The industry is shrinking by 5-6% annually through M&A. Meanwhile, Core & IT suppliers' revenue and profits grow as their quietly act as silent shareholders in every deal no matter the situation - sell or buy. Institutions can restructure their current contracts to prosper before M&A rather than be punished. Hear real life case studies where bankers wisely took matters into their own hands and gained greatly.

1. WAKE UP AND SMELL THE
NEW M&A IMPERATIVE
Minimizing the impact of Silent Shareholders
In your future merger.

2. 2Copyright Statement
PRESENTERS
Been There Done That
Footer
Dean Brown
EVP – Chief Information Officer
& Head of Bank Operations
Steve Young
EVP – Chief Operating Officer
Aaron Silva
CEO of Paladin fs & The Golden Contract Coalition
Professional Negotiator & Industry Disrupter

3. 3Copyright Statement
DEAN BROWN
EVP – Chief Information Officer & Head of Bank Operations
“Loves” to negotiate vs. Core
& IT suppliers. Really loves his
new merger-ready deal with FIS.
Bank IT turnaround specialist
Joined Golden Contract Coalition
October 2016
$13.5 Billion
$16B+ Post Merger
Access National
(pending)

4. 4Copyright Statement
STEVE YOUNG
EVP – Chief Operating Officer
Completed 16 M&A Bank Transactions.
Doesn’t “Love” Core IT Suppliers at all.
Learned a lot in their last contract renewal.
Joined Golden Contract Coalition October 2018

5. 5Copyright Statement
AARON SILVA
CEO of Paladin fs & The Golden Contract Coalition
Professional Negotiator & Industry Disrupter
$108 Million in Merger
Value Accretion
$308 Million in
Cost Reduction
135 Wins / 0 Losses
Paladin Blue Book
Launched June 2016
Group “Offensive”
Negotiations
100+ Institutions
$500 Billion + 30 years
IT Contract Negotiations

6. 6Copyright Statement
AGENDA
Waking Up
The problem with Silent Shareholders?
Centerstate Bank:
Going it alone or Taking the Power Position?
Why is it difficult to Negotiate during a merger?
Union Bank:
Before and After:
Impact of pre-negotiating Core IT Contracts.
ACTION PLAN FOR M&A

7. 7Copyright Statement
Lock banks into
long term deals
Not innovating
Limit your access
to competitive fintech
Take money in
every M&A deal
Punish your
shareholders for helping
them gain market share
THE PROBLEM WITH SILENT SHAREHOLDERS
How Core & IT Supplies Benefit in Every M&A Transaction (for now)
Penalize shareholders
when lowering their
operating costs

8. 8Copyright Statement
FIS Fiserv Jack Henry
Free Cash Flow $1.6 Billion (+$100M) $1.2 Billion (+$100M) $228 Million (-$3M)
Capital Expenditures 7% of revenue 5% of revenue 2% of revenue
Product Development 8% of revenue 8% of revenue 12% of revenue
Focus Modernization of Core
and Payments platforms
User experience updates Treasury services
ERM
Biller Direct
Code-Connect (gateway) Enhancements to platforms Banno Mobile
Data center consolidation Payments integration Faster payments
Secure cloud

9. 9Copyright Statement
TERMINATION, CONVERSION AND INTEGRATION REVENUE
THE PROBLEM WITH SILENT SHAREHOLDERS
$223M
to
$261M
$281M
to
$320M
$360M
to
$410M+
Bank shareholders will pay Core IT
Suppliers more than $410M in 2019
for services they will never provide.

10. 10Copyright Statement
THE PROBLEM WITH SILENT SHAREHOLDERS
Wake up to being punished for boosting their market share
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$1,860,000
PAID TO FISERV
(Termination, de-conversion expense)
$960,000
PAID TO FIS
(Conversion, programming and interface fees)
FIS
Bank 1
FISERV
Bank 2
RESULT: $2.5B Merger
FIS Unfairly Rewarded
SUPPLIER REVENUE
doubles as competitor eliminated
$2x
NO CUSTOMER
acquisition cost
$0
SHAREHOLDERS PAY
a bonus for supplier conversion effort
$$
BANK PROCESSED BY FIS BUYS AN INSTITUTION PROCESSED BY FISERV

11. 11Copyright Statement
THE PROBLEM WITH SILENT SHAREHOLDERS
Wake up to being punished for lowering their operating costs
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BANK PROCESSED BY JACK HENRY BUYS AN INSTITUTION PROCESSED BY JACK HENRY
Bank 1
36 Months
Remaining on Contract
Bank 2
24 Months
Remaining on Contract
Jack Henry
Bank 1
Jack Henry
Bank 2
RESULT:
Combined Entity Must Do Either of the Following
PAY 24 MONTH
TERMINATION EXPENSE
(even with same supplier!)
1
PAY Jack Henry
for all “lost profit”
2
EXTEND AGREEMENT
by a term equal to value of lost profit
3

12. 12Copyright Statement
WHY IS IT DIFFICULT TO NEGOTIATE DURING A MERGER?
Incumbent Core & IT Suppliers Turn Time and M&A Momentum Against You
Train Has Left Station
They know few banks will stop
a merger or litigate contract
issues after merger announced.
Lack of Bank Chutzpah
They know few banks
possess the courage, time
or resources to switch to a
competitor during a merger.
Limited Experience
Few bankers have ever negotiated
a Core IT contract during a
merger more than 1x in a career.
Most negotiate blind and simply
resort to ‘guessing’.

