Transcript The Reserve - Western Independent Bankers

Intrasweep – On-Balance Sheet Solutions
Presented by:
Steve Genereau
Director of Bank Sales
Agenda
I.
Challenges Facing Banks Today
II.
The Solution: 180 Days to a Stronger Balance Sheet
III.
About Intrasweep
IV.
Summary
I. Challenges Facing Banks Today
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
Safety/Security Concerns
Lower levels of customer
loyalty
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 crosssell
- 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 Today
Industry 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.)
II. The Solution:
180 Days to a Stronger Balance Sheet
The Solution: Intrasweep
Addressing 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: Intrasweep
Addressing 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: Intrasweep
for 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: Intrasweep
for 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 Sweep
Solution: 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
Deposit Day
Customer Credit
Deposit
$100,000
Customer A
DDA=$100,000
Target=$50,000
Analyze
DDA & Shadow
Account
Balances
Customer A
Shadow Account = $0
* Assumption: Customer deposit of
$100,000 causes the DDA Account to
have excess funds of $50,000 over the
Target Balance.
Bank Sweep
Excess funds
swept from
Customer A
DDA
Debit
Customer A
DDA=$50,000
Create
Sweep
Transaction
File
Intrasweep
Transmit
Sweep File
to Intrasweep
Process
Sweep
File
Credit/Debit Customer Accts
Ex. Customer A $50,000 Credit
Credit Customer A
Shadow/GL
Account=$50,000
Credit IS DDA
$50,000
Verify Sweep
Totals with Bank
Next Day
at
Intrasweep
Net Activity for All
Designated Accounts
Next Day
at Bank
IS MMDA
IS as Agent for
Designated Customers
IS DDA
IS DDA as Agent for
Designated Customers
Credit $50,000
Debit $50,000
Intrasweep
Transfer Form
Follow Instructions
Instruct Bank
“Move $50,000 from
IS DDA  IS MMDA”
Email
Bank
Withdrawal Day
Check
Debit
Transactions
$30,000
Customer A
DDA=$20,000
Target=$50,000
Customer A
Shadow Account
Balance = $50,000
* Assumption: DDA Balance is
$50,000. Activity in Customer
DDA causes Account to fall
$30,000 below Target Balance
Analyze
DDA & Shadow
Account
Balances
Bank Sweep
Sweep funds
from IS
Intrasweep
Create
Sweep
Transaction
File
Transmit
Sweep File
to Reserve
Process
Sweep
File
Credit
Customer A
DDA=$30,000
Credit/Debit Customer Accts
Ex. Customer A $30,000 Debit
Debit Customer A
Shadow/GL
Account=$30,000
Verify Sweep Totals with Bank
Debit RMC DDA
$30,000
Net Activity for All
Designated Accounts
Next Day
at Bank
IS MMDA
IS as Agent for
Designated Customers
IS DDA
IS as Agent for
Designated Customers
Debit $30,000
Credit $30,000
Confirm Bank
“Move $30,000 from
IS MMDA  IS DDA”
Fax
Receive Transfer Form
Follow Instructions to Debit
$30,000 from IS MMDA
In Person
Messenger
Delivers Transfer Instructions
to Bank
Off-Balance-Sheet Cash Sweep
for 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 Sweep
for 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 Sweep
How 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 Deposits
for 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 Deposits
How It Works
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
• 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 subaccounting activities
• Broker-dealer performs all anti-money-laundering activities
• Reserve Insured Deposits as administrator furnishes all accounting
entries for deposits at bank
III. About Intrasweep
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 offer
a 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.
IV. Summary
Summary
• Intrasweep, a VIP Partner of WIB, provides banks superior On- and OffBalance-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
[email protected]
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