Presentation forVGFOA / Central Region

March 16, 2010Erich Buckenmaier, Regional Director

Promontory Interfinancial Network, LLCy ,

Last fall, I had the opportunity as Finance Director for the City of St. Clairsville to

Hear What Other Public Fund Managers

Are Saying

yinvest in CDARS. I took it because I wanted to get a good, safe investment for the city and to make my life easier – and as OAPT President I also wanted to role Are Sayingmodel how CDARS can benefit other members in the same ways.

Jill LucidiJill LucidiFinance Director

City of St. Clairsville, OH

The CDARS program is something every county, city, and town should investigate. With CDARS our deposits are eligible for

Hear What Other Public Fund Managers

Are Saying

With CDARS, our deposits are eligible for multi-million dollar FDIC insurance, so we don’t have to track those constantly changing collateral values, and they earn a decent rateAre Saying decent rate.

Bonita StadlerPayne County Treasurery y

Stillwater, OK

I have found participation in the CDARS program to be simple and a time saver. We earn very competitive interest rates on

Hear What Other Public Fund Managers

Are Saying

We earn very competitive interest rates on our investments while freeing up staff time. We were in the CDARS program during our last audit and passed with flying colors!Are Saying flying colors!

Christina J. JohnsonTreasurer

Dekalb County, ILy

F d B d M b d B k Ad i B dFounders, Board Members, and Bank Advisory Board

Frank N Newman

Board Members & Bank Advisory Board RepresentationFounders

Eugene A. LudwigChairman & CEOFormer Comptroller of the Currency

Eugene A. LudwigChairman & CEO, Promontory Interfinancial NetworkFormer Controller of the Currency

Alan S. BlinderVice Chairman, Promontory Interfinancial NetworkFormer Vice Chairman, Federal Reserve Board

James M Culberson

Frank N. NewmanChairman Emeritus, Bankers Trust CompanyFormer Deputy Secretary of Treasury

Donald G. OgilvieChairman, American Bankers Association InternationalFormer President and CEO, ABA

Warren Rudmany

Alan S. Blinder Vice Chairman

James M. CulbersonChairman Emeritus, First National Bank & TrustFormer President, American Bankers Association

Art CertosimoVice Chairman, Promontory Interfinancial NetworkEVP and Head of Broker Dealer Services, The Bank of New York

Warren RudmanPartner, Paul, Weiss, Rifkind, Wharton & GarrisonFormer U.S. Senator

Jeffrey B. SchreierManaging Director, The Bank of New York

J. Michael ShepherdEVP & General Counsel and Secretary

Former Vice Chairman of the Board of Governors of the Federal Reserve System

Kenneth M. DubersteinChairman & CEO, The Duberstein GroupFormer White House Chief of Staff

Mark P. JacobsenPresident & COO, Promontory Interfinancial NetworkFormer Chief of Staff, Comptroller of the Currency and FDIC

Edward W Kelley Jr

EVP & General Counsel and Secretary, Bank of the West

O. Jay TomsonChairman, First Citizens National Bank, Mason City, IAFormer President, Independent Community Bankers of America

Frank G. Zarb

Mark P. JacobsenPresident & COOFormer Chief of Staff of the FDIC and Office of the Comptroller of the Currency

Edward W. Kelley, Jr.Former Governor, Federal Reserve Board

Frank G. ZarbChairman, Frank Zarb AssociatesFormer Chairman & CEO, NASD

William Isaac, Chairman, Bank Advisory BoardChairman, The Secura GroupFormer Chairman, FDIC

What is CDARS?

The Certificate of Deposit Account Registry Service is a service that allows FDIC insured institutions to provide ptheir customers with access to full FDIC insurance on CD investments up to $50 million.

• One banking relationshipO e ba g e at o s p• One interest rate• One monthly statement

Your organization’s confidential information remains protected. All communication relating to a CDARS transaction will occur between your local bank and you.

Network Footprint & GrowthNetwork Footprint & Growth

More than 3,000 financial institutions across the nation offer CDARS with billions of dollars being placed through the service each week.

