A Payments Approach to Checking Revenue Compliant Fees Consumers Willingly Pay

1. A Payments Approachto Checking RevenueCompliant Fees Consumers Willingly Pay

2. Contents Introduction A Payments Approach to Checking Revenue Payments Solutions Next Steps

3. Introduction • 2012 – Present, President and CEO – R.C. Giltner Services, Inc.

4. A Payments Approach to DDA Revenues While service charges on deposits are falling, “payments” providers like PayPal are growing revenues over 20% annually. Service Charges on Deposits Banks < $10 Billion, 2009 - 2012 PayPal Revenues 2009 - 2012 Source: FDIC, PayPal, in millions

5. A Payments Approach to Checking Revenue Checking Accounts Payments Services The “payments” space is exploding while “checking accounts” fall to the bottom of the settlement pack. How would you think about the choices below?

6. A Payments Approach to DDA Revenues A “payments” approach to segmenting and pricing transaction services is winning relationships and earning fees consumers willingly pay. • Financial institutions focus on “accounts,” which still provide settlement, but their value is at the bottom of the pack in the hierarchy of consumer payment methods, venues and management. • Payment providers create value by focusing on the use, context and experienceof specific payments, such as where the payment occurs or the context of before or after the payment. • Use, context and experience segmentation of individual payments drives new revenue and value that can be added to any account.

7. A Payments Approach to Checking Revenue Large $1.69 69% more Latte $5.00 500% More $1.00 Consumers opt for and pay more for products and services according to use, context and experience.

8. A Payments Approach to Checking Revenue FI Service Charges $44 Billion Non Credit Score Small Dollar Loan Revenues $32 Billion ($3 Billion) Interchange (net) $10 B With Bank Account $31 Billion 3 2 1 Bank NSF/OD Fee Revenues Segmentation of “payment” revenues within or across all accounts must focus the context of revenue sources 1) NSF revenue, 2) interchange and debit payments and 3) small dollar loans. Source: 2012 FDIC, Fair Issacs, CFSI, Our Analysis

9. Payments Solutions Your near-term revenue opportunities in applying the payments segmentation paradigm can grow revenues 39%. A. Prepaid Check Card/Fresh Start – 8% revenue growth. B. Tiered NSF Fees – 10% revenue growth, 90 days. C. Salutary Small Dollar Loan – 21% revenue growth.

10. 1. Prepaid Debit Solution Prepaid is now promoted as an alternative and adjunct to checking accounts. • Big retailer promotion is driving consumer interest. • 87% of prepaid card users have a checking account. • You cancreate a checking account to serve as a prepaid companion account.

11. 1. Prepaid Debit Solution Branding Pay - payments-oriented contextual use segmentation. Sound - in good condition, financially strong, reliable, competent, sensible, enduring. Key Features: no overdraft fees ever, spending control, online and mobile, automated, line of credit, alternative underwriting, financial empowerment.

12. 1. Prepaid Debit Solution We bring the key skills for a successful, timely, turn-key implementation in 60 days: Understanding the “Payments” revenue opportunity. Product strategy definition. (bill pay?, ACH?) Product financial contribution and budget. Product system set up definition. Product expansion for ChexSystems accounts. Website, marketing and merchandising tool options. Executive and branch team training. Sales and operations training, sales script and roll out.

13. 2. Prepaid Debit Solution $13.95/mo. We propose review your First Step checking pricing and service options to drive more service and higher revenue.

14. 2. Prepaid Debit Solution These accounts will add between $100 and $200 in added revenue per account.

15. 2. NSF/OD Recommendations We focus first on segmenting with a “payments context” overdraft and liquidity services. Bank Service Key Segments Sample FI 10+ overdrafts fee users pay $1,100 a year in fees; 7% of accounts; want items paid; low per item price sensitivity. Heavy NSFer Good Service 1-5 items a year pay $105 a year in fees,15% of accounts; 6-10 items 6% of accounts. Poor Service No Service Rare NSFer Non NSF Liquidity Borrower 22% of accounts <650 credit score 15% of accounts>650 and convenience loan oriented 35 % No Liquidity Use

16. 2. NSF/OD Recommendations This strategy does not hurt your current revenues because overdraft users want items paid not returned. In fact, applying a “payments context” to overdraft pricing can grow revenues with salutary compliance. Sample Competitive Market Fifth Third $37 PNC Bank $36 US Bank $35 Your Tiered Pricing Estimate 16

17. 2. NSF/OD Recommendations Sample Client – 5,000 Accounts We recommend monitoring accounts with 10 or more NSFs, but with monthly deposits averaging less than $20k or where annual NSF/OD fees are more than 3% of annual deposits a year for removal or limitation of use of from overdraft programs. We provide the analysis and data for this strategy of deposit activity by NSF/OD activity.

18. 3. “Payments” Checking with Small Dollar Loan The largest revenue opportunity is capturing the revenue our customers are paying others for small dollar loans. (example: www.paysound.com/FFSBKY)

19. 3. “Payments” Checking with Small Dollar Loan Nearly all transaction account revenue is related to liquidity. Without your response, non-bank competitors using aggregation will steal your revenue and customers with their disruptive strategies. $69B

20. 3. “Payments” Checking with Small Dollar Loan Nearly Half of Small Dollar Loan Users Have Credit Scores >650 • <650 credit score 54% • >650 credit score 46% Source: FI Client Underwriting Justifies Loans for 67% of FI Accounts <650 Credit Score Source: Our Client Analysis

21. 3. “Payments” Checking with Small Dollar Loan Using deposits and net account balances is an alternative way for underwriting loans, similar to Guidance by the OCC (OCC-2013-0005), FDIC (6714-01-P) and CFPB, FIs can define customer ability to repay without credit scores.

22. 3. “Payments” Checking with Small Dollar Loan We provide the process and tools for a payments strategy to grow checking revenues: • Analysis of current checking revenues. • Product, loan, payment strategy, NSF/OD and other revenue recommendations. • Solution tools tailored to your needs, including: • Financial pro forma and budget. • PaySoundSM branding and market protection. • Web marketing site and tools. • In-branch opening automation. • Automated loan underwriting using deposit data. • Comprehensive compliance and regulatory management. • Sales and process training. • Payments product direct marketing and merchandising.

23. 3. “Payments” Checking with Small Dollar Loan We provide a detailed business model generating $180+ in contribution per account.

24. Your Revenue Opportunities We integrate simply with any product set with our sales script and “payments” services. PaySoundSMDebit PaySoundSMChecking PaySoundSM Plan

25. Next Steps A Payments Approachto Checking RevenueCompliant Fees Consumers Willingly Pay Let us share the detailed pro forma of the revenue benefits we can bring to you.