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Industry Perspective How Did We Get Here?

Industry Perspective How Did We Get Here?. Karl Nelson. Our Agenda. An Industry Perspective FDIC – Liquidity Guidance Rate Board Funding TARP CDARS and IND IDC Deposits Federal Reserve Discount Window FHLB Advances Intrasweep Solutions Contingency Funding Plan.

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Industry Perspective How Did We Get Here?

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  1. Industry PerspectiveHow Did We Get Here? Karl Nelson

  2. Our Agenda • An Industry Perspective • FDIC – Liquidity Guidance • Rate Board Funding • TARP • CDARS and IND • IDC Deposits • Federal Reserve Discount Window • FHLB Advances • Intrasweep Solutions • Contingency Funding Plan

  3. The Golden Age of Banking • Key Banking Periods. • Recognizing Problems: 1984 – 1990. • Clean-Up Time: 1990 – 1992 • Golden Years: 1993 – 2006 • Problem Period: 2007 – 2009?

  4. The Real Estate Breakdown • Starts With A Desire to See More Families in Homes. • Add in Some Disreputable Brokers. • Add in Some Homeowners Who Knew Better. • Add in Some Greed From Wall Street. • Add in Some Greed From Rating Agencies. • Toss in Some Misled and Unsophisticated Investors. • We Call This A Mess!!!

  5. The Golden Age of Banking • Of course, This Period Was Also Marked By A Significant Decline in Failures: • 1981 – 1985: 109 / Year • 1986 – 1990: 371 / Year • 1991 – 1993: 167 / Year • 1994 – 2004: 6 / Year • 2005 – 2006: 0 • 2007: 3 • 2008: 25 • 2009: 2

  6. What Does It All Mean? • With our Net Interest Margin in a Declining Trend, Bankers will Pay More Attention to Liquidity and Capital Management. • If You Have Excess Capital, You May Want to Use It To Create Additional Income. • It Has Never Been More Important To Have A Good Contingency Funding Plan. • And, Having Funding Options Is Key To Success.

  7. Funding Options • No Collateral Needed • Rate Board – www.qwickrate.com • Brokered Deposits • CDARS – www.promnetwork.com • IDC Deposits – www.idcdeposits.com • Fed Funds

  8. Funding Options • Collateral Required • Repurchase Agreements – Best Collateral • FHLB Seattle – Next Best Collateral • Federal Reserve Discount Window – Remaining Collateral

  9. Funding Options • With Net Interest Margins Under Attack, It is Key That All Banks Look at Ways to Decrease Their Cost of Funds. • Loan Notes – Floors? • Investments – MBS? • Liabilities – Think Balance Sheet! • Pricing Concepts.

  10. Funds Management Report • Regulators are Naturally Concerned About Wholesale Funding. • Unfortunately, The “Delineated Community” Model isn’t Working. • Is There Really A Core Deposit in the CD Arena? • Using Wholesale Funding Carries a Responsibility To Understanding and Reporting To The Board.

  11. Next Step • What Does The FDIC Have To Say About Liquidity?

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