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Remote Deposit, Check Conversion and Optimized Routing

Remote Deposit, Check Conversion and Optimized Routing. A Revolution in Depository Processes. Dana Box Lubbock Power and Light Customer Service Manager. Anthony Justice Wells Fargo Regional Manager – Treasury Management. TPPA Marketing & Customer Service Conference March 2009

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Remote Deposit, Check Conversion and Optimized Routing

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  1. Remote Deposit, Check Conversion and Optimized Routing A Revolution in Depository Processes Dana BoxLubbock Power and Light Customer Service Manager Anthony Justice Wells Fargo Regional Manager – Treasury Management TPPA Marketing & Customer Service Conference March 2009 San Antonio, TX

  2. What We Will Cover • Overview of 2 Concepts • Check 21 Technology • ACH Check Conversion • Combine both concepts for a Complete Depository Solution • Lubbock Power and Light • Open Discussion

  3. 1st Concept:Check 21 - Remote Image Deposit 3

  4. 1st Concept:Check 21 - Benefits of Remote Image Deposit • Reduction in costs and streamlined process. • Deposit all domestic checks electronically • Reduce courier pick-ups • Reduce trips to the bank • Collect funds faster. • Later deposit deadlines for same day credit (9:00pm CT) • Improved fund availability on most items • Consolidate banking relationships. • Manage returned items more efficiently • Save time on account reconciliation • Reduce banking fees

  5. 2nd Concept:ACH Check Conversion 2.1 B in ‘06 We will focus on ARC Check Conversion in today’s presentation 5

  6. 2nd Concept:Benefits of ACH Check Conversion 6

  7. How Check 21 and Check Conversion Impact You 7

  8. + Check 21 ACH Combine Image Deposit w/ Check Conversionfor Optimized Routing ACH Conversion WF’s “Smart Decision” determines eligibility and the optimum channel for presentment Single Credit to Company Account Substitute Check Step 1 – Create & Deliver Deposit File Step 2 – Decision Items and Post to Account • Identify likely business checks • Examine exclusion database(s) • Routing number conversion and account number translation • One image file delivered • MICR used to create NACHA file for eligible items • Images used for ineligible items

  9. Optimized Payment Routing Overview 9

  10. Depository Solutions 10

  11. Optimized Payment Routing Smart Decision Engine 11

  12. Optimized Payment Routing 12

  13. Optimized Payment Routing 13

  14. Municipality located in Lubbock, TX 90 years of experience providing reliable electric service Operated by an Independent Board in a competitive electric environment Have approximately 76.75% of the electric market Act as the billing and collection agent for the City of Lubbock utilities including water, storm water, sewer and garbage services Serve 100,000+ Customers within the City of Lubbock

  15. Current Image Deposit and ACH Check Conversion Process • Checks received via mail in Lubbock, TX • LP & L captures check images with their own equipment and submits an electronic deposit file to Wells Fargo • Wells Fargo applies the Smart Decision® service to the electronic deposit file to determine which items are eligible for ACH (ARC) check conversion • Started Check 21 image deposit and converting checks to ACH in April 2008: • Average monthly number of checks – 45,000 • Around 80% of checks are converted to ACH. Those items not converted are processed via image exchange or Image Replacement Documents 15

  16. Why move to Remote Deposit with ACH Check Conversion? Improved availability of funds Benefit from overnight investment opportunity Reduce return items Reduce processing costs and manual “paper” handling Ability to make multiple electronic deposits throughout the day Automatic high speed decision-making for ACH eligibility Reduced overtime expenses 16

  17. - the OLD Process Manually Verify Batch Totals Send work off for final imaging Bundle And Batch Work Prep Bags for Courier Research done on outdated image retrieval platform Receipt of Mail Credit Posted at bank Extract and Sort Mail Process Work (Incl- Encoding & microfilm) Receive, process, log and store image files Prepare Deposit Slips Courier Picks up and delivers to bank • Challenges with the OLD process • Equipment and Supply Costs • Manual processes • Document storage and destruction • Research

  18. - the NEW Process LP & L notifies customers on monthly statements. Supports process for customer ACH opt-outs. LP & L inputs customer opt-outs through WF’s CEO internet portal DECISION SYSTEM Step 1 Step 2 Step 3 Step 4 LP & L captures checks, creates electronic deposit file and sends to Wells Fargo. LP & L securely stores the original checks and destroys checks within 10 days. Wells Fargo identifies and creates ARC debits for all eligible items. Ineligible items are processed as substitute checks or via image exchange. Receiving bank debits check writer’s account. Provides payment information on customer’s bank statement. Checks are sent through the US mail to LP & L

  19. - 1 Year later • Cost savings realized • 72% reduction in return items • Overtime • Interest earnings increased • Eliminated cost associated with old (out-dated) image process 19

  20. - 1 Year later • Process efficiencies realized • Significantly reduced overtime • Reduction in time spent with research and customer service • Maximum use of high speed equipment • Wells Fargo Bank provides contacts and support 24/7 • Use of Wells Fargo’s CEO system to easily manage opt-outs

  21. - 1 Year later Other • Check float savings (most items clear by day 1) • Wells Fargo Bank items clear same day • Prior to transition to electronic check conversion, bank float on some items was as much as 5 days • The never-ending “Outsourcing” question • Put it to rest for a long time • Highly efficient operation • Check volume has declined every year since 2003 but deposited dollars increases annually. 21

  22. - 1 Year later Total Benefit

  23. - General Things to Consider 23

  24. - Thank You! Discussion and Questions 24

  25. Supplemental Information 25

  26. ACH and Check 21 Comparison 26

  27. Benefits by Solution 27

  28. BOC Notification Notice and Take-Away Language Additional Notice Language (until Jan 2010) “When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic fund transfer from your account or to process the payment as a check transaction. For inquiries, please call <company’s phone number>.” “When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day you make your payment, and you will not receive your check back from your financial institution.” 28

  29. Business Check Conversion • Effective September 2006 • Checks must be less $25,000 or less • Checks must not contain an auxiliary on-us field in MICR Eligible Check Ineligible Check 29

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