Promontory Financial Group is a leading financial consulting and investment firm focused on risk management, corporate governance and regulatory consulting in addition to its merchant banking and investing activities

I want to begin by telling you how proud and enthusiastic I am - and the whole Board of Promontory is - that we have received the ABA's endorsement for our new service, called CDARS - Certificate of Deposit Account Registry Service.
The CAB staff were rigorous in their due diligence - and I must say their work improved our product.
As some of you have heard, CDARS is a new deposit placement service that helps banks attract and retain large-dollar local deposits.
Essentially, CDARS enables banks in the network to sell each other's CDs and get back the same amount of funds that you give out. The money never really leaves your bank.
In addition, you set the interest rate for your customer's portfolio of CDs according to your own local rates and conditions - you don't have to bid up to the national brokered CD rate.
Most importantly, the customer relationship is completely managed through your bank - the other banks that issue CDs to your customers never see their identifying information and don't deal with the customer directly.
So you get many advantages: You keep the customer relationship. You increase your funding. You set the local interest rate for deposits -- it's stable money.
It's because of these advantages that we were able to attract the Board members that we have - including two former FDIC chairman, two former Fed governors and a former ABA president - your friend and mine, Jim Culberson. (Earl McVicker, Al Tubbs, Bob Lowe, and Dick White, etc.)
I'll leave it to our Promontory team here today and throughout the conference to tell you all the other important features of the service. You can see them in Aisle 900 of the trade show. I'd like to take a moment now to talk about how and why we created CDARS.

Right now, amid the turmoil of an uncertain stock market and weak capital markets, corporate financial scandals and the threat of war, we've seen investors return to banks in droves. Perilous times make investors head for cover.
For this reason, right now, deposits seem plentiful.
Unfortunately, it won't last forever. The bright picture has clouds in it.
As you all know well, the portion of the customer's wallet that finds its way into community banks is still shrinking.
That's the long term trend. Depository institutions hold less than 25 percent of funds today. That's down from 50 percent in the mid-70s. It's been a steady downward slope ever since.

Banks are becoming increasingly dependent on more volatile sources of funding. For example, brokered deposits in commercial banks with fewer than $1 billion in assets rose by almost five fold between 1992 and 2002. And FHLB advances have skyrocketed.
To be clear, the availability of these options is good for banking. The more sources of liquidity the better. But to the extent these alternative funding sources are more expensive, they reduce your net interest margins.
And, of course, net interest income is all-important for community banks - it currently accounts for around 74% of operating revenue at commercial banks with between $100 million and $1 billion in assets.
What's more, community bank's share of banking assets has also been declining. Small banks are losing out to big banks, and all banks are losing out to mutual funds and other types of financial services providers.
I am convinced that -- right now, community banks have the best opportunity in more than a decade to reverse this long-term trend of shrinking deposits - and to do something to increase market share.
Scary times like these can bring money back into banks. But you need new tools to help you keep it there - so that it will remain when you really need it down the road.
Otherwise, when the economy picks up, the deposits will return to the capital markets, leaving your bank less able to grow efficiently.

In addition -- competing firms have aimed their lance at the heart of the banking business.

What is even scarier is that many of these competitors for customer funds are succeeding at offering YOUR unique banking services, as if they were their own - they are advertising full FDIC insurance coverage. Indeed, the really big boys are offering y

Large brokerage firms tell customers, "Call us to place $600,000 in fully FDIC insured deposits."

Here is something I quote from one of their Web sites: "We take seriously the trust you place in us. In fact, insurance provided by the Federal Deposit Insurance Corporation is one of the most important new benefits you receive with the XYZ Program. Cash in your XYZ Program accounts will be FDIC-insured up to a total of $100,000 per depositor, at each of the participating banks."

The last thing you want is for big New York brokerage firms to become your customer's gateway to the banking system.

That's where we started in our thinking at Promontory Interfinancial Network. That was our premise: There's no benefit for community banks in having a brokerage firm become the customer's gateway to the banking system.

What could we do - what kind of company could we create that would assist community banks in responding to this competition. We have come up with the first of --what we know will be -- many ideas to benefit community banks.

I can tell you that since we officially launched three weeks ago, we've received commitments from more than 170 banks - and that was before we came to this wonderful conference.

We're in business to make funding less expensive for banks and to make community banks more attractive to large-dollar customers.

This is absolutely the right time to work on increasing marketshare - and one way to do that is by taking advantage of a service such as CDARS that provides benefits to both you and your customers.

Community banks are taking in deposits at a higher than normal volume. This is a good thing. There is no such thing as "too many cheap deposits." You must do everything possible to hold onto them. Your ability to attract these funds is THE principal advantage of having a bank charter to begin with.

So seize the moment! Plan Ahead! Give your customers new reasons to stay with your bank. Get a jump on Wall Street. Offer your customers new products and anticipate their needs before the larger capital market players do. You have an opportunity now to prosper in ways that have not been possible for decades.

Thank you.