Only headquarters of our Member Banks are shown on this map. Additionally, we have network members in Alaska and Hawaii.

g p g

Using CDARS for Public Deposits in theState of VirginiaState of Virginia

Virginia is one of a growing list of 46 states that allow the use of CDARS for the investment ofallow the use of CDARS for the investment of public funds. State law expressly authorizing investment of local government funds through the CDARS service became effectiveJ l 1 2008 (SB 399)July 1, 2008. (SB 399)

This means that, for municipalities and other public sector entities, CDARS can be a valuablepublic sector entities, CDARS can be a valuable tool either for cash management or for longer-term investment.

Availability of CDARS for Public Fund Investorsy

MONTANA

WASHINGTON

NORTH DAKOTA

MINNESOTA MAINE

WYOMING

IDAHO

OREGON

DAKOTA

SOUTH DAKOTA

NEBRASKAIOWA

WISCONSIN

MICHIGAN NEW YORK

PENN NEWJERSEY

CONNRI

MASS

VT

NH

NEVADA

UTAH

CALIFORNIA

ARIZONA

S

COLORADO

KANSAS

ARKANSAS

MISSOURI

ILLINOISINDIANA

KENTUCKY

TENNESSEE

NORTH CAROLINA

VIRGINIAWV

OHIO

MARYLAND

DELAWARE

JERSEY

ARIZONA

NEW MEXICO

TEXAS

OKLAHOMA ARKANSAS

LOUISIANA

MISSALABAMA*

GEORGIA

FLORIDA

SOUTHCAROLINA

CDARS

ALASKA

HAWAII

AuthorizedPending Legislation to Authorize

CDARS

If a depositor is subject to restrictions with respect to the placement of funds in depository institutions, it is the responsibility of the depositor to determine whether the placement of the depositor's funds through CDARS or a particular CDARS transaction satisfies those restrictions.

CDARS Not Authorized

With CDARS local governmentsWith CDARS, local governments enjoy…

• Security of FDIC Insurance

• Time-Saving Conveniences

• Community InvestmentCommunity Investment

• CD-level Returns

Wh D P bli U it Lik CDARS?Why Do Public Units Like CDARS?

Rate. Certificates of Deposit generally pay interest above that of U.S. Treasury securities and Agencies.

Security. FDIC provides an easy, effective way to protect public deposits that is permissible by even the most conservative of investment policies.

No Collateral. Therefore, no need to track or maintain records on the value of pledged securities since all of the deposit is FDIC insured.

Convenience Monitoring a CDARS account is easy Customers receive aConvenience. Monitoring a CDARS account is easy. Customers receive a single statement listing all the banks in which their money has been placed through CDARS, as well as the interest earnings and maturity date of each CD.

Community Reinvestment. Local banks, like local government, work for the good of the communities they serve. CDARS is an investment that keeps public funds at work in the local community.

In other words, use of CDARS can help facilitate your reinvestment of local taxpayers’ dollars back into , p y p ythe local economy in support of the local community. Let’s keep the taxpayers’ $$ close to home!

1 You deposit $500 000 with your

CDARS Mechanics Example

1. You deposit $500,000 with your local bank.

2. The bank places your organization’s funds into CDs Local Bank

issued by other banks in the CDARS Network.

3. CDs are issued in increments less than the standard FDIC insurance

You deposit $500,000

than the standard FDIC insurance maximum (currently $250,000 through 2013) so that both principal and interest are eligible for complete FDIC protection $240,000 CD $240,000 CD $20,000 CD

Bank A Bank B Bank C

for complete FDIC protection.

4. As a result, your organization can receive coverage through many banks while working directly with

$ ,issuedusing

CDARS

$ ,issuedusing

CDARS

$20,000 CD issuedusing

CDARS

just one institution.

CDARS Mechanics (continued)Example

4. Your bank receives $500,000 through CDARS from the customers of other network members.

L l B k5. Your bank issues CDs for those

customers.

6. As a result, your local bank

We issue CDs for $500,000

Local Bank

, ycomes out “whole” so the total value of your $500,000 deposit effectively remains within your local bank. Bank BBank A Bank C

7. That’s it – you receive a transaction confirmation and monthly summary account statements

$240,000 sent to your

bank through CDARS

$240,000 sent to your

bank through CDARS

$20,000 sent to your

bank through CDARSstatements. CDARSCDARS CDARS

CDARS® M t itiCDARS® Maturities

Offered in seven maturities …

4-week

13-week

26 week 26-week

52-week (1 year)

104-week (2-year)

156-week (3-year)

260-week (5-year)

If desired, your organization can also ladder CDsor combine maturities to effectively create a customized term.

