How To Profitably Respond to the W almart/AMEX Bluebird Card and Other DDA Alternatives

1. How To Profitably Respond to the Walmart/AMEX Bluebird Card and Other DDA Alternatives Configuring and Marketing a Checking Account as a Companion Card 2013

2. Agenda Summary Understanding the Need for the New Service The Growth Drivers of Prepaid Card Services The Walmart/Amex Bluebird Account Recommended Product Strategy Product Revenue Product Set Up Specifications Deposit Operations and Compliance Marketing

3. Summary Prepaid cards and particularly the Bluebird Card by Walmart/American Express are growing rapidly to over 10% of transactions as a checking alternative and checking companion card with heavy marketing dollars. 87% of buyers are checking customers and use the card as an added service for students, adolescents, online shopping, spending control and travel. FIs under $10 billion can configure a checking account with a debit card to be a “companion card” account where the FI requires no partner and keeps all account revenue averaging $100 a year. 5%-10% penetration of your existing accounts would generate material in revenue and thwart competitive inroads. Product expansion can drive 10% growth in total service charge revenues.

4. Summary: Recommended Product Strategy We recommend establishing checking accounts that behave like a prepaid card. Cross sell customers who want the prepaid option. Attract accounts that want entry with prepaid option. Provide account for small business/employers for direct deposit for specific employees where volume is not sufficient for Payroll card strategies.

5. Summary: Sample Bank Marketing of Checking Account Configured as Prepaid Bank Web Page Banner • Radio • :30 second ad on local stations • Print – short run in local publications • Horse Trader • Quill • Standard News • Howell County News • Summersville Beacon • Direct Mail Bank Web Page Banner

6. Summary – The Payoff $13.95/mo. Optional expansion of the service drives added revenue. 5% of your accounts will average $100 in revenues which equals $20k in incremental revenue plus 3% No Overdraft or Fresh Start accounts will generate $24k, totaling $48k.

7. Understanding the Need for the New Service • GPR Prepaid Cards • Buy card and put specific amount of funds on card. • “Multi-account” credit card/debit card except funds come only from amount “pre-loaded.” • Can re-load at merchants, direct deposits or through bank accounts. • Gift Cards • Buy card and put specific amount of funds on card. • Works like a credit card/debit card except funds come only from amount “pre-loaded.” • One time use only. What Is A GPR Prepaid Card vs a Gift Card?

8. Understanding the Need for the New Service • GPR Prepaid Cards • Buy card and put specific amount of funds on card. • While “prepaid,” overages can still happen but no fees. • “Multi-account” credit card/debit card except funds come only from amount “pre-loaded.” • Can re-load at merchants, direct deposits or through bank accounts. • Debit Only, Opt Out Checking • Debit card only and “return all” so only access funds deposited. • While “prepaid,” overages can still happen but no fees. • Works like a credit card/debit card except funds come only from amount “deposited” • Can deposit (“load”) via online banking transfer, branches, ATMs, or direct deposit. Functionally the same thing. GPR Prepaid Card vs an Debit Card Only, Opt Out Checking Account

9. Understanding the Need for the New Service Large $1.69 69% more Grande $2.10 110% More Because as markets mature, segmentation occurs by Use, Context and Experience Why would people pay more for something that they can get at many places at a lower cost when it is functionally the same thing?

10. Understanding the Need for the New Service Home Use Travel Use $1.99 ($1.53 per oz.) $4.99 ($.90 per oz.) Segmentation of the same product by useoccurs with all products.

11. Understanding the Need for the New Service When only $.50 more, the large is seen as the best value. Free Popcorn to All Our Guests Context and experience is a key part of pricing.

