Presented By
© 2012 Treasury Strategies, Inc. All rights reserved.
Treasury Management Performance Benchmarks
July 17, 2012
Dave Robertson, Partner Chrystal Pozin, Managing Director Dave Wexler, Principal
2!
Agenda
Introduction Proposed Scope
• Peer Groups • Market Segments • Solution Sets
Benchmarks Next Steps Appendix
3!
Introduction
4!
Polling Questions
1. What key metrics are most important for you in comparing your performance to that of peers?
• Revenue growth • Deposit growth • Profit margins • Staffing levels • Net hard dollar fees collected as a percentage of gross fees • Other
2. How frequently would you like to benchmark your performance against peers? • Annually • Quarterly • Monthly • Other
5!
Scope: Peer Groups
Peer Group Definition Universe
Global & National Banks • Banks with >$250 Billion in assets. 7
Super-Regional Banks • Banks with $50-$250 Billion in assets. 30
Regional Banks • Banks with $10-$50 Billion in assets. 70
Community Banks • Banks with $2-$10 Billion in assets. 245
Non-Bank Processors
• Non-bank providers of treasury management services that are sold directly to businesses (e.g., Amex, First Data, etc.).
�50
6!
Scope: Market Segments
Segment Definition(s)
Small Business • Businesses with <$10MM in annual revenue.
Commercial/Middle Market • Businesses with $10MM-$500MM in annual revenue.
Large Corporate • Businesses with annual revenue >$500MM.
Government and Not-for-profit • State and local governments. • Organizations with tax-exempt status.
Healthcare • Businesses engaged in providing large-scale
health services (e.g., hospital systems, insurance carriers, etc.).
Financial Institutions • Businesses engaged in providing financial
services (e.g., banks, broker/dealers, asset managers, etc.).
7!
Scope: Solution Sets
Solution Set Scope Key Financial Data
Cash Management
• All analyzed products, including collections, disbursements, payments, information, liquidity, etc.
• Gross PV • Net PV (hard dollar charges
exclusive of discounts, waivers, rebates and offsetting earnings credits)
Card • Merchant Processing • Commercial Card, including
Procurement, T&E, Fleet • Prepaid and other specialty
card • Business debit card
• Merchant processing fees • Card interchange, net of rebates • Card spread on revolving balances
8!
Scope: Solution Sets
Solution Set Scope Key Financial Data
Deposits • All commercial deposits, including analyzed and interest-bearing DDA, MMDA / Savings, Time Deposits
• Sweeps
• DDA balances, imputed spread and hard dollar interest
• Other interest-bearing deposits, imputed spread and hard dollar interest
• Sweeps − On-balance sheet − Off-balance sheet
Trade • Documentary collections • Import/Export LCs • Standby/Financial LCs
• Fees • Spread
9!
Polling Questions
1. Which peer segment breakouts are most important to you? • Global & National Banks <$250B in assets • Super-Regional Banks $50B-$250B in assets • Regional Banks $10-$50B in assets • Community Banks <$10B in assets • Non-Bank Processors • Other
2. Which Market Segment breakouts are most important to you? • Large Corporate >$500MM in revenue • Middle Market $10-$500MM in revenue • Small Business <$10MM in revenue • Healthcare • Public Sector • Financial Institutions • Other
3. Which solution sets are most important to you? • Cash Management • Merchant Card • Commercial Card • Deposit & Sweep • Trade • Other
10!
Benchmarks
We propose a comprehensive battery of benchmarks: • Quarter over quarter • Year-to-date over Year-to-date • Rolling 4-quarter average versus prior rolling 4-quarter average
Where feasible, trends will be broken out by peer group, market segment and solution set.
11!
Benchmarks
Trends Performance Portfolio Composition
• Revenue • Deposit • Customer growth/
attrition • Credit commitment/
outstanding • FTE (front-office)
• Credit leverage ratio • Deposit leverage
ratios • Staff leverage ratio • Customer profile
ratios
• Revenue composition by solution set, revenue type, market segment
• Deposit composition • FTE mix
12!
!6.0%&
!4.0%&
!2.0%&
0.0%&
2.0%&
4.0%&
6.0%&
8.0%&
10.0%&
%"Cha
nge"in"Fee"In
come"
Quarterly"%"Change"in"Fee"Income""
Sample: Fee Trends
ILLUSTRATIVE Bank A
• Is in the 70th percentile for the industry
• Is in the 75th percentile for its peer group
13!
Sample: Cumulative Trend
ILLUSTRATIVE
14!
Sample: Growth vs. Peers
Quarter-over-quarter Change In: ABC Bank Industry Peer Group Bank 1 Bank 2 Total Revenue
Fee Income Gross PV Fees
Net PV Fees Merchant Processing Fees Commercial Card Fees Trade Finance Fees Other Fees
Spread Revenue DDA Other Interest-Bearing Sweep
Total Customers Net Growth Gross Growth Attrition
Credit Commitments Credit Outstandings Total Front Office FTE
Sales Service Implementation Other
15!
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
Small Business Commercial Middle Market
Rate of Customer Acquisition 3Q 2011
ABC Bank Industry Average Peer Group Average
Sample: Trend by Segment
Acquisition Rate: A % ratio indicating the rate at which the bank acquires new clients. (New Customers(t) / Total Customers(t-1) x 100)
ILLUSTRATIVE
16!
