Driving Solutions

There is no doubt liquidity and collateral requirements have made it more difficult for your financial institution’s to provide you with more value for deposits. You can understand the difficulty banks have been going through, trying to bring viable solutions to non-operating deposits that are on-balance sheet that can also increase yields for entities like yours.

Driving Solutions

One thing is for sure: with rising short-term interest rates, your deposits could be worth a lot more. However, as small, medium, and large banks begin to roll out different deposit alternatives, you need to ask yourself, “What is best for my entity?”

Even though your financial providers may offer several deposit alternatives, are they really the right ones for your entity? How can you be sure?

There’s a reason so many types of cars exist today. Yes, every car will get you from point A to point B. But when you’re in the market for a car, you’re looking for more than just transportation! You want to ensure your next vehicle meets your specific needs, on many fronts.

 

Driving Solutions

 

If your bank’s relationship manager suggests you begin to use your balances in different ways, ask what is your entity’s best plan going forward. Just like a car, you identify the one that works best for your needs. Sure, you may be able to bring more value to your deposits from a product the bank offers, but how do you maximize the benefit of those products? Are there even better products that fit your entity’s unique needs?

Alternatives to deposits may be a great opportunity to increase yield, but not all deposit alternatives are created equal. How flexible are your liquidity needs? How should you match your operating cash with available marketplace investments without sacrificing safety and liquidity—while still increasing yield?

The answers to these questions and more can be answered through a cashVest® analysis. Using this tool, three+one can identify what’s best for your entity’s needs—and help you achieve new levels of profitability.

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See Us At These Upcoming Events and Conferences:
Ohio GFOA – September
GFOA SC – October
PA GFOA – October

What’s In Your Rate?

Over the past several weeks, I have heard varying comments by our public and higher Ed clients about the level of the Earnings Credit Rates (ECR) currently offered by their banks to cover banking services and transaction fees.

 

What's In Your Rate?

 

You should understand that ECR levels vary on a number of factors:

  1. The size of the entity’s relationship with its bank(s)

  2. The size of deposits being held by the bank, and the ratio of operating vs. non-operating deposits.

  3. The potential for new banking services that could be implemented.

  4. How proactive and open the entity’s dialogue is with its banker(s) about ECRs—especially with short-term rates on the rise.

We recommend our clients verify all their banking costs and ECRs on a monthly basis by carefully reviewing their banking analysis statements.

At three+one we can help public and higher Ed entities properly analyze their Earnings Credit Rates and provide insightful marketplace comparisons. By doing so, entities can cost effectively maximize their banking services and build stronger banking relationships.

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See Us At These Upcoming Events and Conferences:
Ohio GFOA – September
GFOA SC – October
PA GFOA – October

One Size Doesn’t Fit All

You’ve heard the expression “one size” fits all. That may work in some areas but it definitely does not apply when you’re talking about a banking Request for Proposal (RFP). Your entity is unique and you deserve a banking RFP that reflects that uniqueness. “Cookie-cutter” RFPs that come from a template will lack any true color or substance, won’t reflect the individual character of your entity, —and will not likely produce the results you’re after.

One Size Doesn't Fit All

Here are four tips that can help you achieve a successful banking RFP:

1.) Ensure your next banking RFP is data rich, forward thinking, and intertwined with your institution’s ability to have the latitude it needs to be creative, with innovative technology and services enabling new levels of efficiency and cost savings.

2.} Insist that all written responses are limited to 25 pages. Who has the time to read several hundred pages of needless filler? Have your responders describe why they should continue to serve as your banking institution—or how they differentiate themselves in the marketplace. Or both.

3.) Have in-person interviews with the three leading candidates. Such conversations are much more powerful and revealing than words on paper. Go with your personal instinct on the chemistry of the team that will best serve you and your entity’s needs—especially regarding response time to your emails and/or phone calls.