12. Understanding the Need for the New Service Bank DDA Marketing: A Bank Account No Use, Context and Experience • Hear is another checking account with just a debit card. What’s different? • Now balance your account and don’t think your online balance is accurate to make sure you don’t overspend or overdraft. Balance my account on a cell phone? • Let me explain how you can “Opt out” under Regulation E to avoid overdraft fees. What is Reg E ? • You need to manage risk with your full bank account information. My risk? • Be careful shopping online, or at risky merchants. Not shop online? • Don’t let others use your debit card. Not parent, child, brother, sister, baby sitter…? VS. Alternative DDA Marketing: A Companion Card: Use, Context and Experience Market “No overdraft fees ever.” Sell “Help manage your spending.” Manage risk and security. Protect your Online shopping. Have spending control while shopping. Have a card to hand to students, youth, the baby sitter, etc that you control. “Load” with direct deposit, etc.

13. Understanding the Need for the New Service – Market Drivers

14. Understanding the Need for the New Service GPR prepaid marketing use, context and experience is growing 30%+ a year and penetrating all segments, serving over 10% of households.The Amex/ Walmart Bluebird card reflects this mass market strategy. Source: The Wall Street Journal

15. Understanding the Need for the New Service – Your Action We need to market a “companion card” for use, context and experience as an “add on” service to a checking account, not just try to explain Regulation E and “opt out.” Your Best Option to for Prepaid Debit card account with full service online and mobile banking integration, and safety with existing accounts. No overdraft fees ever. No over spending your budget (return all account). Great for youth or students. Online shopping security. Load and transfer with direct deposit or existing online/mobile banking. Great for “payroll,” “government payment,” fresh start account. No long checkout lines. No out-of-town call center; local service. $5.95/mo.

16. Growth Drivers of Prepaid Card Services The benefits driving the growth of “prepaid” can be provided in a checking account: • No overdraft fees ever. (73%)* (positions Reg E opt out as a benefit) • Control over spending. (58%)* • Retail access for loading. • Second chance options where CheckSystems scores are low. “Community banks struggle to devise a 21st century business model that accounts for changing consumer behavior.”* * Analysis of GPR Branded Prepaid Cards, Bretton Woods, 2012

17. Growth Drivers of Prepaid Card Services Many specific uses are driving the explosive growth of prepaid use among checking account holders.

18. Growth Drivers of Prepaid Card Services Prepaid customers have a checking account.

19. Have a checking account….? 87% Dissatisfied from OD Fees Source: Center for Financial Innovation Study, Aite Group Customer Survey, 2010 Growth Drivers of Prepaid Card Services “Prepaid” card are increasingly used as a second or additional transaction service to manage spending and security. They can be an “added” account for many customers. Even half of the “underbanked” users had checking.

20. Growth Drivers of Prepaid Card Services Overdrawing their account for liquidity services is the least attractive option for this customer segment. 1 2 3

21. Growth Drivers of Prepaid Card Services Banks and non bank competitors are offering prepaid card alternatives, with large banks underwriting their own card and smaller banks partnering with a vendor.

22. Source: National Community Investment Fund and Our Analysis, Card Revenue Only Growth Drivers of Prepaid Card Services Unlike prepaid card programs, a “Prepaid Checking” account allows the financial institution to keep all the account revenue and face no “prepaid” compliance concerns without partnering with a vendor.

23. Walmart/Amex Bluebird Account The single most important competitors is now Amex/Walmart. Prepaid is now promoted as an alternative to checking accounts. Big retailer promotion and in-store availability is driving consumer interest.

24. Walmart/Amex Bluebird Account The competitive challenge is significant.

25. Walmart/Amex Bluebird Account Rich features include: direct deposit, online and mobile, checks, ATM access, sub-accounts.

26. Walmart/Amex Bluebird Account Bluebird

27. Walmart/Amex Bluebird Account Bluebird

28. Walmart/Amex Bluebird Account Bluebird

29. Walmart/Amex Bluebird Account Bluebird

30. Walmart/Amex Bluebird Account Bluebird

31. Walmart/Amex Bluebird Account Bluebird

32. Walmart/Amex Bluebird Account Bluebird Fees

33. Walmart/Amex Bluebird Account Bluebird “surcharge free” ATMs include our ATMs.

34. Recommended Product Strategy We recommend establishing checking accounts that behave like a prepaid card. Cross sell customers who want the prepaid option. Attract accounts that want entry with prepaid option. Provide account for small business/employers for direct deposit for specific employees where volume is not sufficient for Payroll card strategies.

