross-sell • Many community banks are leveraging community event sponsorships and adopting “Going Green” practices to strengthen existing relationships and brand awareness with retail and commercial clientele
Challenges Facing Banks Today • Maintaining healthy net interest margins • Generating fee income • Meeting regulatory requirements
Challenges Facing Banks TodayIndustry Responses Much more demand for the following: • On-balance-sheet cash sweep • Off-balance-sheet cash sweep • Multiple FDIC solutions(CDARS, Reserve Insured Deposits, etc.) • Deposit reclassification • Excess FDIC insurance(i.e., Kansas Surety, Progressive, etc.)
The Solution: IntrasweepAddressing Challenges • Growing deposits • The On-Balance-Sheet Cash Sweep solution is designed to give banks more control over customers’ cash by retaining deposits • Funding loan growth • Cash remains on the balance sheet, which allows for the funding of loans or other investments • Convert cash that is locked in repo sweep programs • Maintaining healthy net Interest margins • The bank sets interest rates and has the ability to tier rates based on balances or account relationship • Generating fee income • Both On- and Off-Balance-Sheet solutions provide opportunities to generate fee income
The Solution: IntrasweepAddressing Challenges • Attracting and retaining customer relationships • The On-Balance-Sheet Cash Sweep has proven effective in attracting new accounts and solidifying existing customer relationships • Meeting regulatory compliance • Patented process in place to comply with monthly withdrawal transaction restrictions (Reg. D) while allowing for the payment of interest on commercial checking accounts (Reg. Q) • Competing effectively • Build distinction as an innovative, full-service financial provider in your market space • Advertise that dollars are being kept in the community
The Solution: Intrasweepfor Your Bank • Offer a unique cash management service especially designed for commercial customers • Retain cash in commercial sweep accounts on the bank’s balance sheet with administrative ease • Generate new core deposits and grow loan-able funds • Convert cash that is locked in repo programs into loan-able funds • Increase fee income • Attract new commercial customers and expand existing relationships • Segment customer base through tiered interest rate
The Solution: Intrasweepfor Your Customers • Earn or increase returns on idle balances • Eliminate time spent checking balances and initiating transfers • Keep deposits in the community since excess funds are transferred into a money market deposits account held at the bank
On-Balance-Sheet Cash SweepSolution: How It Works • Bank provides account analysis and works with customer to designate a target balance of deposits to be maintained in checking account • Customer signs new account agreement and an independent third party is assigned as its agent on sweep account • Intrasweep’s role is to maintain official books and records for each customer’s account. The bank’s core processing system serves as processor for daily sweep processing activity
Bank Sweep Excess funds swept from Customer A DDA Bank Intrasweep Deposit Day Transmit Sweep File to Intrasweep Customer Deposit $100,000 Customer A DDA=$100,000 Target=$50,000 Analyze DDA & Shadow Account Balances Create Sweep Transaction File Process Sweep File Credit Customer A Shadow Account = $0 Debit Customer ADDA=$50,000 Credit/Debit Customer Accts Ex. Customer A $50,000 Credit Credit Customer A Shadow/GL Account=$50,000 * Assumption: Customer deposit of $100,000 causes the DDA Account to have excess funds of $50,000 over the Target Balance. Verify SweepTotals with Bank Next Dayat Intrasweep Credit IS DDA $50,000 Net Activity for All Designated Accounts Next Dayat Bank IS MMDA IS as Agent for Designated Customers IS DDAIS DDA as Agent forDesignated Customers Instruct Bank “Move $50,000 from IS DDA IS MMDA” Debit $50,000 Credit $50,000 IntrasweepTransfer Form Follow Instructions Email
Customer A DDA=$20,000 Target=$50,000 Bank Sweep Sweep funds from IS Bank Intrasweep Withdrawal Day Transmit Sweep File to Reserve Check Transactions $30,000 Analyze DDA & Shadow Account Balances Create Sweep Transaction File Process Sweep File Debit Customer A Shadow Account Balance = $50,000 Credit Customer A DDA=$30,000 Credit/Debit Customer Accts Ex. Customer A $30,000 Debit Debit Customer A Shadow/GLAccount=$30,000 Verify Sweep Totals with Bank * Assumption: DDA Balance is $50,000. Activity in Customer DDA causes Account to fall $30,000 below Target Balance Debit RMC DDA $30,000 Net Activity for All Designated Accounts Next Dayat Bank IS MMDA IS as Agent for Designated Customers IS DDA IS as Agent for Designated Customers Confirm Bank “Move $30,000 from IS MMDA IS DDA” Credit $30,000 Debit $30,000 Fax In Person Receive Transfer Form Follow Instructions to Debit $30,000 from IS MMDA Messenger Delivers Transfer Instructions to Bank
Off-Balance-Sheet Cash Sweepfor Your Bank • Provide an effective cash management solution that will help attract and retain commercial, municipal, non-profit, and individual customers • Offer enhanced product offerings including a large selection of taxable, tax-exempt and municipal money market funds, with no capital charge to the bank • Attract and retain customers by offering competitive interest rates • Diversify revenue stream • Increase fee income
