Account Analysis Presentation Final

Account Analysis: Bankers’ Best Kept Secrets for Relationship Reviews and

Strategic Planning In this New Era, paying “Out of Pocket” for TM Solutions Warrants Taking a Fresh Look

Presented by: Laurel Egan Kenny, MBA, MCM, President, Turningpoint CommunicationsLynne Marlor, MBA, CTP, Vice President, Treasury Services Global Sales, BNY Mellon

Return on InvestmentYou are most likely:Paying:

too much for TM services today or will be soon!for services you are not using or receiving “free” servicesmore “out-of-pocket” than you used to

Your balances are not worth as much to your Bank Banks can no longer absorb down-streamed fees New fees

Regulatory requirements Recoup lost interest revenues elsewhere

Managing more banking relationships than you need Using the wrong bank or wrong solutions

In ONE hour, you can save money and time.

Driving Change: Are you Ready?

• RecognitionNEW ERAChange is needed

• MotivationChampion

• KnowledgeProcessTools

• Understand/CompareCosts

• InfluenceDecisions

• MAKE CHANGE

• AnalysisWeighing options

• QuestionBanking Relationships

Agenda: Making Informed Banking Decisions for your Company

Treasury Management Solutions

Analysis Statements

Common Bank Services Billing Standard

eBAM

Choosing the Right Bank and Solutions

Bank Pricing / Your Costs

Industry Tools You Can Use

Impacts of Financial Regulation and Risk

Compensating Balances

Tools

• Analysis

It’s a New Era

Economic Shakedown2008 2009

Economic Collapse

2010

Economic Recovery

2011

•Banks Failing• Flight to safety•Massive Layoffs• Interest Rates•Credit Scarcity•Middle Market and

Small Biz left out•Little product innovation• Only generating more

fees • Doing more

with less

•TARP and Scrutiny•Regulatory Reform•No Loans•No new investments in business•Business on hold•Displaced Workers•Divorced Customers

•Rise in Treasury Mngt• Enhanced / Expanded Role

of the Treasurer• TM importance to Bank goals• Technology Companies tiering

products for Banks and END USERS• Clients focused on banks,

products, services of ‘value’•Banks implement FINReg•Banks focused on who they serve best• Providing expertise, solutions• Enjoying annuity TM business

5Copyright 2012. Turningpoint Communications.

20132012 2014

Your Bank(s)’ StrategyAligned with your Objectives?

Smaller, Community Banks High-touch client service Relationship pricing philosophy:

Knowledge of vendor costs affords pricing by client vs. cost center

Fixed fee vs. variable, rendering significant savings

Product offerings are similar (if not identical) to large banks’ and tiered according to end-client / industry needs

Experienced sales people know their clients, how to customize the sale and how to win clients back

Flexibility to respond quickly to industry mandates and evolving client needs

Serve small to mid-sized companies well.

Large Financial Services Companies High-touch client service for VICs Relationship pricing philosophy based on

profitability (PxV, Cross Sell opportunity) Sophisticated / Holistic solutions Well-oiled machines or Siloed, Overly

Complex, Hierarchical Deep bench strength and experience

Sales Relationship Management Product Dev. / Management Implementation Client Service Senior / Executive Management

Serve large, global enterprises well.

What is most important to you? Service, Pricing, Products, Relationships / ExpertiseThere is a Bank that is well positioned to serve you based on your needs.

Copyright 2012 Turningpoint Communications. Not for Unauthorized Use, Duplication or Distribution.

