Pub. 1 2012 Issue 8

December 2012 7 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s W ITH THE ECONOMIC TURMOIL AND UN- certainty of the last few years continuing to have a major impact in the financial marketplace, ap - petite among institutional customers for safe and liquid investments remains strong and will likely continue for the foreseeable future. Some of these depositors have relied on the Transaction Account Guarantee (TAG) program provided by the Federal Deposit Insurance Corporation (FDIC). Through December 31, 2012 TAG provides unlimited deposit insurance coverage for certain qualifying non-interest-bearing transaction accounts, including non-interest-bearing traditional check- ing accounts. With just under two months before TAG is scheduled to expire, the future of the popular program is unclear. While Congress will be in ses - sion in November, there is no guarantee that it will extend TAG, leaving banks needing to plan for different possibilities. The uncertainty around the future of TAG is one reason why the FDIC recently issued guidance encouraging commercial banks and savings and loans to provide adequate advance notice to depositors about the potential expiration of the program. Fortunately, banks that are members of the Promontory Network can retain the high-value relationships they have already built by offering an alternative – ICS, a service that provides access to multi-million-dollar FDIC insurance and interest on funds placed into demand deposit ac - counts (using an ICS demand option), money market deposit accounts (using an ICS savings option), or both. While the TAG program may end at the close of the year, banks can use ICS to retain large-dollar customers who otherwise might require collateralization or be tempted to run around to other banks, opening ac- counts, and maintaining balances just under the standard FDIC insurance maximum of $250,000. And banks can promote the availability of ICS, as well as other alternatives, in notices they provide to customers about TAG. And now, ICS is available for free. Through June 30, 2013, Promontory will waive ICS fees for up to $100 million of new ICS balances (up to $150 million of new balances for existing Network members 1 ). This will provide banks with a no-cost way to determine how best to replace the key functionality of TAG in the event the program is not extended. After June 30, 2013, banks can stay with ICS and pay Promontory’s normal, low fees. Otherwise, there is no obligation to keep using ICS. Beyond helping banks to attract and retain high-value relationships, ICS can help a bank to replace higher cost funding (e.g., repurchase sweeps, letters of credit) and to reduce collateralization requirements. On that latter note, by replacing collateralized deposits with ICS deposits, banks can repurpose collateral into higher-earning assets, reduce collateral- tracking costs, improve asset liquidity, and lower the risk of shortfall due to collateral-value deterioration. While a bank’s current suite of cash management products may include the basics, adding ICS can help financial institutions to improve profit - ability while taking care of their most valuable customers. With ICS, banks can offer large-dollar depositors, such as businesses and public funds (in states that permit their use of the service) all of these benefits at once: yield, peace of mind, and flexibility. Additionally, ICS enables participating banks to compete on dimen - sions other than price – in particular, by featuring access to a level of security greater than any bank (regardless of size) can offer on its own. All of this makes ICS a smart choice. To learn more about this great service, please visit Promontory’s website at www.promnetwork.com , or contact Lance Caldwell, Regional Director at 866-776-6426 ext. 3487 or lcaldwell@promnetwork.com. 1 Up to $100 million of new ICS placements made by new Network members and up to $150 million in incremental placements (over existing ICS and CDARS balances) for current Network members. ICS bank participation limits apply and are based on factors which include total deposits and IDC rating. Additional terms and conditions apply. Insured Cash Sweep is a registered service mark, and ICS is a service mark, of Promontory Interfinancial Network, LLC. ICS – THE SMART CHOICE FOR BANKS ICS is a product of Promontory, an endorsed vendor of the KBA.