The Tides of Cash Management

The Tides of Cash Management Hosted By: Ceto and Associates Presented By: David Austin If you do not want to hear the presentation through your computer speakers or do not have speakers, please call-in toll free number: 1-866-699-3239 Attendee access code: 48194051 If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Thursday, April 10, 2008 Sunrise: 12:00 PM EST Sunset: 1:00 PM EST Ceto and Associates Consultants to Bank Management Agenda I. II. III. IV. Ceto and Associates Why is Cash Management a concern Now? Current Cash Position Cash Management I. II. III. IV. How are cash decisions made? Influences Unknown Cash Information Problems Cash Usage Ending Cash Vs. Usage Denomination Mix Targets & Goals Delivery & Carry Costs Economic Order Quantity Standardization Training V. Solutions I. II. III. IV. V. VI. VII. VIII. VI. VII. Implementation Questions & Answers If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Ceto and Associates Consultants to Bank Management • A consulting firm based in Atlanta, Georgia • Founded by Nicholas Ceto, Jr. upon his retirement from KPMG, as National Partner-InCharge of Revenue Enhancement Consulting Services • Develops solutions to provide financial institutions the ability to increase their profitability through the implementation of earning enhancement programs and the optimization of overall operational efficiencies Nicholas Ceto, Jr. Founder, Chairman and Chief Executive Officer • Trusted by over 1,500 clients in all 50 states. If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Ceto’s Solutions If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solutions Deposit Reclassification This process enables financial institutions to dramatically reduce reserve balances held at the FRB by reclassifying a significant portion of interest bearing and non-interest bearing transaction accounts to a non-reservable savings status. As a result, non-earning assets can be quickly transformed into loans and investments that produce new recurring revenue streams. If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solutions Ceto Cash Calculator (C3) This web-based tool standardizes the management of vault cash by empowering users to collaborate in optimizing cash levels at branch locations and improving cash management from an institution-wide perspective. By dynamically aligning competing cash needs including customer usage, denomination mixes, carry cost, and delivery costs; C3 saves management valuable time while giving branch personnel tools to manage cash levels and improve operational efficiency. The system is easily understood by branch managers yet sophisticated enough to help top management view their institution’s overall cash position in visual charts, graphs and reports. As a result, branch managers gain a better understanding of customer activity specific to their branch’s market and customer traffic. Clients typically decrease vault cash levels by an average of fifteen to twenty-five percent. If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solutions Consulting Services Group (CSG) Ceto’s team of consultants provides revenue enhancement, productivity improvement, and technology effectiveness services. These services are available to banks, thrifts, and credit unions of all asset sizes. Ceto’s goals for your institution are to increase revenue, reduce expenses, improved productivity and enhance your customer’s experience. Management Consulting Service projects are done in three stages - Diagnostic, Implementation and Realization, and Benefit Monitoring. This process enables our experienced and knowledgeable Consulting Services Group to analyze your institution’s profitability drivers, operations, processes, systems and expenses to uncover areas to increase profits. In addition, the team will assist in implementing approved initiatives to ensure that benefits are realized. If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Why is Cash Management a Concern Now? • Current Economic Conditions • Increase Operational Efficiency – Standardizing processes throughout financial institution to increase profitability • Low Reserve Environment – Vault Cash (branch cash) in the past was used to meet reserve requirements – Deposit Reclassification reduced reserve requirements well below branch cash levels If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Why is Cash Management a Concern Now? Deposit Reclassification Reduced to Zero! If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Why is Cash Management a Concern Now? Vault Cash Data from the Federal Reserve Bank $60 $50 $40 Billions $30 $20 $10 $0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Surplus vault cash since 1994, has increased by 75% or $12 billion. Year Total vault cash, NSA Vault cash used to satisify required reserves, NSA Surplus vault cash, NSA Source: Federal Reserve Board Aggregate Reserves on Depository Institutions and the Monetary Base If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Current Cash Position Cash Ending Vs. Cash Usage - Bank Average Cash 120000 100000 The average bank needs $160,000 in cash per branch, but often carries more than $260,000 80000 Total Cash 60000 40000 20000 0 0 20 40 60 80 100 120 Number of Branches Average Cash Held at Branch Trend Line If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Courtesy of Ceto Cash Calculator (C3) Ceto and Associates Consultants to Bank Management Current Cash Position Cash Ending Vs. Cash Usage – Credit Union Average Cash 70000 60000 Total Cash 50000 40000 30000 20000 10000 The average credit union needs $225,000 in cash per branch, but often carries more than $354,600 0 0 10 20 30 40 50 60 70 80 Number of Branches Average Cash Held at Branch Trend Line If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Courtesy of Ceto Cash Calculator (C3) Ceto and Associates Consultants to Bank Management Cash Management Benefits • Reduces excess cash levels 15% - 25% – Increases earning assets • Standardizes Cash Management Decisions – Saves branch and executive management time – Makes cash data available for performance and historical review • Ensures a positive customer or