Corporate Trust
CONNECTION
Winter 2007
fall 2010
Welcome, Terry Dolan
Terrance (Terry)
R. Dolan was
named Vice
Chairman, Wealth
Management and
Securities Services,
of U.S. Bancorp in
July 2010. Dolan
succeeded Diane
Thormodsgard,
Terry Dolan
who retired at
Vice Chairman of
the end of June.
Wealth Management
Dolan oversees
and Securities
Corporate Trust
Services
Services, Wealth
Management, Institutional Trust &
Custody, Fund Services and Trust
Technology & Support Services.
In his previous role as executive vice
president and controller of U.S. Bancorp,
Dolan led various strategic initiatives
of the company, including the spinoff
of Piper Jaffray and establishment of
Elavon Financial Services in Ireland.
In March 2008, he took on the role of
chairman and chief executive officer of
U.S. Bancorp’s Community Development
Corporation located in St. Louis.
Dolan serves on the boards of Elavon
Financial Services and Syncada, a joint
venture with Visa. He is also on the
board of directors of ArtSpace, Inc.,
The Minneapolis Foundation and the
steering committee for The Cowles
Center for Dance and Performing Arts.
Corporate Trust Connection sat down
with Dolan to discuss his goals and
vision for the future.
CTC: U.S. Bank Corporate Trust
Services has grown considerably over
the past decade. What are the prospects
for continued growth?
Dolan: About 10 years ago, our corporate trust line of business ranked in
the middle in market share. A concerted
effort was made by the company to grow
this business through acquisitions, and
now we’re among the top three in the
market. In addition, during the past few
years we have seen significant organic
growth in our existing offices.
With fewer providers of corporate
trust, we expect more of our growth to
occur organically than through acquisitions. That said, there do remain a few
acquisition opportunities in the marketplace, and we will continue to explore
them if they become available.
CTC: What are your goals overall and
for Corporate Trust Services specifically?
Dolan: We’re looking at continued
market share growth in all areas. We are
uniquely positioned to do that given the
bank’s strong financial position, brand
awareness, strong partnering with our
wholesale banking groups and employee
continued on page 3
inside
2 DTC Will Enforce Cut-Off Time, Identification for Bond Payments
2 U.S. Bank Is Named Trustee, Collateral Administrator and Custodian
for CLO Transaction 3 Spotlight on the Seattle Office 4 TNE Survey
Did You Know?
New Acquisition for Corporate
Trust Services
U.S. Bank N.A. has reached an agreement to acquire the bond and transfer
agent business of First National Trust
Company, a subsidiary of First National
Bank of Pennsylvania.
Our new customers will be served
through our existing Corporate Trust
Services offices in Philadelphia and
Pittsburgh. The U.S. Bank team
welcomes our new customers and will
work with First National Trust Company
to assure a seamless transition.
Upon completion of this transaction,
U.S. Bank’s corporate trust division
will have $2.9 trillion in assets under
administration, nearly 604,687 bondholders and more than 112,797 client
issuances. This acquisition reflects
U.S. Bank’s ongoing commitment to
the corporate trust industry.
New Rule Takes Effect January 1
DTC Will Enforce Cut-Off Time,
Identification for Bond Payments
Bond issuers, take note: Beginning in 2011,
The Depository Trust Company (DTC)
will change the way it handles principal
and income (P&I) payments on securities
it services. The change may affect the timing of payments you make to U.S. Bank
Corporate Trust Services.
DTC, a subsidiary of The Depository Trust
& Clearing Corporation (DTCC), serves as a
clearinghouse for various types of registered
securities. It collects and allocates cash entitlements due on these DTC-eligible securities
on a daily basis. The cash entitlements, commonly referred to as P&I payments, include
dividend, interest, periodic principal, redemption and maturity payments.
“When Corporate Trust Services receives
a payment from an issuer or obligor on a
bond deal, we pay DTC, who is shown as
the bondholder of record in our system,”
explains Nancy Stahl, Vice President,
U.S. Bank Corporate Trust Services
Northwestern Region, Seattle office. “DTC
then disburses the money to what it calls its
‘participants,’ which are the brokers that
are holding the bonds for the investors.”
In 2009, nearly 96 percent of payments
were properly identified and collected by
DTC’s cutoff time. That leaves only 4 percent that presented a risk. But when you
consider that DTC collected and allocated
nearly 5 million payments totaling almost
$3 trillion in 2009, even a small percentage
represents a huge dollar figure.* “It’s a risk
for DTC, because they’re applying funds
that they’re not sure will actually be paid
or that are not identified correctly,” Stahl
points out.
Under the new rules, DTC will only
collect and allocate properly identified
payments it receives by 3 p.m. ET. All
payments not meeting these criteria will
be allocated one or more days after the
payable date.