7

Treasury Management Model

Concentration (Cash Positioning)

Investments(Short-term Investing)

Disbursement(Cash Outflows)

Funding(Short Term Borrowing)

Collection (Cash Inflows)


Treasury Management Solutions

8

Concentration Cash Positioning

•ZBA

•Internet banking

Information Reporting•

Analysis

InvestmentsSweeps

On/Off Balance SheetOther Investment Vehicles

Earnings Credit (ECR)

Disbursement(Cash Outflows)

Controlled Disbursement

•

Account Recon

•

(Teller)

Positive Pay

•

Integrated Payables

•

Cards

•

Wire/ACHFunding

Credit Line

Collection (Cash Inflows)

Lockbox

•

Wire/ACH

•

Merchant Services

•

Remote Deposit

•

Integrated Receivables

•

Deposits


Service USAGE by Company Size

Online banking– Acct info– Images– Transfers– ACH/wire– Tax payments

Zero balance accountsSweepsAccount analysis

Emphasis on basic tracking

and money movement

• Positive pay

• Account recon

• Expanded ACH/EDI

• Cash vault services

• Wholesale lockbox

• Controlled disbursing

• Payment cards

Emphasis on functionality

• Multi-bank data exchange• Most advanced ACH/EDI

services• International cash

management• Consolidated, electronic

payables and receivables

Emphasis on real-time straight-thru processing, multi-user, high security

Small Business Middle Market Corporate

Value Proposition: TM Worth Paying For

Extends DSO

Enables out of office productivity

More 'tech savvy'

Increases automation

More secure

Increases convenience

Saves Time

Saves $$

12%

16%

19%

19%

31%

46%

49%

55%

Critical factors in smaller- to mid-sized companies’ paying for bank services

AITE: Building the Case for Migrating Small Businesses onto Business Online Banking Platforms, December 2011

Analysis StatementsAnalysis Statement Defined

Summary report of your banking services for a specific time period. Includes: Avg. daily collected balanceApplicable service fees

(including transaction fees)Value-added service fees

ancillary charges

• Are you receiving your statement?• It is your right and responsibility!

• Is it correct?• Your time is limited!

• Details hard fees vs. compensating balances.• Only you can determine what is most

meaningful/valuable to you• May be used to help negotiate

better alternative services and better pricing.• An educated consumer is a bank’s

best customer.


Analysis StatementAnalysis PeriodClient Reference Number

Average Daily Collected Balance

Service Charge DetailGrouped at various levels

Total Service ChargesCopyright 2012 Turningpoint Communications. Not for Unauthorized Use, Duplication or Distribution.

Analysis StatementAnalysis PeriodUsually the calendar month for which fees were assessed

Average Daily Collected BalanceThe sum of the Daily Collected Balances at the close of each business day of the statement period, divided by the number of days in the month in the statement period. Customers who meet or exceed the required Average Daily Collected Balance will pay no monthly fee, if applicable.

Service Charge DetailA listing of the services used during the period, grouped by service category. Volume counts, unit prices, and total service charges, if applicable, are shown for each service.

Total Service ChargesThe sum of all service charges incurred during the month.While you may be accustomed to being charged for some services at the time of occurrence (e.g. per stop payment), you will now be assessed for the total of all services only once per month. This change will appear on your Checking Account Statement for the month following the Analysis period. Copyright 2012 Turningpoint Communications. Not for Unauthorized Use, Duplication or Distribution.

Common Bank Services Billing Standard

Drivers: No way of accurately verifying international bank fees Analysis of bank fees is labor intensive No way to provide management with global bank relationship metrics International cash management fees are decentralized with few controls in place Compliance issues, like Sarbanes-Oxley (SOX)

Benefits to Treasurers: Transparency into large, multinationals’ working capital management Ability to understand and genericize services globally. Maximize efficiency of internal procedures Review charges to see if they are reasonable and customary. Easily compare bank charges against specific criteria and other banks’ charges equally. Gain increased understanding of subsidiaries’ bank accounts. Understand if they are using appropriate services as they were intended and if there are

opportunities for new services, discounts. Copyright 2012 Turningpoint Communications. Not for Unauthorized Use, Duplication or Distribution.