Off-Balance-Sheet Sweepfor Your Customers • Earn a competitive yield that increasing earnings through compounding interest • Select from a variety of taxable, tax-exempt and municipal money fund alternatives • Safety and diversity of investments with no exposure to SIVs • Eliminate time spent checking balances and initiating transfers • Enjoy complete liquidity management with relative safety
Off-Balance-Sheet SweepHow It Works • Bank works with customer to designate a target balance of deposits to be maintained in checking account • Your customer can choose from a selection of taxable, tax-exempt and municipal money market funds • At the end of the business day, funds in excess of each customer’s target/peg balance are automatically invested in a money market fund, or if funds fall bellow the target/peg balance, funds are automatically swept back into the customer’s checking account
Reserve Insured Deposits Reserve Insured Deposits comprises cash from brokerage firm clients that is redirected to banks as deposits, providing FDIC-insurance for the clients and funding to the banks. • Not all brokerages have or want to have an affiliated bank, yet they still wish to offer an insured sweep • Your bank becomes a program bank and a recipient of these deposits • Brokerages may have an affiliated bank, but capital constraints may limit ability to take all deposits • Your bank becomes a program bank and a recipient of these excess deposits • Brokerages may wish to provide FDIC insurance coverage in excess of $250,000 • Your bank provides an additional charter, thus enabling FDIC insurance in excess of $250,000
Reserve Insured Depositsfor Your Bank • Benefit from no client acquisition costs: no marketing expenses to attract new deposits • Maintain control with the ability to set deposit flow by setting caps • Enjoy a stable deposit base since each account is comprised of thousands of individual brokerage customers • Avoid cannibalizing retail accounts with teaser rate specials • Improve liquidity as no collateral is needed • Save money with no prepayment penalties
Reserve Insured DepositsHow It Works • A program bank establishes one funded MMDA directly in the name of the broker-dealer • Bank receives one daily settlement wire • Program banks do not engage in any check processing or sub-accounting activities • Broker-dealer performs all anti-money-laundering activities • Reserve Insured Deposits as administrator furnishes all accounting entries for deposits at bank Through agreements with some of the nation’s largest broker-dealers and clearing firms, Reserve Insured Deposits is able to pool investors’ funds and make deposits into funded deposit accounts established within each program bank
About Intrasweep • IntrasweepSM is a ground-breaking bank servicing company dedicated exclusively to supporting the deposit and liquidity needs of banks, their commercial customers, and their communities. We currently work with more than 300 banks, representing more than $6 billion in deposits retained on bank balance sheets. • Intrasweep gives you and your clients the benefit of an 11-year track record in enhancing deposit solutions for banks with our innovation, service, operations, and marketing support, allowing us to focus on superior cash management solutions exclusively for the banking industry.
About Intrasweep • Innovative: Intrasweep enables its bank clients to keep commercial sweep deposits on their balance sheets while providing their commercial customers competitive, interest-bearing sweep accounts with all the benefits of bank commercial checking accounts. • Unique: Named for its unique characteristic of keeping sweep assets within (“intra”) your bank, Intrasweep is the only company in the marketplace to offera core deposit On-Balance-Sheet Sweep Solution. • A Proven Approach: Intrasweep’s independent infrastructure allows us to remain highly responsive to your evolving needs. Let us provide a strong foundation for your organization's growth. • Advanced Technology: With its fully integrated bank core relationships, turnkey sweep technology, full back-office support, as well as a variety of other time-saving benefits, Intrasweep can help you strengthen and enhance your balance sheet, client relationships and position in the marketplace.
Summary • Intrasweep, a VIP Partner of WIB, provides banks superior On- and Off-Balance-Sheet Cash Sweep Solutions • The On-Balance-Sheet Solution addresses the key issues facing banks today • Growing deposits; Providing liquidity; Acquisition/Retention/Cross-sell; Competing Effectively; Generating fee income; and Meeting Regulatory Requirements • Seamless conversion; 180 days to your stronger balance sheet • More than 300 satisfied banking customers
Contact Us Today Steve Genereau Director of Bank Sales 320-387-2454 firstname.lastname@example.org www.intrasweep.com
Disclosure • FDIC insurance on each On-Balance-Sheet Sweep account will be limited to a combined total of $100,000 for all deposits held in the same legal ownership category for each depositor bank, which includes an On-Balance-Sheet account and any other balances held directly or through other intermediaries. • You should carefully consider the investment objectives, risks and charges and expenses of a fund before investing. A fund’s prospectus, which contains this and other information, may be obtained by writing to The Reserve, 1250 Broadway, New York, New York 10001-3701 or by calling 800-637-1700 and pressing “0”. You should read the prospectus carefully before you invest. • An investment in funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds. Money market yields may vary