35. Product Strategy What are the strengths we can leverage against Bluebird? Your Best Prepaid Checking Option Debit card account with full service online banking integration, and safety with existing accounts. No overdraft fees ever. No over spending your budget (return all account). Great for youth or students. Online shopping security. Load and transfer with direct deposit or existing online/mobile banking. Great for “payroll” or “government payment” account. No long checkout lines. No out-of-town call center; local service. $5.95/mo.

36. Product Strategy Expansion What are the strengths we can leverage against Bluebird? Your Best No Overdraft Fee Ever checking account, with Fresh Start options. Debit and checking account with full service online banking, integration and safety with existing accounts. No overdraft fees ever (or return check charges!) No budget over spending (return all account). No ATM fees (our ATMs). No out-of-town call center; local service. No long checkout lines. Not on ChexSystems $12.95/mo. ChexSystems but no fraud $19.95/mo.

37. Product Strategy Current overdraft revenues will not be cannibalized because overdraft users want items paid where ever possible. Three Customer Segments No NSF/OD or Returned Check Fees (Return All) Present few NSF/OD items/Want Them Paid (Pay) Regularly present Many NSF Items/Want Paid (Pay)

38. Product Revenue and Financial Pro Forma These accounts will add between $100 and $200 in added revenue per account.

39. Product Revenue and Financial Pro Forma This generates valuable contribution over the direct variable costs of $58 with the largely fixed costs of retail checking delivery.

40. Product Set Up Specifications Full Service Prepaid Checking • Set up as: • Return all. • No overdraft fees. • Charge for paper statements. • Monthly Fee of $9.95. • ($14.95 if on ChexSystems) Prepaid Check Card • Set up as: • Debit card only. • Return all. • No overdraft fees. • Monthly Fee of $5.95. • Charge for paper statements. • ($.50 per check charge.)

41. Deposit Operations and Compliance Deposit operations will have no changes for these accounts compared with the current checking products. While “prepaid check cards” have received attention for compliance and regulation from the CFPB and the FDIC, there are no compliance issues with these accepted checking configurations. Banks under $10 Billion are exempt from interchange caps under Durbin, and banks over $10 Billion cannot offer these accounts and be exempt. Their prepaid card exemptions are only available to “multi-account” prepaid cards.

42. Marketing Your Best No Overdraft Fee Ever checking account, with Fresh Start options. Debit and checking account with full service online banking integration and safety with any existing accounts. • No overdraft fees ever (or return check charges!) • No budget over spending (return all account). • No ATM fees (our ATMs). • No out-of-town call center; local service. • No long checkout lines. Your Best Prepaid Checking Option Debit card account with full service online banking integration and safety with any existing accounts. • No overdraft fees ever. • No budget over spending (return all account). • No ATM fees (our ATMs). • No out-of-town call center; local service. • No long checkout lines. The marketing messaging content would be:

43. Marketing Card Messaging: • No Overdraft Fees, Ever! • No Budget-Busting Surprises • No ATM Fees • No Load Fees • No Out-of-Town Call Center • No Long Checkout Lines • No Fooling! Great for: Teens and students Online shopping Travel Spending control Government benefits Security and safety

44. Sales and Sales Training Brochure We will provide a sales aid. We will provide a sales script and integration into your sales process. Provide business bankers benefits of accounts for direct deposit for specific employees. We will execute a sales and implementation kick off meeting with your team.

45. What We Provide Product Strategy Definition Product System Set Up Definition Product Expansion for ChexSystems Accounts Market Guidance Executive and Branch Team Training Sales and Operations Training and Roll Out