BSB AdoptionRequires cooperation from Corporates, Banks and Technology Providers. Barriers to Adoption Banks fearing that BSB could be used against them in upcoming negotiations. Banks have been side-tracked with other priorities: Dodd-Frank and other regulations. Corporates cannot expend the resources to develop or modify an in-house solution. Technology vendors have been slow to enter the market and/or add billing to their treasury workstations.Encouraging Bank Adoption of BSB TWIST created and tries to promote the BSB standard Corporates must go to their banks and request it. It is up to each individual bank to implement the BSB standard.

The world’s largest banks (and those with correspondent partners) are already using BSB standards. Others will do it because their customers insist. Others will see that this is a good strategy to maintain existing and attract new customers. Still others fear customers will reduce their banking bills and cause the bank to lose revenue.

BSB’s Future Small and mid-sized enterprises will aspire to and demand BSB after adoption by large, multi-nationals Europe to Asia due to multi-nationals’ insistence and international banks’ European and Asian presence. Expansion of 2008 AFP Service Codes into an internationally compliant set of common ‘global’ codes - the

Global Service Codes Project and Register the BSB under ISO 20022.

Electronic Bank Account Management (eBAM)

Large corporations work with more than 20 banks with multiple accounts at/services provided by each

Bank account management is usually decentralized by subsidiary or entity

Corporations place themselves at risk with inadequate, disparate, inaccessible, and out of date bank documentation and contracts.

Electronic Bank Account Management (eBAM) affords better management of your company’s bank-related data, corporate signatories and exposures across all global accounts rapidly, accurately and securely.


Your CostsDo you know your costs?

Get them down on paperComparisons: apples-to-apples / AFP service codes

How do you know what you’re paying?

Do you have a means of monitoring your services?

Do you feel your bank is a great match for you?Weighting what is important to youWhat are you willing to pay more for


PricingWide range of pricing between providers

RationaleWorst case scenarioStandard Vs Relationship

Off the shelf Using multiple services from your bank

“Off” pricing / Disengagement Banks are in the business of making money, too!

They like profitable business

Phoenix Hecht Pricing StandardsCopyright 2012 Turningpoint Communications. Not for Unauthorized Use, Duplication or Distribution.

How much RISK can you afford?

Risk should be weighed as part of understanding your costs of idle cashChanges to regulatory environmentOn/off balance sheet investmentsFederally insured vs. riskier deposits or investmentsBanks’ exposure to risk

European BanksVolcker Rules


Weighing Opportunity Cost of ECRStrategic Analysis ECR versus cost of borrowing or earnings from investment

Every bank’s ECR is calculated differently What is your capital structure? What is your rate based on your credit rating? How much of a compensating balance is required? Are we better off paying hard fees?

Earnings Credit ECR is calculated daily using the account’s positive available balance No standard, BUT usually based on some percentage of the 90 day tbill rate

(Ask and understand!) Formula: Daily Positive Available Balance x Earnings Credit Rate/Reserve Requirement/365

Days/100

Example: • Daily Positive Available Balance = $100,000.00 • Earnings Credit Rate = .002 (Or some % of tbill)• Reserve Requirement = .90 $100,000.00 x .002/.90/365/100= $0.006

<1%$.01 per $100,000


FIN REG Impact on Banks


FIN REG and Impact on Companies

Dodd-FrankFDIC insurance

Changes to sweepsBanks must pay insurance based on asset classes now

Repeal of Reg. QSome banks do not technically have the ability to pay

interest on balances, so they do not have toVolcker Rule

Banking entities can no longer engage in impermissible proprietary trading


FIN REG and Impact on Companies

Durbin AmendmentLimits how much money banks can make on each debit card swipe

Basel IIIAssessments will be based on capital requirements and the

value of deposits (stable versus liquid) primarily Risk adjusted capital reporting Raised capital requirements from 2% to 4.5%


Bankers’ SecretsBankers are more selective than ever, evaluating you based on

your overall profitability (and overall attractiveness) to them. Ideal clients are difficult and expensive to replace

Cross selling opportunity and FIT will affect pricingYour bank may be trying to get rid of you!

