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QwickRate, The Only Automated Source for Qwi ckRate Non-Brokered CD Funding and Investing Liquidity Management A Profitability-Enhancing Workshop February 11, 2009 Seattle, WA Melissa Wallace, QwickRate Presentation Preview • Listing Services – Who Uses Them and How Do They Work? • Automation – Setting the Standard for National Market CD Deposit Generation • Regulatory Perspective – Most asked questions • Questions and Answers – We’re here to help All Listing Services are Not the Same Public Network • Uncontrolled audience that is open to all investors including consumers • Do not identify participants or users of their information Example: BankRate.com Closed Network • Controls audience and may limit access to certain groups • Network participants are screened or identified prior to being given access- consists of mainly financial institutions and corporations- NO INDIVIDUALS! Example: QwickRate Not All “Internet” Deposits are the Same Depositor Characteristics Differ Depending on the Depositor Consumer Depositors Institutional Depositors Managing only a few CDs Managing large CD portfolios consisting of hundreds of individual 99K Interest income often a deposits primary component of overall income Primary goal is to secure deposit insurance for each Highly rate sensitive will individual deposit move deposits at maturity if able to earn an additional 5 Require access to hundreds of financial institutions BP in yield Less rate sensitive due to market saturation Direct Non–Brokered CD’s Your Bank’s Details Historically Speaking … •The Listing Service concept was formed in the mid 1980’s and used as a way for banks to advertise competing rates •Communication took place via the telephone •Documentation was faxed or mailed In 2007 Program Automation Was Introduced Banks can quickly and efficiently receive deposit inquiries, communicate with depositors and manage depositor information with just a few clicks of the mouse. The issuing bank simply chooses to “accept” or “decline” the deposit; this action then initiates a corresponding response back to the investor via email. All investor information is maintained electronically and can now be added directly into the bank’s portfolio tracking system. Bank Inquiry Activity by Rate Term Activity by Term Position Benchmarking Your Rates & Fine Tuning Your Position Local CD Specials Don’t Dismiss the Cost of Local CD Specials! Know What They are Costing You! Regulatory Perspective • Brokered versus non-brokered deposits • CIP • How to address the “volatile” issue • Risk Management Deposit Classification The FDIC classifies a rate board as a “non-brokered deposit listing services” if the rate board meets the following criteria: Charge subscription fees only Fees not charged on number or dollar value of CDs placed Performs no services except gathering and transmission of information The listing service is not involved in placing deposit Deposits obtained directly as a result of a bank listing rates on a rate board will be classified as non-brokered. “Time deposits less than $100,000” on schedule RC-E of the call report Included in the UBPR calculation of core deposits Does not effect your banks dependency on non-core funding liquidity ratios Customer Identification Procedures The CIP requirements for the majority of market participants are minimized because they are readily identifiable. The CIP Rule excludes the following from the definition of “customer”: A financial institution regulated by a federal functional regulator A bank regulated by a state bank regulator Governmental agencies and instrumentalities Companies that are publicly traded Hot Money Out of area deposits are generally labeled as volatile unless you provide supporting information that proves otherwise. Volatility can be addressed by tracking the percentage of out of area deposits that remain or “roll over” with your institution at maturity. • Evaluate daily and monthly activity • Rate Board may offer tracking functionality as part of • your subscription This “Retention Data” is useful for: • Making liquidity assumptions and projections • Establishing market stability with examiners Monthly Retention Report Market Objective What is your bank’s funding objective for this market? • Seasonal usage? • Supplemental funding? • Alternative source to local deposits, FHLB borrowings, brokered deposits, etc? What percentage of your deposits do you anticipate generating from this market? • There are no regulatory limitations on the amount of out of area deposits • Regulatory benchmarks are a tool used by examiners to indicate when additional risk management procedures may be needed • The board should set the expectations and limitations for their institutions • Know how to monitor your level of activity Regulatory To Do List • Document risk management procedures: • Define your market objective • Outline goals and limitations • Detail procedures • Have a back-up plan in place Issuer Benefits • Raising funds is easy and efficient • Non-brokered core deposits (time deposits <100k) • Stable and Consistent Investor Audience • No collateral requirements • Use for on-time liquidity or pre-funding • Open a virtual branch at a fraction of the cost of brick and mortar • Prevent balance sheet re-pricing (cannibalization) Questions & Answers Melissa Wallace 800-285-8626 ext 4062 firstname.lastname@example.org
"Presentation - Western Independent Bankers"