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Presentation - Western Independent Bankers


									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
  •     Do not identify participants or users of their information


  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

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