Pub. 2 2011 Issue 4

www.wvbankers.org 26 Resourceful. Responsive. Reliable. Do business with someone who thinks like you. www.CBBonline.com 804.239.0452 ICS, A Savings Product That Provides Access to Multi-Million- Dollar FDIC Insurance AND Interest By Erich Buckenmaier, Regional Director, Promontory Interfinancial Network, LLC T he economic turmoil and uncertainty of the last few years continue to have a major impact in the financial marketplace. The appetite among institutional investors for safe and liquid investments is strong and will likely remain so for the foreseeable future.he economic turmoil and uncertainty of the last few years continue to have a major impact in the financial marketplace. The appetite among institutional investors for safe and liquid invest- ments is strong and will likely remain so for the foreseeable future. The Federal Deposit Insurance Corporation (FDIC) has put in place regulations that will give some depositors extra protection through 2012. Under its new rules, through December 31, 2012, the FDIC will provide unlimited deposit insurance coverage for certain qualifying noninterest-bearing transaction accounts, including noninterest-bearing traditional checking accounts. But in order to take advantage of this protection, a safety-conscious investor has to choose to keep money in an account that does not earn any interest. Fortunately, banks can offer their customers an alternative – ICS, a savings product that provides access to multi-million-dollar FDIC insurance and interest. Using ICS (or Insured Cash Sweep) service, banks can provide a savings product to businesses, nonprofits, and many other large-dollar depositors, and can keep the full amount of deposits on balance sheet through a true reciprocal deposit arrangement. Through ICS, customer funds can be swept from a transaction account at their relationship institution into interest-bearing savings accounts (money market deposit accounts) at multiple banks. And each relationship bank maintains full control over its customer re- lationships and sets the rates it offers to customers for funds placed through the service. ICS is a new tool that can help community banks to compete head- on with the largest financial institutions for money market mutual fund monies that may be “in play.” Additionally, ICS enables participating banks to compete on dimensions other than price – in particular, by featuring access to a level of security greater than any bank (regardless of size) can offer on its own. While a bank’s current suite of cash management products may include the basics, adding ICS can help financial institutions take care of their most valuable customers. With ICS, banks can offer large-dollar depositors, such as businesses and public funds (in states that permit the use of the service) all these benefits at once: yield, peace of mind, and the ability to make multiple monthly pro- gram withdrawals. And unlike money market mutual fund sweeps and short-term bond funds, ICS lets banks keep the full amount of customer funds on their balance sheets. Additionally, when custom- ers adhere to program limits, ICS reduces many of the ongoing collateralization and tracking burdens associated with repo sweeps and collateralized deposits – making ICS a great alternative from both the bank’s and the customer’s perspectives. All of this makes ICS the most convenient deposit sweep ser- vice. If you want to learn more about this great new service, visit Promontory’s website at www.promnetwork.com, or call Erich Buckenmaier at 866-776-6426, x 3354 (toll-free) . n