Account Analysis Presentation Final

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

Return on Investment
You are most likely:
Paying:
 too much for TM services today or will be soon!
 for services you are not using or receiving “free” services
 more “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?
• Understand/ • Motivation
Compare Champion
Costs • Recognition
NEW ERA
• Question Change is needed
Banking
Relationships • MAKE CHANGE

• Knowledge • Influence
Process • Analysis
Decisions
Tools Weighing
options

Agenda: Making Informed Banking
Decisions for your Company
T  Treasury Management Solutions
o
o  Analysis Statements
l
 Common Bank Services Billing Standard
s
•  eBAM
A
 Choosing the Right Bank and Solutions
n
a  Bank Pricing / Your Costs
l
y  Industry Tools You Can Use
s  Impacts of Financial Regulation and Risk
i
s  Compensating Balances

It’s a New Era
Economic Shakedown
Economic Collapse Economic Recovery
2008 2009 2010 2011 2012 2013 2014

•Banks Failing •TARP and Scrutiny •Rise in Treasury Mngt
• Flight to safety •Regulatory Reform • Enhanced / Expanded Role
•Massive Layoffs •No Loans of the Treasurer
• TM importance to Bank goals
• Interest Rates •No new investments • Technology Companies tiering
•Credit Scarcity in business products for Banks and END
• Middle Market and
•Business on hold USERS
Small Biz left out • Clients focused on
•Little product •Displaced Workers
banks, products, services of
innovation •Divorced Customers ‘value’
• Only generating •Banks implement FINReg
more fees •Banks focused on who
• Doing more
they serve best
with less
• Providing expertise, solutions
• Enjoying annuity TM business

Copyright 2012. Turningpoint Communications. 5

Your Bank(s)’ Strategy
Aligned with your Objectives?
What is most important to you? Service, Pricing, Products, Relationships / Expertise
There is a Bank that is well positioned to serve you based on your needs.
Smaller, Community Banks Large Financial Services Companies
 High-touch client service  High-touch client service for VICs
 Relationship pricing philosophy:  Relationship pricing philosophy based on
 Knowledge of vendor costs affords profitability (PxV, Cross Sell opportunity)
pricing by client vs. cost center  Sophisticated / Holistic solutions
 Fixed fee vs. variable, rendering  Well-oiled machines or Siloed, Overly
significant savings Complex, Hierarchical
 Product offerings are similar (if not  Deep bench strength and experience
identical) to large banks’ and tiered  Sales
according to end-client / industry needs  Relationship Management
 Experienced sales people know their
 Product Dev. / Management
clients, how to customize the sale and
how to win clients back  Implementation
 Flexibility to respond quickly to industry  Client Service
mandates and evolving client needs  Senior / Executive Management

Serve small to mid-sized companies well. Serve large, global enterprises well.
Copyright 2012 Turningpoint Communications. Not for Unauthorized Use, Duplication or Distribution.

Treasury Management Model
Investments
(Short-term Investing)

Collection Concentration Disbursement
(Cash Inflows) (Cash Positioning) (Cash Outflows)

Funding
(Short Term Borrowing)

Copyright 2012 Turningpoint Communications. Not for Unauthorized Use, Duplication or Distribution. 7

Treasury Management Solutions
Collection Investments Disbursement
(Cash Inflows) Sweeps (Cash Outflows)
On/Off Balance Sheet
Lockbox Other Investment Vehicles Controlled Disbursement
Earnings Credit (ECR)
• •
Wire/ACH Account Recon
• •
Merchant Services
Concentration (Teller)
Cash Positioning
• • Positive Pay
Remote Deposit ZBA •
•
• Internet banking Integrated Payables
Integrated Receivables Information Reporting •
•
• Analysis Cards
Deposits •
Wire/ACH
Funding
Credit Line
8

