Hosted by:
New Hampshire
Government
Finance Officers
Association
Sponsored by:
Local
Government
Center
May 5, 2011
3:30 – 5:00pm
Presented by:
Glenn Rowley
Joyce Baldassare
Tammy L. Buchanan
Safety of Municipal Funds
By
Glenn Rowley, SVP
Government Banking
603-634-7164
Glenn.Rowley@citizensbank.com
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 Citizens Financial Group is a commercial bank holding company
and a wholly owned subsidiary of The Royal Bank of Scotland
Group.
 Headquartered in Providence, RI
 U.S. ranked 12th in Assets at $130 billion and $92 billion in Deposits
 1,500 branches with 495 in New England
 Long-Term Credit Ratings (as of Feb. 2011)
 Fitch A+
 Moody’s A2
 Standard & Poor’s A-
 Tier 1 Capital Ratio 13.16% (CFG as of Feb. 2011)
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 BANK FINANCIALS
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Know who you are banking with and understand the bank’s financials
 RATIOs
 Liquidity
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Loans to Deposit
Liquidity Ratio
Asset Quality
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Capital
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Tier 1 Capital
Risk Based Capital
Earnings
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Non performing Loans to Total
Loans
Loan Reserve to Total Loans
Return on Assets
Return on Equity
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 Bank Rating Services
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Highline Financial
Veribanc
IDC
Bankrate
Bauer Financials
 Rating Agencies
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Standard & Poor’s
Moody’s
Fitch
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 Collateralization – things to look for
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Third party involvement
Automation
Mark to Market Daily
Program approved by Bank Board
Contract
Notices, confirms, online information
Underlying securities
 Third Party
Should be impartial
 They are a service provider, the credit quality pertains to the
securities pledge to the deposit
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 Costs
Most banks are compensated through rate spreads
 Costs can be between 25 to 50 basis points (bps)
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 Citizens Banks Collateral Program
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Third Party Program through Bank of NY Mellon
Daily Mark to Market
Online access
Automated daily feed
FIRREA Compliant
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
Dodd-Frank Signed into law July 21, 2010
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Most significant remake of the U.S. Financial Services sector since the Great
Depression
Impacts every segment of the Financial Services Industry
Dodd Frank requires
 243 New Regulations
 67 Studies
Will it prevent future financial disasters?
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Panic of 1907
Crash of 1929
S & L Crisis of 1989
Crash of 2008
Gave
Gave
Gave
Gave
Us
Us
Us
Us
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Federal Reserve 1913
SEC, FDIC, Glass Steagall
FIRREA
Dodd Frank
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Sixteen Provisions of the Act
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Deriviative Regulation
Systematic Risk
Bank Regulatory and Supervisory Framework
Insurance
Investor
Credit Rating Agencies
Broker Dealers
Disclosure
Deposit Insurance
Consumer Protection
What this means to you
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Regulation Q Repeal
FDIC Unlimited Coverage on DDA through 2012
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Collateral Presentation
By
Joyce Baldassare
SVP/Chief Deposit Officer
603 606 4714 direct line
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 Centrix Bank was founded in 1998 to provide commercial banking services to
small- to medium-sized businesses and professionals in New Hampshire.
 Unique in its goal and successful in the execution of its business model, Centrix is
one of the fastest-growing banks in the Granite State.
 Centrix offers a full-range of banking services to commercial entities,
professionals, not-for-profits and municipalities.
 A New Hampshire State-chartered, FDIC-insured bank, Centrix is comprised of
professionals who contribute greatly to the diversity and experience necessary to
serve its niche.
 Our customer service philosophy is to serve our customers through
uncompromised focus on customer satisfaction.
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 Centrix Bank is headquartered in Bedford, New Hampshire with branches located
in Concord, Dover, Manchester, Milford, and Portsmouth and a loan production
office in Nashua.
 Centrix Bank continues to grow at a steady pace, while maintaining strong asset
quality with our total equity to asset ratio greater than 7.1%.
 At the conclusion of Q4 2010, Centrix Bank’s assets and loans grew 16% and
10% year-over-year, respectively.
 Centrix Bank is quoted on the OTCBB under the symbol “CXBT”.
 SNL Financial LC listing of Centrix Bank at #58 out of 1147 banks in the Best 100
Performing U.S. Community Banks with assets between $500 million and $5
billion.
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 Repurchase Agreements - Pledged collateral typically Fannie Mae and
Freddie Mac Mortgage Backed Securities (MBS).
 Collateralized Deposits - Pledged collateral typically Fannie Mae and
Freddie Mac Mortgage Backed Securities (MBS).
 CDARS or Certificate of Account Registry Service
 ICS or Insured Cash Sweep
 No extra cost for collateral since the cost is built into the rate.
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 Promontory Interfinancial Network developed and started CDARS in
2003.
 The founders and board member of this network include former
regulators of the FDIC and the former Treasury Deputy. Additional
information about Promontory and CDARS can be found at
www.promnetwork.com.
 The most popular products offered by Promontory for Public Funds
investment are CDARS and ICS.
 CDARS or Certificate of Deposit Account Registry Service invests funds in
Certificates of Deposit, and ICS or Insured Cash Sweep invests in Money
Market accounts.
 Each bank in the Promontory network can invest multi-million dollars in
both CDARS and ICS.
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Forego the hassle of:
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Tracking and “marking to market” changing collateral values on an
ongoing basis.
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Having uninsured investments to footnote in financial statements.