13. 13Copyright Statement
THE CENTERSTATE BANK SITUATION
Snapshot as of April 2017
CenterState Bank
$10 Billion
FIS Horizon – In House Processed
Account Processing
Item Processing
EFT / ATM
Commercial Capture
AI Managed Services
ACI (Fiserv) / ORCC
Retail Online Banking
We BELIEVED can do this alone.
Negotiated for 15 months and got nowhere
(about $350K), few favorable terms.
Suppliers have too much control and power
over information.
Walled off - We cannot access other banks’
contracts, pricing and terms.
Difficult to negotiate vs. “partner”
Can’t be too tough.
Data redacted due to proprietary
nature of information and
confidentiality restrictions.
Please contact info@paladin-fs.com
to request access to a full version.

14. 14Copyright Statement
WE REALIZED OUR LIMITATIONS
Brought in the hired guns
Brought in Paladin to negotiate the deal.
Paladin does this every day of their existence,
a banker might do 2 or 3 M&As in a career.
Paladin Blue Book access, massive database of
national market intelligence and pricing data.
Paladin became the “heavy” and I am the
“ACE in the hole” (Power Position).

15. 15Copyright Statement
NEGOTIATION RESULTS
Increased Leverage by Moving into the Power Seat.
Combined cost reduction
$2.1 Million
over contract term
(6x banker ’alone’ result)
Aligned terms +
pricing to a future
$25B institution
Stretched pricing
tiers dramatically
Fixed conversion,
de-conversion fees
Improved SLAs for
outsourced services
Limited silent shareholder
benefit if future liquidation
Reconciled to current
regulator compliance
standards
Updated with new
legal terms
Data redacted due to proprietary nature of information and confidentiality restrictions.
Please contact info@paladin-fs.com to request access to a full version.

16. 16Copyright Statement
THE UNION BANK & TRUST SITUATION
Snapshot as of April 2017 (pre-merger Xenith)
PALADIN PRE-MERGER ASSESSMENT
$3,654,854
$5,274,903
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Overpayment & Net Savings Opportunity
Next 5 Years Next 7 years
Union Bank & Trust
$8 Billion
FIS Horizon – exp. July 2020 (35 mos.)
Account Processing
Item Processing
EFT / ATM
Commercial Capture
AI Managed Services
Digital Insight – exp. July 2020 (35 mos.)
Retail Online Banking
Bottomline – exp. July 2017 (1 yr. auto)
Business Online Banking
Data redacted due to proprietary
nature of information and
confidentiality restrictions.
Please contact info@paladin-fs.com
to request access to a full version.

17. 17Copyright Statement
NEGOTIATION RESULTS
Focused on economic relief and key business SLAs.
Combined cost reduction $17.4 Million
over contract term
UNION acquired a bank 40% of their asset
size and increased Core IT cost by less than 1%.
Dramatic impact and rebalancing to
commercial terms, SLAs and future M&A incentives.
Data redacted due to proprietary nature of information and
confidentiality restrictions.
Please contact info@paladin-fs.com to request access to a full
version.

18. 18Copyright Statement
OTHER CRITICAL TERMS TO TARGET
Negotiating is more than just cost reduction
Demand SLAs that aligned with
current business goals
Implemented sanctions
that had real TEETH
Include predictable bank-
favorable merger incentives
Core Uptime SLA Core Batch Nightly SLA Merger Incentives
99.5% - 100% = HAPPY
1-3 Misses = Increasing
% credits
Absolute
Termination Rights
0-2 Misses per Month = HAPPY
3-4 Misses = Increasing
% credits
Absolute
Termination Rights
$$ Triggers when you merge
with a supplier competitor
CAP fees
Eliminate “at prevailing rate”
ambiguity
Data redacted due to proprietary nature of information and confidentiality restrictions.
Please contact info@paladin-fs.com to request access to a full version.

19. 19Copyright Statement
WAKE UP ACTION PLAN
Thinking about M&A in next 5 years?
Don’t go it alone. Take the power position.
Get access to data.
Proactively assess your current position
(Contracts, price, technology stack)
Understand silent shareholders M&A impact,
mitigate immediately.
KEY NEGOTIATING AREAS
Shift economic structures to benefit for M&A growth
Implement ‘survival incentives’ tied to triggers
Weaken exclusivity clauses
Pre-stipulate conversion, de-conversion costs and integration
Bifurcate termination expense
Demand APIs that fit your innovation plan.
Repurpose cost reduction toward fintech initiatives
Data redacted due to proprietary
nature of information and
confidentiality restrictions.
Please contact info@paladin-fs.com
to request access to a full version.

20. 20Copyright Statement
COST REDUCTION AND MERGER-READY ASSESSMENT
Email / Call:
877.746.4859
Paladin-fs.com
3 Current Invoices
+ Contracts
Completely
Confidential
No Cost
No Obligation

21. 21Copyright Statement
Join now
@ GoldenContract.com
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The only national banking coalition fighting for Banks against
the Core IT oligopoly for a fair deal.

22. 22Copyright Statement
THANK YOU
Aaron Silva
877-746-4859 x 704
asilva@paladin-fs.com
Dean Brown
804-327-7500
dean.brown@bankatunion.com
Steve Young
863-291-3900
syoung@centerstatebank.com