Current Treasury Pricing & Industry Trends Panel Discussion

Researching the Financial Services Industry Since 1983.

Current Treasury Pricing & Industry Trends Panel Discussion

2 Knowledge is profit

Topics of Discussion

• Overview of the Regulatory Changes & General Industry Trends

• FDIC Insurance (naming, elimination, money leaving FI to investment banks)

• Hybrid Accounts (creation of hybrid products)

• Historical rate environment – projections for the future

• Mobile and Virtual Banking

• Durbin Amendment

• RDC – consumer vs business space

• Treasury Packages

• Corporate Credit Cards

• Final Thoughts


FDIC Insurance Name Change

Overall 88% of institutions surveyed intend to change the name or description they currently use to identify their FDIC Charge.

• 36% of these institutions plan to use the term “Deposit” in their new FDIC naming convention (i.e. Deposit Fee, Deposit Assessment, Deposit Coverage)

• 35% of institutions surveyed overall indicated they were undecided in the terminology they will use for new naming convention.

• 7% of these institutions intend to keep the term “Insurance” in their name.

• Only a single institution in the $10-$20 Billion asset range indicated that they do not intend to remove the term “FDIC” from the naming convention.


FDIC Insurance – New Names

Account Balance Assessment

Account Balance Fee

Administrative Fee

Administrative Charge Fees

Analysis Fee

Analyzed Account Charge

Assessment Fee

Balance Assessment Fee

Balance Based Charge

Balance Deposit Fee

Balance Fee

Balance Management Fee

Bank Administrative Fee

Bank Administrative Fee/Regulation Fee

Commercial Balance Assessment

Deposit Account Usage Fee

Deposit Administration Fee

Deposit Assessment Fee

Deposit Balance Fee

Deposit Balance Maintenance Fee

Deposit Balance Protection

Deposit Coverage Fee

Deposit Fee

Deposit Insurance – Bank Assessment

Deposit Insurance Allocation

Deposit Insurance Assessment

Deposit Insurance Fee

Deposit Protection Fee

Deposit Security Fee

Deposit Service Assessment Fee

Deposit Services Fee

Deposit Supervisory Fee

Insurance Allocation Fee

Insurance Fee

Insurance Recovery Charge

Recoupment Fee

Regulatory Assessment Fee

Regulatory Balance Fee

Regulatory Fee

Supervision & Assessment Fee

Supervisor Assessment


Hybrid & Interest Only Accounts

Hybrid Commercial Checking: •Traditional – This is the most traditional hybrid product offered by most institutions . It will have an ECR rate to offset the fees and interest earned on the excess balances. •Non-traditional - The other non-traditional hybrid option does not have an ECR, but the interest earned is first used to offset the fees then if there are any excess balances it will earn interest.

Commercial Interest Checking: •This product earns only an interest rate. The product does not have an ECR and has no option to offset the fees. This product is very similar to what was available only to sole proprietor/non-profit entities.


New Hybrid Accounts – Top 25

Statistics based on all institutions in the top 25 by asset size (source: American Banker) that offer HYB - Best rate out of any ECR or HYB product at $100K - Rates as of March 2013 - Change Column reflects change in rates from April 2012 - March 2013:

• 64% of institutions surveyed offer both a commercial hybrid checking and a traditional analyzed ECR product

• 72% of institutions surveyed offer a commercial interest checking product

• 60% of institutions surveyed offer all three product options

The first hybrid product was introduced on 9/1/2011

The most recent new hybrid product was introduced on 3/5/2013


0.00

1.00

2.00

3.00

4.00

5.00

6.00

1/2

1/2

00

4

5/2

1/2

00

4

9/2

1/2

00

4

1/2

1/2

00

5

5/2

1/2

00

5

9/2

1/2

00

5

1/2

1/2

00

6

5/2

1/2

00

6

9/2

1/2

00

6

1/2

1/2

00

7

5/2

1/2

00

7

9/2

1/2

00

7

1/2

1/2

00

8

5/2

1/2

00

8

9/2

1/2

00

8

1/2

1/2

009

5/2

1/2

00

9

9/2

1/2

00

9

1/2

1/2

01

0

5/2

1/2

01

0

9/2

1/2

01

0

1/2

1/2

011

5/2

1/2

01

1

9/2

1/2

01

1

1/2

1/2

01

2

5/2

1/2

01

2

9/2

1/2

01

2

1/2

1/2

01

3

AP

Y

Date

ECR Historic Data


ECR and Hybrid Rates Comparison

Analyzed ECR Analyzed ECR

Only With Interest

(Hybrid)

Institution Tier Earnings Credit Rate ECR Change Earnings Credit Rate Hybrid Change

Bank A $100,000 0.45% 0.20%

Bank B $100,000 0.20% 0.20%

Bank C $100,000 0.20% (-0.10) 0.20%

Bank D $100,000 0.25% (-0.10) 0.20%

Bank E $100,000 0.20% (-0.05) 0.20%

Bank F $100,000 0.15% 0.20% (-0.05)