4.) Have one sheet that outlines a clear-cut listing of all bank fees, including the Earning Credit Rate (ECR) and recoupment fees on all deposits. Such a listing will enable you to properly compare apples to apples.

If you feel that you don’t have the time or staff to review all banking services or perform a banking RFP, call three+one. We can provide an in-depth analysis to identify your entity’s specific banking needs, requirements, and specific data that will lead to better RFP responses and necessary pricing information.

We all have unique ways in viewing banking RFPs. Let’s make sure it fits your entity’s size and needs.

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See Us At These Upcoming Events and Conferences:
Ohio GFOA – September
GFOA SC – October
PA GFOA – October

Keeping Pace

Short-term treasury rates continue to rise with the one-month T-bill reaching 1.0%.

 

Keeping Pace

 

As rates move up, just ask yourself “Am I keeping pace?”

As you compare the effective annual rates on all funds, your best comparison is the one-month T-bill rate, now hovering around 1.0%. If you are not close to earning 1.0% on your operating or non-operating cash, then you are not keeping pace with the marketplace.

A three+one liquidity analysis can help you identify all your cash, its time horizon, and its marketplace value. If you use our data—in conjunction with that of your bank(s) and/or investment advisor—your cash will keep pace or even outpace what it is currently earning. The result: more income on an annual basis and a significant accomplishment at year’s end.

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See Us At These Upcoming Events and Conferences:
NYSCTFOA Summer Conference – August
Ohio GFOA – September
GFOA SC – October
PA GFOA – October

Defining Liquidity Analysis

Liquidity analysis is a science that three+one has brought to the public and higherEd marketplace over the last several years.

Defining Liquidity Analysis

The term “liquidity analysis” has been popping up and used loosely to describe cash flow management. While both terms are intertwined, they are different.

Liquidity analysis provides a deep-dive approach into determining an entity’s need of cash at any given time while managing the asset of cash through various investment alternatives.

Cash flow management is the ability to determine the flow of dollars in and out of an organization that will determine daily, monthly, quarterly, and year-end levels. For most entities, cash flow reports are created on a monthly or annual basis.

Defining Liquidity Analysis

Liquidity analysis determines the time need, time horizons, and marketplace value of an entity’s cash while available, by dissecting each bank account and its correlation with a holistic perspective of all available cash. Liquidity analysis is also a composite of daily data, graphs, and charts that reveals both one’s cash flow needs and the value of its cash as an asset in the marketplace.

Over the last nine years the need to determine liquidity value was not needed since the short-term value on such funds was virtually non-existent. However, now that short-term rates are up, performing liquidity analyses can provide valuable insights on new sources of income and can help an entity better manage its cash.

A liquidity analysis cannot be determined on monthly cash balances alone. Rather, daily banking transaction patterns are required to determine the actual “float” available for cash needs as well as investment opportunities.

At three+one, we use our proprietary liquidity model, cashVest®, to determine cash patterns that adjust to anomalies or unexpected expenses. These data tell us the “stress levels” of all cash. In determining these levels, we’re able to provide an entity the minimum-to-maximum amount of time available for cash deposits and /or investments. This kind of information is invaluable to an entity’s bank and or investment advisor.

The better one’s liquidity is managed, the greater the level of yield that can be achieved on one’s cash. Now that this yield is averaging over 1.10%, it can be a significant source of annual income.

It’s unfortunate that so many public entities and higherEd institutions miss out on this opportunity.

A liquidity analysis is a process that takes time, expertise, and experience. At three+one, we have mastered a proprietary process that will change the way you view your cash flow and the value of your cash as a income-producing asset—without jeopardizing any legal, safety, or liquidity requirements.

If you wish to explore the proven value of a liquidity analysis, do not hesitate to contact us.

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See Us At These Upcoming Events and Conferences:
NYSCTFOA Summer Conference – August
Ohio GFOA – September
GFOA SC – October
PA GFOA – October