member experience – Maintains cash levels needed – Maintains cash denominations needed If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Cash Management How are cash decisions made? • “Best Guess” efforts • Previous Branch Experience – Size of Branch – Type of Customer or Member – Usage or Supplied Branch Type • Use of General Ledger or Cash Position Papers – Time consuming – No relationship to customer usage If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Cash Management Influences • Fear of Running out of Cash • Geographic Influences on traffic and usage • Customers or Members profiles • Holidays or Seasonal influences • Executive/Senior Management If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Cash Management Unknown Cash Information • Customer Usage – Tracking cash data – Calculation of customer needs – Predicting customer needs • Ordering Schedules – Carry and delivery cost – Optimal trade off between cost If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Cash Management Unknown Cash Information • Seasonality – Historical data – Holidays or Seasonal traffic • Denomination Mix – Customer needs – Optimized amounts If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Cash Management Problems • Problems caused by not knowing cash data – Excess Cash – Wrong Denominations – Running out of Denominations – Running out of Cash • Results – Bad Customer Experience – UnnecessaryNon-Earning Assets If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solutions Cash Usage • Find out cash demand – Discover • What do your customers/members use? • How much do you ship? • How much do you receive? – Update data often – Make it available to branch management and executive management • Compare to Cash Ending balances If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solutions Ending Cash Vs. Usage The difference between your cash usage and cash ending is excess cash, a non-earning asset for your If you cannot hear the presentation, please call institution 1-866-699-3239; access code: 48194051 Courtesy of Ceto Cash Calculator (C3) Ceto and Associates Consultants to Bank Management Solutions Denomination Mix • On a branch by branch basis, determine what denominations are demanded – Allocate the correct amount of cash for the denomination demand Cash Ending Cash Usage Courtesy of Ceto Cash Calculator (C3) If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solution Targets & Goals • Create Targets and Goals – Executive management creates a target for each branch manager • Create a Maximum amount of cash for each branch • Create a Minimum amount of cash for each branch – Create a goal which brings the branch cash level closer to the customer needs – Revisit these goals • Effectiveness • Branch and personnel performance If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solutions Delivery & Carry Cost • Find out Delivery and Carry Cost – How much does it cost to deliver cash to the branch • Armored car expenses • Counting cash, Breaking down bundles, etc. – How much does it cost to carry cash • What rate of interest would you apply to excess cash • Find the balance between the costs If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solutions Economic Order Quantity 2.25 Courtesy of Ceto Cash Calculator (C3) If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solution Standardization • Standardize the Cash Management Process – Create or implement a system which is the same institution wide – Make cash data available to the parties involved • Branch Managers • Executive Management • Branch Personnel – Create historical records which are meaningful to current and new branch management If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Solution Training • Train branch personnel on the cash management system – Implement a system that is easy to understand – New system should not be more time consuming then previous method – Train and retrain If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Implementation • Cash Management System – Implemented within 4-6 weeks – Implementation requires a total of 4 hours of staff time – Training requires a total of 2 hours of staff time – Excess Cash Reduction is 15% to 25% Uncover the benefits of implementing a cash management system by attending Wave Parameters & Applications of Ceto Cash Calculator (C3) Tuesday, April 15, 2008 at 12:00 PM EST or… Wednesday, April 23, 2008 at 4:00 PM EST or… Thursday May 1, 2008 at 2:00 PM EST If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Questions? Please type your questions in the ? box If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management Curious to know your benefit? Fax your two most recent FR2900s to Ceto and Associates (678-297-1127) to receive a Free analysis on your financial institution’s benefits from a Cash Management system!! Did one of your associates miss this webinar or you’d like to have an associates listen to this webinar?? The Tides of Cash Management webinar will be given again: Wednesday, April 16, 2008 at 4:00 PM EST Tuesday, April 22, 2008 at 2:00 PM EST and… To contact David Austin, please e-mail daustin@ceto.com or call 1.866.227.1361 x233 If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 To Contact Us: Ceto and Associates Toll Free 1-866-227-1361 Fax: 678-297-1127 E-mail: webinar@ceto.com 3325 Paddocks Parkway Suite 400 Suwanee, Georgia 30024 www.ceto.com Ceto and Associates Consultants to Bank Management Upcoming Webinars Wave Parameters & Applications of Ceto Cash Calculator Tuesday, April 15, 2008 at 12:00 PM EST Wednesday, April 23, 2008 at 4:00 PM EST Thursday, May 1, 2008 at 2:00 PM EST Weathering the Storm: Samples and Illustrations of Assessing Non-Interest Income Tuesday, April 29, 2008 at 12:00 PM EST Wednesday, May 7, 2008 at 4:00 PM EST Thursday, May 15, 2008 at 2:00 PM EST The Current State of Banking & Predictions for the Future Thursday, April 24, 2008 at 12:00 PM EST Wednesday, April 30, 2008 at 2:00 PM EST Tuesday, May 6, 2008 at 4:00 PM EST Please register for all webinars at www.ceto.com If you cannot hear the presentation, please call 1-866-699-3239; access code: 48194051 Ceto and Associates Consultants to Bank Management