Presented by: The Northern Trust Company Dan Carey, CTP

1. Windy City Summit CTP Review Chapters 3 Service Expertise Integrity Presented by: The Northern Trust Company Dan Carey, CTP

2. Chapter 3 • Managing Relationships with Service Providers • Dan Carey, CTP

3. Financial Institutions, Functions and Services • Global Financial Institutions • US Commercial Banks • Deposit Accounts • Credit Services • Investment Banking Services • Payment and Collection Services • Trade Services • Foreign Exchange Services • Risk Management Services • Fiduciary Services • Investment Banking and Brokerage Firms • Investment Banks • Origination • Underwriting • Distribution

4. Financial Institutions, Functions and Services • Other Financial Services • Savings Institutions • Credit Unions • Mutual Funds

5. Financial Service Provider Selection Process • Selection Criteria • Soliciting Information from Financial Service Providers • RFI and RFP • RFQ • Selection Decision

6. Bank Relationship Management • Number of Bank Relationships • Documentation • Performance Measurement and Evaluation • Bank Scorecard • Relationship Review • Bank Compensation Practices • Fee versus Balance Compensation

7. Global Account Management • Sovereign and Political Risk • Value Dating

8. Account Analysis in the US Commercial Banking System • Account Analysis Standards • Account Analysis Terminology • Average Ledger Balance – sum of daily ending balance divided by number of days in analysis period • Average Deposit Float – sum of daily dollar amount of items in process of collection divided by number of calendar business days in analysis period • Average Collected Balance – sum of daily ending collected balances (+ and -) divided by number of days in analysis period • Reserve Requirement • Service Charges • Available or Investable Balance • Earnings Credit Allowance

9. Account Analysis in the US Commercial Banking System • Account Analysis Calculations • EC = CB x (1-RR) x ECR (D/365) • EC = Earnings Credit • CB = Average Collected Balances • RR = Reserve Requirement • ECR = Earnings Credit Rate • D = Number of Days in Month • CB = SC / ECR x (D/365) x (1-RR)

10. Monitoring Financial Service Provider Risk in the United States • Monitoring Financial Risk • Managing Confidential Information and Conflicts of Interest • Assessing Financial risk for Financial Institutions • The Camels Rating System • Capital Adequacy • Asset Quality • Management Capability • Earnings • Liquidity • Sensitivity to Market Risk • Basel 1 and 2

11. Other Topics in Managing Service Provider Relationships • Benchmarking Bank Pricing • Counterparty Risk • Off Shoring of Financial Services

12. Questions for Chapter 3 Describe 7 reasons why companies initiate the process of selecting a financial institution. Describe 5 factors that increase the mutual benefit and profitability of a bank relationship. Describe 3 characteristics of value dating. Describe 5 components of the account analysis statements that the U.S. banks provider to commercial customers. What are 2 ways that Banks present service charges. Describe 2 reasons for the development of non-bank and third party financial service providers. Describe items typically requested in a Request for Proposal. Differentiate among 6 components that make up Camels rating system. Describe 4 types of political risk. Describe 6 types of non-bank financial institutions.