Lack of a scorecard or Account Analysis may open the door for the competition (Bankers do not like to play Defense )

People prefer to work with people they likeGood RMs are like the “Pied Piper”

Bank systems are tracking your every moveInformation may not be available when needed


Warning Signs / Red FlagsBe on the LookoutFinancial StrengthPriorities

Where is your bank investing? People? Technology? Events? Brochures? Locations? a new Lobby? Growth?

Banks in acquisition / merger modeLack of focus on the business, product development, YOU

Excessive turnoverCommunication breakdownsExtreme Pricing (High or Low)

“Free” – It comes with a price


Scorecards: Measure / Compare Banks

Use industry standard or create your ownIncorporate everything you can quantify:

performance, tangible/intangible items, frequency and method of communication or meetings

Measure all banking relationships in the same wayRefine document as business changes

Volumes +/-, products used, new locationsEnsure a support team is in placeIf your bank is sold / acquired / merging, participate in

meetings with new bank for a smooth transition

.Copyright 2012 Turningpoint Communications. Not for Unauthorized Use, Duplication or Distribution.

TakeawaysAssess your treasury department, performance, needs, costs—and TOOLSManage up, down and across your organization to ensure that your treasury

structure, investment policy, liquidity, and risk profile are working FOR your organization.

Understand and proactively manage your bank relationships Align your priorities with your bank’s competencies

Use your Bank for what it is best at Banks with many branches need cash, large banks do not.

Communicate your needs (current, future) to your bankers Hold regular meetings with bankers to assess performance / satisfaction

Share your concerns AND commendations Keep Score Establish milestones and celebrate success

Add Self and Bank “Analyses” to your annual review


Tools to Help YouAFP Score Card

www.afponline.com

Phoenix Hecht Blue Book of Pricing www.phoenixhecht.com/treasuryresources/PDF/BBExecSumm.pdf

Remote Deposit Capture ROI Calculator www.RemoteDepositCapture.com

AFP Best Payments Practices & Policies www.afponline.org/pub/pdf/BESTPRA4.pdf

Executive Perspectives on 2011 AFP® Strategic Role of Treasury Survey www.corporatetreasurers.org/CTC_Essentials/CTC_Research_Perspectives.html

AFP Treasury Benchmarking Program: 2011 Survey-Bank Relationship Management http://www.afponline.org/benchmark/


Laurel Egan Kenny, MBA, MCMLaurel Egan Kenny is President of Turningpoint Communications, a marketing communications and training firm focused exclusively on promoting the thought leadership and best practices of its treasury management clients — in communications, at strategic events, in the media and in the communities they serve. Among her clients are 5 of the 10 largest financial services institutions in the United States.

Previously, Laurel spent 15 years building and leading marketing teams for treasury, wealth management and foreign exchange divisions at two of the largest, Fortune 100 financial services firms, directly aligned with executive, business development and relationship managers, from whom she learned the best practices, strategy, and the trusted advisor approach she brings to bear for her clients today.

Laurel presents regionally and nationally on a variety of industry topics and serves as Treasurer of the Treasury Management Association of New England (TMANE) and Advisor to / Trainer for the Association of Financial Professionals (AFP).

Laurel holds an M.B.A., an M.S. in Communications Management, and a B.A. in English and Communications, all from Simmons College, in Boston.

Lynne Marlor, MBA, CTPLynne Marlor is a Vice President in Global Treasury Services supporting the Financial Services segment. She has overall responsibility for business development for mutual funds, hedge funds and financial services companies in the US.

Lynne joined the BNY Mellon in 2003 after a rich career beginning at First Chicago in the credit training program. She later moved into the Cash Management Consulting Group where she supported major financial services companies nationwide. Lynne continued her career throughout the merger of First Chicago and Bank One as the Sales Manager of the Financial Services sector for Boston and New York markets.

Lynne earned a BS/BA in Business Administration from Boston University and an M.B.A. (Magna Cum Laude) from Suffolk University, Boston, MA.

Documents

Account Analysis Presentation Final