C h M t St t CDARS L dd iCash Management Strategy - CDARS LadderingA customer has $1,000,000 to invest:

W k #1 W k #2 W k #3 W k #4 W k #5Week #1 Week #2 Week #3 Week #4 Week #5

$250,000 Available for h t$250,000

4-wk CD

$250,000

cash-out or reinvestment

Available for cash out or,

4-wk CD

$250,000 4 k CD

cash-out or reinvestment

4-wk CD

$250,000 4-wk CD

Fi E St f C tFive Easy Steps for Customers

Customer signs Deposit Placement Agreement (DPA)Customer signs Deposit Placement Agreement (DPA), and deposits money with its Bank.

Funds are placed using CDARS.

Customer CDs are issued by other banks in the Network.

Customer receives a confirmation of CD portfolio from its bank.

Customer receives consolidated interest payments and statements from its bank.

D it Pl t Ti liDeposit Placement Timeline

WednesdayOrder

Placement Day

ThursdaySettlement

Day

FridayNew Account

Notice

Customer ReportingCustomer ReportingSample New Account Notice

Customer Reporting (continued)Customer Reporting (continued)Sample Monthly Statement

C t Wh C B fit f CDARS®Customers Who Can Benefit from CDARS®

Government agencies

Municipalities (villages, town, cities, counties)

Police departments

Fire districts

Public colleges and universities

Public hospitals

School districts

State funds (such as state workers’ State funds (such as state workers’ compensation funds)

Utility districts (sewer, water, power, etc.)

Locating CDARS in VirginiaLocating CDARS in Virginia(www.cdars.com)

Acacia Federal Savings BankAccess National Bank

Farmers BankFirst and Citizens Bank

The Bank of FincastleThe Bank of Marion

BB&TBank of BotetourtBank of Clarke CountyBank of EssexBank of Hampton Roads

First BankFirst Community Bank, NAFirst Market Bank, FSBFirst Sentinel BankFirst State Bank

The Bank of Southside VirginiaThe Fauquier BankThe First Bank and Trust CompanyThe Freedom Bank of VirginiaTh Old P i t N ti l B kBank of McKenney

Bank of the CommonwealthBenchmark Community BankBurke & Herbert Bank & TrustCapital One, NA

First Virginia Community BankFranklin Community Bank, NAGateway BankHighlands Union BankHomeTown Bank

The Old Point National BankThe Page Valley BankThe Peoples BankTowneBankTrupoint Bankp

Cardinal BankCentral Virginia BankChain Bridge BankChesapeake BankCitizens Bank & Trust Co.

John Marshall BankLee Bank and Trust CompanyMainStreet BankMiddleburg BankMillennium Bank, NA

United BankValley BankVillage BankVirginia Business BankVirginia Commerce BankCitizens Bank & Trust Co.

Citizens National BankCommunity Bankers’ BankConsolidated Bank & Trust CompanyEVB

Millennium Bank, NAMonarch BankNew Peoples Bank, Inc.Peoples Community BankPioneer BankRiver Community Bank NA

Virginia Community BankVirginia Company BankVirginia Heritage BankVirginia Nation BankVirginia Savings Bank

Farmers & Merchants BankRiver Community Bank, NAStellarOne

g gWashingtonFirst Bank

AppendixAppendix

A N R i l S S iBreaking

With ICSSM, the Insured Cash SweepSM

i P t N t k b

A New, Reciprocal Sweep Service News!

service, Promontory Network members can offer customers a business savings product that provides access to multi-million-dollar FDIC insurance.

Importantly, Virginia’s General Assembly enrolled HB 284 this year making ICS an eligible option for themaking ICS an eligible option for the investment of Virginia public funds beginning July 1, 2010.

Think of ICS as a new investment optionThink of ICS as a new investment option for that portion of your deposit portfolio which demands a greater degree of liquidity while enjoying the surety of FDIC i t tiFDIC insurance protection.

Questions

Erich BuckenmaierRegional DirectorPromontory Interfinancial Network886 776 6426 x3354886-776-6426 x3354ebuckenmaier@promnetwork.com

Locate CDARS Network Banks at:www.cdars.com