Sample: Revenue Composition
Revenue Composition by Solution Set
17!
Sample: Portfolio Benchmark
0%
2%
4%
6%
8%
10%
12%
14%
16%
DDA as % of Total Deposits
Industry Average
ILLUSTRATIVE
18!
Sample: Performance Ratios
Beneath the high level performance drivers, we will show diagnostic analyses around how well banks leverage credit relationships, deposit levels and staff.
ILLUSTRATIVE
Key Performance Ratios ABC Bank Industry Peer Group Bank 1 Bank 2 Credit Leverage Ratio – Total
Cash Management Card Deposits Trade
Credit Utilization Ratio Deposit Leverage Ratio – Total
Spread Interchange
Revenue per FTE Sales Service Implementation Other
Average Revenue per Client Cash Management Card Deposits Trade
Average Deposit per Client DDA Other Interest Bearing Sweep
ILLUSTRATIVE
19!
Sample: Staffing Leverage
A side-by-side comparison of number of clients assigned to each FTE by each segment.
0
20
40
60
80
100
120
Small Business Commercial Middle Market
Clients per FTE by Segment
ABC Bank Industry Average Peer Group Average
ILLUSTRATIVE
20!
Polling Question
Are there any key benchmarks not mentioned that you would like to see?
21!
Required Data
The full range of reports requires 52 data elements, as outlined below.
# Element Notes a. Total b. Large Corporate
c. Middle Market
d. Small Business
e. Government / NFP f. Healthcare g. Financial
Institutions Beginning Period Customers
1 Total (using any product) 2 Cash Management 3 Merchant Card 4 Commercial Card 5 Deposits 6 Trade
New Customers Acquired 7 Total (using any product) 8 Cash Management 9 Merchant Card
10 Commercial Card 11 Deposits 12 Trade
Attrited Customers Lost 13 Total (using any product) 14 Cash Management 15 Merchant Card 16 Commercial Card 17 Deposits 18 Trade
Ending Period Customers 19 Total (using any product) 1 + 7 -13 20 Cash Management 2 + 8 - 14 21 Merchant Card 3 + 9 - 15 22 Commercial Card 4 + 10 - 16 23 Deposits 5 + 11 - 17 24 Trade 6 + 12 - 18
Fees 25 Total (using any product) 26 Cash Management 27 Merchant Card 28 Commercial Card 29 Deposits 30 Trade Sum (25 : 29)
22!
Required Data
# Element Notes a. Total b. Large Corporate
c. Middle Market
d. Small Business
e. Government / NFP f. Healthcare g. Financial
Institutions Balances
31 Credit Commitments 32 Credit Outstandings 33 DDA 34 Other Interest-Bearing MMDA, Time 35 On-Balance Sheet Sweep 36 Off-Balance Sheet Sweep
Spread 37 FTP value of DDA 38 FTP value of Other Interest-Bearing 39 FTP value of On-Balance Sheet Sweep 40 Interest Expense of DDA 41 Interest Expense of Other Interest-Bering 42 Interest Expense of On-Balance Sheet Sweep
Net Interest Margin 43 DDA 7 - 10 44 Other Interest-Bearing 8 - 11 45 On-Balance Sheet Sweep 9 - 12 46 Commercial Card 47 Trade
Front Office FTP 48 Sales 49 Service 50 Implementation 51 Other 52 Total Sum (19 : 22)
23!
Polling Question
How easily could you provide the data required to support the Performance Monitor?
• Data is readily available across all segments
• Data is readily available, but not for all segments
• Most data elements are available, but require moderate work to gather
• Most or all elements of data are unavailable
• Other
24!
Q&A
Dave Wexler Principal 646-717-4400 [email protected] Dave Robertson Partner 312-628-6950 [email protected] Chrystal Pozin Managing Director 312-628-6964 [email protected]
25!
Treasury Strategies Financial Services Practice
Clients Solutions • Global Banks • Regional Banks • Solution
Providers • Associations • Regulators
• Business Strategy • Revenue Enhancement • Deposit & Sweep Pricing • Sales Training & Effectiveness • Product Opportunity & Gap Analysis • Operational Efficiency • Risk Management & Compliance • Competitive Assessment & Positioning • Vendor Selection & RFP Management • Market Analysis
Our strategic advice and pragmatic solutions improve bottom line performance. Clients benefit from our 360o view of the treasury market, deep relationships, and proprietary analytic frameworks that transform data into strategic insights.
26!
About Treasury Strategies, Inc.
Who We Are Treasury Strategies, Inc. is the leading treasury consulting firm working with corporations and financial services providers. Our experience and thought leadership in treasury management, working capital management, liquidity and payments, combined with our comprehensive view of the market, rewards you with a unique perspective, unparalleled insights and actionable solutions.
What We Do Corporations We help you maximize worldwide treasury performance and navigate regulatory and payment system changes through a focus on best practices, technology, liquidity and controls.
Treasury Technology We provide guidance through every step of the technology process. Our expert approach will uncover opportunities to optimize the value of your treasury through fully integrated technology solutions.
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