Western Independent Banker - March/April 2008 - (Page 31)

WIB Service Corporation Report By Anne K. Scully, President, WIB Service Corporation Using The Reserve’s On-BalanceSheet Sweep to Their Advantage WIB Banks Share Their Success Stories THE WIB SERVICE Corporation is very proud to recommend the On-BalanceSheet Sweep (On-BSS), offered by our endorsed partner, The Reserve. Nearly 40 WIB banks are successfully taking advantage of this one-of-a-kind sweep – that keeps customer deposits on a bank’s balance sheet – to grow core deposits/liquidity, fund loan growth and gain a competitive edge. We thought you might like to hear directly from three WIB banks that have successfully deployed this unique sweep product to attract new commercial, corporate and high net worth customers; convert cash previously locked in repurchase agreement programs (repos) into loanable funds; offer a cash management solution for municipal and non-profit customers; and expand and enhance their product offerings. Three member banks using this sweep program recently shared their success stories in a WIB Service Corporation webinar. [The webinar replay can be found at: http:// wib.org/conferences__education/wibsco_ webcasts.html.] Here’s a summary of what they said. San Joaquin Bank (Steve Annis, EVP/ CFO) Headquarters: Bakersfield, Calif.; four branches; $840 million assets. San Joaquin Bank started as a business bank, and business continues to be its market focus. Beginning in 1987, the bank initially offered a traditional off-balancesheet sweep product to its customers. However, the bank desired to keep the sweep dollars in the bank and quickly developed its own “on-balance-sheet” sweep, using a combination of waterfall accounts and repurchase agreements. The bank’s sweep started with $1.5 million in balances; by 2003, it had grown to $110 million. In 2003, the bank underwent a core processor conversion which, when comWestern Independent Banker March/April 2008 bined with regulatory changes, triggered an end to their sweep and the need to find a new way to handle its sweep deposits. After reviewing their options, San Joaquin Bank implemented The Reserve’s OnBSS in 2003 and began the process of converting its customers. Since that time, the bank has grown its program to $177 million in deposit balances. And, all of the new growth has been generated internally. The On-BSS has played a critical role in supporting the bank’s lending function and serving as a primary source of liquidity. More importantly, it has provided a viable service for the bank’s business customers which represent a significant portion of the bank’s core deposits and core relationships (many having been cash management customers for nearly 20 years). AmericanWest Bank (Wade Griffith, EVP/CIO) Headquarters: Spokane, Wash.; 65 branches; $2 billion assets. AmericanWest Bank implemented The Reserve’s On-BSS in mid-2006. It started at “Ground Zero,” with no deposit conversions from other types of sweep programs. Today, the bank has $50 million in deposit balances. As a new “user,” the bank has found the On-BSS to be very valuable in a variety of ways. The On-BSS eliminated a set of very labor intensive and cumbersome repo sweeps that had grown organically within the bank. These repo sweeps were both inconvenient and limiting, as they had to tie into the bank’s investment portfolio. AmericanWest was able to use the OnBSS to retain several large-balance, key customers of two recently acquired banks. It further helped solidify these relationships in the post-M&A transition period. On the consumer side, the On-BSS has provided a viable rate-competitive product to offer large balance, “recalcitrant” Regulation D violators who have difficulty understanding and/or adhering to the restrictions on withdrawals. With the On-BSS, the bank has been able to offer these customers a way to keep their funds properly invested and out of regulatory hot water. Beyond retaining these deposits, the OnBSS has helped the bank enhance the value of the relationships. The On-BSS has become a key component to the bank’s cash management product basket for attracting new deposit business relationships. It has proven to be a strong competitive alternative to an offbalance sheet product and a “door opener” for the bank’s cash management team’s sales efforts. The bank was able to capitalize on some variations in certain state laws and use the On-BSS to retain public entities’ investable funds locally with the bank versus sending them to state-run investment pools. Barnes Banking Company (Doug Stanger, EVP/CFO) Headquarters: Kaysville, Utah; 10 branches; $900 million assets. Barnes Bank originally created its own on-balance-sheet repo repurchase sweep as a means to meet competition, particularly from larger regional banks. However, the bank soon discovered it was eating up its investment portfolio and losing liquidity flexibility in the process. The bank examined the On-BSS product very thoroughly before implementing the product because it was concerned about retaining customers during the conversion process. The bank found the opposite to be the case, i.e., the On-BSS was a very friendly customer conversion product. In fact, the bank’s customers were very thrilled with the On-BSS because it was a very viable and easily understandable product – money market fund vs. repo sweep – particularly for small-to-medium 31 http://wib.org/conferences__education/wibsco_webinars.html http://wib.org/conferences__education/wibsco_webinars.html http://wib.org/conferences__education/wibsco_webinars.html

Table of Contents Feed for the Digital Edition of Western Independent Banker - March/April 2008

Western Independent Banker - March/April 2008 Contents A Message from the President & CEO The Forest Through the Trees Differentiating Your Bank Through the Five Senses 51st Annual Conference for Bank Presidents, Senior Officers and Directors Building Franchise Value Deposit Gathering Steps to Determine ROI on a Successful Brand Want to Improve Customer Loyalty? Managing the Change Your Bank Needs to Grow Ten No-Fail Strategies to Create Profit-Rich Growth Niche Banking Rethinking ROI Using The Reserve’s On-Balance-Sheet Sweep to Their Advantage WIB Calendar Welcome New Members Index to Advertisers Advertiser.com

Western Independent Banker - March/April 2008

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