Service USAGE by Company Size
Small Business Middle Market Corporate

 Online banking • Positive pay • Multi-bank data exchange
– Acct info • Most advanced ACH/EDI
• Account recon
– Images services
– Transfers • Expanded ACH/EDI • International cash
– ACH/wire • Cash vault services management
– Tax payments • Consolidated, electronic
• Wholesale lockbox payables and receivables
 Zero balance accounts
• Controlled disbursing
 Sweeps
• Payment cards
 Account analysis

Emphasis on basic tracking Emphasis on functionality Emphasis on real-time
and money movement straight-thru processing,
multi-user, high security

Value Proposition: TM Worth Paying For
Critical factors in smaller- to mid-sized companies’ paying for bank services

Saves $$ 55%

Saves Time 49%

Increases convenience 46%

More secure 31%

Increases automation 19%

More 'tech savvy' 19%

Enables out of office productivity 16%

Extends DSO 12%

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

Analysis Statements
Analysis Statement Defined • Are you receiving your statement?
• It is your right and responsibility!
Summary report of your • Is it correct?
banking services for a specific • Your time is limited!
time period. • Details hard fees vs. compensating
Includes:
balances.
• Only you can determine what is most
 Avg. daily collected balance meaningful/valuable to you
 Applicable service fees • May be used to help negotiate
(including transaction fees) better alternative services and
 Value-added service fees better pricing.
ancillary charges • An educated consumer is a bank’s
best customer.

Analysis Statement
Analysis Period
Client Reference Number

Average Daily Collected Balance

Service Charge Detail
Grouped at various levels

Total Service Charges

Analysis Statement
Analysis Period
Usually the calendar month for which fees were assessed

Average Daily Collected Balance
The 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 Detail
A 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 Charges
The 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.

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.

BSB Adoption
Requires 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 Costs
 Do you know your costs?
 Get them down on paper
 Comparisons: 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 you
 What are you willing to pay more for


Pricing
 Wide range of pricing between providers
 Rationale
 Worst case scenario
 Standard 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 Standards


How much RISK can you afford?
Risk should be weighed as part of understanding your
costs of idle cash
 Changes to regulatory environment
 On/off balance sheet investments
 Federally insured vs. riskier deposits or investments
 Banks’ exposure to risk
 European Banks
 Volcker Rules


Weighing Opportunity Cost of ECR
Strategic 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)
<1%
• Reserve Requirement = .90
$100,000.00 x .002/.90/365/100= $0.006
$.01 per $100,000

FIN REG Impact on Banks


FIN REG and Impact on Companies
Dodd-Frank
 FDIC insurance
 Changes to sweeps
 Banks must pay insurance based on asset classes now
 Repeal of Reg. Q
 Some banks do not technically have the ability to pay
interest on balances, so they do not have to
 Volcker Rule
 Banking entities can no longer engage in impermissible
proprietary trading

FIN REG and Impact on Companies
 Durbin Amendment
 Limits how much money banks can make on each debit card swipe

 Basel III
 Assessments 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’ Secrets
 Bankers 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 pricing
 Your 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 like
 Good RMs are like the “Pied Piper”
 Bank systems are tracking your every move
 Information may not be available when needed


Warning Signs / Red Flags
Be on the Lookout
 Financial Strength
 Priorities
 Where is your bank investing? People? Technology? Events?
Brochures? Locations? a new Lobby? Growth?
 Banks in acquisition / merger mode
 Lack of focus on the business, product development, YOU
 Excessive turnover
 Communication breakdowns
 Extreme Pricing (High or Low)
 “Free” – It comes with a price


Scorecards: Measure / Compare Banks
 Use industry standard or create your own
 Incorporate everything you can quantify:
 performance, tangible/intangible items,
frequency and method of communication or meetings
 Measure all banking relationships in the same way
 Refine document as business changes
 Volumes +/-, products used, new locations
 Ensure a support team is in place
 If your bank is sold / acquired / merging, participate in
meetings with new bank for a smooth transition


Takeaways
 Assess your treasury department, performance, needs, costs—and TOOLS
 Manage 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 You
 AFP 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, MCM
Laurel 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, CTP
Lynne 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.

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