U.S. Bank Corporate Trust Services is
participating in an industry task force
that DTCC set up to ensure industry
collaboration as they move forward with
the effort to refine the P&I payment process. “U.S. Bank was invited to participate
because we’re one of the top agents in the
country,” Stahl comments.
DTC Must Cut Risk
What You Need to Know
Currently, DTC collects and allocates virtually all payments on the scheduled payable
date, even if the payments arrive after its
intraday cut-off time or without proper
CUSIP identification. (A unique CUSIP
number is assigned to all securities issued
in the United States.) “Those payments that
arrive late or without proper identification
are causing risk for DTC,” Stahl says.
“For bond issuers, there are a couple of key
points to be aware of so that their trustee or
agent can meet the new DTC requirements,”
Stahl says. “First, funds for payment of any
interest, principal, redemption or maturity
need to be remitted to the trustee or agent
in a prompt and timely manner. And second, financings should be structured in such
a manner that funds for payment of any
interest and/or principal are received by the
trustee or agent in sufficient time to allow
the trustee or agent to meet the new DTC
payment timeframe.”
U.S. Bank Corporate Trust Services is
reviewing the impact the new initiative
will have on its business, and will communicate procedural and policy changes to
its clients as the January 1, 2011, deadline
approaches.
Your U.S. Bank Account Manager would
be happy to discuss this with you to ensure
your accounts and processes are ready for
the January 1, 2011, deadline. Paying agents
or issuers with questions or comments who
would like to contact DTCC directly should
contact the following DTCC P&I processing
managers: Ed Collins ([email protected]),
Joseph McGuire ([email protected]) or
Robert Olivari ([email protected]).
* S ource: DTCC White Paper, “P&I Payment
Refinement: A Move to Further Reduce Payment
Risk,” November 2009.
U.S. Bank Is Named Trustee, Collateral Administrator
and Custodian for CLO Transaction
Apollo Management, L.P. has selected U.S. Bank as trustee, collateral
administrator and custodian for its recent ALM Funding 2010-1 transaction. U.S. Bank will be responsible for compliance oversight, collateral
maintenance, noteholder communication and processing of principal
and interest payments.
“The $325 million
portfolio of assets for
this transaction will
consist primarily of
page
2
senior secured bank loans,” says Mike Zak, Vice President,
U.S. Bank Corporate Trust Services. “We’re very pleased to have
been selected by Apollo Management, L.P., since we’ve had a longstanding relationship with the portfolio manager for the funds.”
The CLO market had been battered by the nation’s financial crisis
in 2008 and early 2009. In fact, according to Bloomberg, last year
there were only 17 CLO deals totaling $26.5 billion, the lowest level
in a decade, due to the prior year’s nationwide financial crisis.*
* Source: Bloomberg.com, posted March 16, 2010.
Spotlight on the Seattle Office
With a skyline dominated by the iconic Space Needle and majestic
Mount Rainier, Seattle reigns over the Pacific Northwest region
of the United States. Often cited as one of America’s most livable
cities, Seattle is home base for the Northwest offices of U.S. Bank
Corporate Trust Services.
A Geographic Stretch
“There are 24 people in the Seattle office,” says Dyan Huhta,
vice president and manager in the Northwest region. “Our group
includes account managers, set-up specialists, a team of compliance
professionals and two default administration professionals.” The
Seattle employees boast an average of 20 years’ experience. “We
even have several individuals who have celebrated 35 years and
another two with 40 years at the bank,” Huhta says. “Our depth
and breadth of experience is instrumental in allowing us to provide
creative solutions and responsive customer service.”
Long-term customers of the Seattle office include the Alaska
Housing Finance Corporation and the Washington State Housing
Finance Commission, relationships that reach back to the 1980s
and 1990s. “We do a lot of health care bond financing and housing financing, and have developed expertise in handling military
housing finance projects all over the country,” Huhta says. “We
also have account managers dedicated to corporate escrows.”
Members of the Seattle office stand ready
to serve the Northwest region.
As a leader in market share in Washington state, the Seattle
office is firmly established as the corporate trust services provider
of choice in the Northwest.
The next time you are in the area, stop by for a friendly chat
and a cup of coffee (this is Seattle, after all). If you have questions
about the products and services U.S. Bank Corporate Trust Services
can provide, please contact your Account Manager.
Welcome, Terry Dolan
continued from front
engagement. What’s important to our customers is that we will continue to make
investments in technology, systems capabilities and in our people, helping us move
from being very good today to great customer advocates. We need to continue to be
focused on expanding our business development, relationship management and strong
client service capabilities.
From a corporate trust perspective, we are
focused on organic growth, domestic acquisitions and, for selective business segments,
global opportunities as well. For example,
we expect to see opportunities within the
entire Securities Services division from our
global alliance with Societe Generale. Also,
I believe the structured finance business will
begin to expand again both domestically and
in Europe. We continue to evaluate how our
business will need to change to take advantage
of these opportunities.