Average $100,000 0.24% (-0.04) 0.20% (-0.01)

*Methodology - Product with best rate @ $100K tier in HQ Market - Change Column reflects changes from April 2012 - March 2013


Commercial Account Fees

Monthly Maintenance Deposit Ticket Deposited Item Paid Item

Analyzed ECR

Only

Analyzed ECR

& Interest

Analyzed ECR

Only

Analyzed ECR

& Interest

Analyzed ECR

Only

Analyzed ECR

& Interest

Analyzed ECR

Only

Analyzed ECR

& Interest

Bank A $22.00 $22.00 $0.80 $0.80 $0.20 $0.20 $0.20 $0.20

Bank B $20.00 $40.00 $1.00 $1.00 $0.15 $0.15 $0.19 $0.19

Bank C $20.00 $75.00 $1.40 $1.40 $0.13 $0.13 $0.20 $0.20

Bank D $22.00 $30.00 $0.80 $0.30 $0.20 $0.30 $0.20 $0.30

Bank E $20.00 $20.00 $0.75 $0.75 $0.15 $0.15 $0.20 $0.20

Bank F $23.00 $40.00 $1.00 $1.00 $0.18 $0.18 $0.22 $0.22


Hybrid & Interest Only Accounts

ECR Only

Account Rate

Hybrid Account

ECR Rate

ECR Only

Account Monthly

Fee

Hybrid Account

Monthly Fee

Low 0.10% 0.10% $14.00 $16.00

Median 0.225% 0.20% $20.00 $23.00

High 0.45% 0.28% $27.00 $40.00

Average ($100K

Tier)

0.25% 0.1875% $21.10 $25.27

Statistics based on all institutions in the top 25 by asset size (source: American Banker) that offer HYB - Best rate out of any ECR or HYB product at $100K - Rates as of March 2013 - Change Column reflects change in rates from April 2012 - March 2013


RDC Key Trends 2012-2013 Changes in Remote Deposit Pricing Structure

• Commercial: commercial remote deposit pricing is an essential cash management service

• Small Business: The number of financial institutions offering a separate small business RDC solution continues to grow

• Retail: Mobile RDC has become one of the most important and demanded retail products and has been the hottest buzz term in retail banking since the ATM

Changes in Remote Deposit Check Scanner Equipment

• Commercial: financial institutions continue to offer multiple check equipment options with payment and financing options and continue to provide for the bring your own device segment

• Small Business: bundled packages of RDC solutions including the check scanner equipment along with other cash management services

• Retail: remote deposit capture is an area of fast and exciting growth.


The Future of Remote Capture

• The future of remote deposit is one that is changing as quickly as technology advances. The next generation of RDC is likely to be mobile based and segment specific.

• Technology enhancements with RDC now include:

• Account reconciliation capabilities

• Online systems integrations

• User limit controls

• Duplicate detection technology

• Remittance processing

• Mobile deposit

• Small business RDC has seen some of the most dramatic growth. Many institutions allow smaller businesses to use the retail mobile RDC as a deposit option.

• The future of remote deposit is mobile. With the aforementioned small business growth in standard RDC, the mobile option has become an expected addition and institutions will continue to develop segment-specific mobile RDC options.


Commercial Product Packages Financial Institution Bank A Bank B Bank C

Package Name AccessManager Treasury E

CM Essentials

Monthly Fee $295.00/p.a. $100.00 $30.00

Fee Waivers None $50K Average Balance $40K Average Balance

Accounts Included Includes 5 Accounts and ZBAs

1 Master, 2 Beneficiary Accounts

Business or Preferred Checking

Account Transactions 1,000 Items Included 2,500 Items Included 250 Advantage 500 Preferred

Online Banking Online Manager Online Express $15.00 Month Prior Day

Online Direct Prior Day Included, $15.75 Intraday

Cash Services Not Included $100K Free $10K Advantage $25K Preferred

ACH ACH Payments Included $10.00 Month $0.35 Item $20.00 Month waived with $50K

Wires 10 Outgoing Wires $10.00 Month Wire Discounts

RDC Free Scanner $50.00 Month Not Included

Positive Pay Not Included $10.00 Month Included

Lockbox Not Included $225.00 Month Not Included


Credit and Prepaid Card Trends

• Shift from Debit to Credit

• Payroll Cards

• Merchant Card Processing

• Pre-paid business cards


Final Thoughts

• Conclusions

• Where are we now?

• What is going to happen?

• Product Recommendations

• Industry Focus

• Sophistication & Simplicity

• Projections for 2013 and beyond

• Rate Environment

• Fee Environment

• Questions


Contact Information

Zoya Lieberman, CTP

Informa Research Services, Inc. [email protected]

Randy Rosen, CTP

Informa Research Services, Inc. [email protected]

Jim Graves

KeyBank

[email protected]

mailto:[email protected]



Documents

Current Treasury Pricing & Industry Trends Panel Discussion