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GASB 40 issues1
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Opening accounts at different banks and/or under different insurable
capacities.
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Manually consolidating account statements.
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Calculating blended rates and manually consolidating interest
disbursements on a recurring basis.
[1] CDs issued to governments through CDARS should not be regarded as being exposed to custodial credit risk or requiring an adverse
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disclosure on the government's financial reports.
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 Highlights of CDARS
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Full FDIC coverage of all the funds placed in the network in
increments of less than $250,000 deposited in Certificates of Deposit
in approved banks throughout the country.
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Certificates of Deposit range in term from four weeks to three years,
allowing you to manage your liquidity.
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Municipalities would receive one statement, one 1099 tax form, and
one rate for each Certificate of Deposit term.
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 Benefits of CDARS
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Municipalities would receive full protection on their deposits with FDIC
insurance.
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The rate and return on the money is significantly higher than US
Treasuries and similar other low-risk investment instruments.
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The money invested in CDARS is maintained in the local economy.
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1. Sign a CDARS Deposit Placement Agreement and deposit money with
Centrix Bank.
2. Your funds are placed using the CDARS service.
3. Provide list to Centrix Bank of where Municipality has other monies in
order for Promontory to exclude those banks from your funds
placement.
4. Your CDs are issued by banks in the CDARS Network.
5. The Municipality will receive confirmation from your bank of our CDs.
6. The Municipality will receive consolidated interest payments and
statements.
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 ICS is a semi-liquid investment product with the funds deposited
into Money Markets within the Promontory network.
 With ICS service you can:
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Earn interest with one interest rate on each account.
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Access funds with withdrawals up to six times per month.
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Have the security of full FDIC insurance.
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Unlimited deposits into the ICS account.
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Online access to view where your funds are at all times.
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1. Identify an existing account or establish a new checking with Centrix
Bank to be used with ICS.
2. Sign an ICS Deposit Placement Agreement and a custodial agreement.
3. Provide list to Centrix Bank of where Municipality has other monies in
order for Promontory to exclude those banks from your funds
placement.
4. Have your deposited funds placed into money market deposit accounts
at other banks using ICS.
5. See where your funds are at all times through online tools specially
developed for ICS.
6. Receive one monthly statement from Centrix Bank detailing your account
activity and balances across all institutions.
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 How safe are your deposits?
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In 2010, the NH State Treasurer specified approved use of
CDARS by municipalities for investment of public funds.
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This program has been endorsed by the American Bankers
Association.
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The FDIC has stated and recognized that all money deposited
through this program is covered under FDIC guidelines.
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The media, both print and television, have featured this
program as a safe and wise investment.
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Additional supportive information including videos and
newspaper clippings can be found by visiting www.cdars.com.
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COLLATERALIZATION THROUGH FHLBB
Tammy L. Buchanan, AVP
Government Banking
(603) 762-1876
Tammy.Buchanan@Peoples.com
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
43rd largest financial institution in the U.S.
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$25 billion in assets
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$1.5 billion in excess capital
 Largest New England-based Bank with 340 branches and 491 ATMs
from New York to Maine.
 Formerly known as Ocean Bank
 169 years in business; 32 recessions; 0 bailouts
 Established $60 million community foundation in 2007 in support of
local nonprofits
 100% publicly-owned stock form holding company regulated by the
U.S. Office of Thrift Supervision (OTS)
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NASDAQ ticker - PBCT
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 FHLBB is a Government-sponsored, privately-owned wholesale bank.
 It’s mission is to support the lending activities of its member financial
institutions throughout the six New England states.
 All FHLBB stock is owned by its member banks.
 As a member, People’s United Bank utilized FHLBB’s resources which
enables us to deliver competitively priced financial products, services
and expertise.
 FHLBB consistently receives the highest possible agency ratings. The
Bank is rated Aaa by Moody's Investors Service and AAA by Standard &
Poor's Corporation.
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 Letter of Credit (LOC) is used to secure deposits made by state
governments, municipalities and other public agencies
 Benefits of an LOC over traditional collateral:
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Customer has full deposit relationship protected up to the
maximum credit amount determined by the municipal entity
and the relationship manager
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Customer has less paper, less reporting and less reconciliation
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Customer is owner of the account; Bank cannot terminate or
change the LOC without the agreement of the customer
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Same-day payout of funds should the Bank default
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 Less paperwork
 Fast and easy set-up
 Easy to manage
 Cost effective for both Bank and Customer
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
Member (People’s United Bank) applies to the FHLBB for the LOC;
the Member is the applicant while the municipality is the
beneficiary
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FHLBB issues the LOC on behalf of the applicant in the name of the
municipality
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LOC must have an expiry date and can only be changed or cancelled
with the municipality’s consent
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In the event of a bank default, the municipality prepares and
delivers to FHLBB a sight draft and letter of request to draw funds
against the LOC. (If these documents are received by 11:00 AM,
funds are disbursed by wire transfer on the same business day.)
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What is the cost to the Municipality?
What is the cost to the Bank?
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The Comprehensive Implementation Guide, issued by the
Governmental Accounting Standards Board, states that an
Irrevocable Letter of Credit can be considered a form of
insurance if the Bank or the Bank’s affiliate did not issue it and
provides a scope of coverage substantially the same as that
provided by Federal deposit insurance. Thus, the Irrevocable
Standby Letter of Credit issued by the Federal Home Loan Bank
is not exposed to custodial credit risk, and deposits should be
considered Category 1.
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Q&A
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