CTC: What about the Nuveen Investments
alliance with FAF Advisors? What does that
mean for our customers?
Dolan: I think that the alliance is very
positive. Nuveen is a premier organization
and provides a significant distribution channel to the strong product that FAF Advisors
offers. Customers who use equity and fixedincome mutual funds will have access to the
expanded capabilities that Nuveen brings to
the table. Corporate Trust Services customers who use cash management and money
market products will see little or no change,
as those products will continue to be offered
by our company through U.S. Bancorp Asset
Management.
CTC: What can you tell us about how
you operate and how it fits in with the
culture of U.S. Bank?
Dolan: I’m very supportive of Corporate
Trust Services initiatives to help improve
our business to the benefit of the customer
and expand our market share. I’m also a
strong advocate for U.S. Bank’s focus on
employee engagement. In a recent survey,
we found that 90 percent of our employees
are very engaged, confident in the future
of U.S. Bank and understand its vision and
how they contribute. This confidence and
enthusiasm benefits our customers as it
directly and positively affects the high level
of products and service we provide.
Finally, we are very customer-focused and
strive to do what is right for our customers
as well as the shareholder. When we talk to
our key strategic partners, they confirm that
U.S. Bank is held in high regard, the “gold
standard” in the industry. That’s testament
to our products and services, but also to
our employees and their focus on customer
advocacy. This is an amazing team!
CTC: Do you have any plans to meet
our customers?
Dolan: I’m planning a lot of travel
between now and the end of the year, and
I definitely look forward to meeting many
of our valued Corporate Trust Services
customers as well as continuing to meet the
U.S. Bank Corporate Trust Services folks
that make it happen every day. Our goal
is to continue expanding our customers
by being the best corporate trust business
in America!
page
3
Survey Confirms Popularity of TrustNow EssentialsSM
Thank you to all the customers who recently took part in our
U.S. Bank TrustNow Essentials survey. Your feedback helps us
improve your user experience.
TrustNow Essentials is an online trust reporting system, offered
free to our customers, that puts real-time account information at
your fingertips anytime, anywhere. Plus, you can sign up for electronic statement delivery and turn off mail delivery of your paper
statements – an easy step in going green!
“We have a great product in TrustNow Essentials, and many
of the customer comments we received in this survey support that
view,” says Dennis Egan, Senior Vice President and South East
Regional Manager, U.S. Bank Corporate Trust Services.
Survey Highlights
Easy to use: More than 90 percent of survey respondents said
the set-up process for TrustNow Essentials was easy for them.
Specifically, TrustNow Essentials users told us it was easy to obtain
a user ID, easy to add or delete staff access and account access,
and easy to schedule their reports. Customer service. Of those who had contacted their Account
Managers for assistance, 93 percent found them helpful. One hundred percent of those who called the Resolution Center found it
helpful. A comment was, “I’ve gone through the help desk and our
[account] representative for assistance and have been completely
satisfied with both experiences.”
Electronic statements. Survey respondents ranked the ability to
retrieve statements electronically as the most important feature of
TrustNow Essentials. A comment from a customer: “It is wonderful having the statements electronically. The timeliness is much
better than waiting on paper statements and it saves me a lot of
cluttered paper files now that I save them electronically.”
One hundred percent
of those who called
the Resolution Center
found it helpful.
Flexible report options. One respondent commented on the
ability to access reports anytime: “I love the ability to track
current transaction details in between monthly statements.”
Are You Enjoying the Benefits?
Overall, 82 percent of survey respondents rated their user experience with TrustNow Essentials good or excellent. “There are many
reasons that customers may want to use or increase their use of
TrustNow Essentials,” Egan says. With it, you can:
• Review transactions and obtain account information in the
format you prefer whenever you want it.
• Choose from a variety of reports and schedule them at intervals
you choose or receive them on demand.
• Download account data into your in-house accounting software.
• Receive statements electronically and discontinue paper statements.
You’ll be notified by e-mail when your statement is available.
To learn more about how you can best put TrustNow Essentials
to work for you, contact your Account Manager.
The articles and information included in this newsletter are for your information and are not intended as legal, accounting or tax advice. While the information is intended
to be accurate, neither U.S. Bank Corporate Trust Services nor the publisher accepts responsibility for relying on the information provided. Images may be from one or more
of these sources: ©Thinkstock, ©iStock, ©Fotolia. ©2010 U.S. Bank Corporate Trust Services. Member FDIC.
Comments and suggestions for the newsletter are welcome and should be forwarded to Ashley Beukelman, Corporate Trust Connection, U.S. Bank Corporate Trust Services,
(651) 495-3941 (phone) or [email protected] (e-mail). For more information, visit our website at usbank.com/corporatetrust.
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